Oracle Corporation et al v. SAP AG et al

Filing 814

Declaration of Tharan Gregory Lanier in Support of 813 Motion for Partial Summary Judgment (FILED PURSUANT TO D.I. 810) filed by SAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S, # 20 Exhibit T, # 21 Exhibit U, # 22 Exhibit V, # 23 Exhibit W, # 24 Exhibit X)(Related document(s) 810 ) (Froyd, Jane) (Filed on 8/27/2010) Modified on 8/27/2010 (vlk, COURT STAFF).

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Oracle Corporation et al v. SAP AG et al Doc. 814 Att. 23 EXHIBIT W Dockets.Justia.com FLETCHER CYCLOPEDIA OF THE LAW OF CORPORATIO S WILLIAM MEADE FLETCHER 2 0 0 6 R E V I S E D VOLUME B y CAROL A. J O N E S , J.D. VOLUME 1 THOMSON \NEST For Customer Assistance Call 1-800-328-4880 Mat # 4 0 4 0 0 2 5 6 CORPORATE ENTITY OR PERSONALITY 36 p a r t i c i p a t i n g s h a r e h o l d e r a l s o i s guilty.9 V i o l a t i o n s o f p e n a l laws a r e g o v e r n e d by t h e s a m e p r i n c i p l e s , a n d e a c h v i o l a t o r may be liable. 10 35 Distinctness of corporate entity-Domicile, residence or citizenship Research References West's Key N u m b e r D i g e s t , C o r p o r a t i o n s e:::>1.3 B e c a u s e a c o r p o r a t i o n is a n e n t i t y d i s t i n c t from i t s officers, directors a n d s h a r e h o l d e r s , t h e r e s i d e n c e o f i t s officers, direct o r s o r s h a r e h o l d e r s d o e s n o t d e t e r m i n e t h e domicile, c i t i z e n ship or residence of the corporation. 1 The citizenship, domicile a n d r e s i d e n c e o f c o r p o r a t i o n s i s f u l l y a d d r e s s e d i n another chapter of this treatise. 2 36 Distinctness of corporate entity-Litigation by and against corporation or its members Research References W e s t ' s Key N u m b e r D i g e s t , C o r p o r a t i o n s e:::>1.3 The c a p a c i t y o f s u i n g a n d b e i n g s u e d i n i t s own n a m e is 9 C o n n . - S t a t e v. P i c h e c a , 2 Conn C i r 584, 203 A2d 242 (conviction of m a j o r i t y s h a r e h o l d e r a n d officer who c o n t r o l l e d c o r p o r a t i o n a n d was i t s a l t e r ego). N . Y . - P e o p l e v. T r a p p , 2 0 NY2d 6 1 3 , 2 8 6 N Y S 2 d 11, 2 3 3 NE2d 1 1 0 ( s u s t a i n i n g c o n v i c t i o n o f principal s h a r e h o l d e r a n d p r e s i d e n t for f a i l u r e t o m a k e c o r p o r a t e p a y m e n t s i n violation o f s t a t u t e ) . T e n n . - B o o k o u t v. C i t y o f C h a t t a n o o g a , 5 9 T e n n A p p 576, 4 4 2 SW2d 6 5 8 ( c o n v i c t i o n f o r v i o l a t i n g Sunday ordinance where defendant owned a n d o p e r a t e d c o r p o r a t i o n ) . Wash.-One who is the p r e s i d e n t , m a n a g i n g officer, a n d o w n e r o f p r a c t i c a l l y a l l o f t h e capit a l s t o c k m a y be c r i m i n a l l y l i a b l e for a m i s a p p r o p r i a t i o n o f money b y t h e c o r p o r a t i o n . S t a t e v. T h o m a s , 123 W a s h 2 9 9 , 2 1 2 P 2 5 3 . 1 m . - C h i c a g o Union Traction Co. v. C i t y o f Chicago, 1 9 9 III 579, 65 N E 470. [Section 35) 1Iowa-Home Savings & L o a n A s s ' n v. I o w a C i t y I n n , Inc., 152 N W 2 d 5 8 8 ( I o w a ) . M o . - C i t y o f S t . L o i u s v. Wiggins F e r r y Co., 40 Mo 580; S t a t e v. M i l l e r , 217 Mo App 16, 272 S W 1066. 2 C i t i z e n s h i p , domicile, r e s i dence and habitancy of corporat i o n s , s e e c h 48; c h o i c e o f l a w f o r corporate issues and the internal a f f a i r s d o c t r i n e , s e e 4223.50. 93 36 FLETCHER CYCLOPEDIA CORPORATIONS o n e o f t h e c o r p o r a t e a t t r i b u t e s . l A c c o r d i n g l y , s u b j e c t to s o m e exceptions, a s h a r e h o l d e r m u s t s u e only on r i g h t s p e r t a i n i n g to that shareholder as an individual and the corporation o n l y on r i g h t s b e l o n g i n g t o i t . 2 A c t i o n s b y a n d a g a i n s t corporations a r e covered i n a n o t h e r c h a p t e r o f t h i s t r e a t i s e . 3 The distinction between direct shareholder actions and s h a r e h o l d e r d e r i v a t i v e a c t i o n s i s also a d d r e s s e d e l s e w h e r e i n t h i s t r e a t i s e . 4 S h a r e h o l d e r d e r i v a t i v e a c t i o n s t h e m s e l v e s also are covered in detail elsewhere in this treatise. s The rule barring suits by shareholders individually where the rights sued upon belong to the corporation also applies equally w h e r e a l l t h e s t o c k i n t h e c o r p o r a t i o n is h e l d b y o n e p e r s o n o r a s m a l l n u m b e r o f people. 6 T h e r u l e a p p l i e s e v e n w h e r e the corporation is a Subchapter S corporation, since that s t a t u s p e r t a i n s only to a c o r p o r a t i o n ' s a n d s h a r e h o l d e r ' s t a x l i a b i l i t y a n d does n o t affect t h e g e n e r a l l a w o f c o r p o r a t i o n s . 7 S i m i l a r l y , w h i l e s h a r e h o l d e r s a n d d i r e c t o r s h a v e t h e r i g h t to " t a k e a c t i o n " on t h e c o r p o r a t i o n ' s b e h a l f , t h a t d o e s n o t e n t i t l e those persons to practice law on behalf of the corporation b e c a u s e t h e c o r p o r a t i o n is a s e p a r a t e l e g a l e n t i t y t h a t c a n n o t a p p e a r on i t s b e h a l f t h r o u g h a n a g e n t o t h e r t h a n a n a t t o r n e y . s A n a c t i o n o r s u i t s h o u l d be b r o u g h t by t h e corporat i o n o r by t h e m e m b e r , w h i c h e v e r h a s t h e r i g h t o f action, a n d a g a i n s t t h e o n e o r t h e o t h e r , w h i c h e v e r is liable, a n d i t s h o u l d be i n t h e n a m e o f t h e p r o p e r p a r t y p l a i n t i f f a n d n a m e [Section 36] l V . S . - L o y d v. P a i n e W e b b e r , I n c . , 2 0 8 F 3 d 7 5 5 (CA9 2 0 0 0 ) . l l l . - A c o r p o r a t i o n is a l e g a l entity, separate and distinct from i t s s h a r e h o l d e r s , officers a n d d i r e c tors, and generally must be sued in its own name and not in the name of its shareholders, officers or d i r e c t o r s . G o u l d i n g v. A g - R e - C o , I n c . , 233 I I I A p p 3 d 8 6 7 , 5 9 9 N E 2 d 1094 ( 9 9 2 ) . M d . - L l e w e l l y n v. Q u e e n C i t y D a i r y , Inc., 187 M d 4 9 , 4 8 A 2 d 322, q u o t i n g t h i s t r e a t i s e . 2 M d . - L l e w e H y n v. Q u e e n C i t y D a i r y , I n c . , 187 M d 4 9 , 4 8 A 2 d 322, q u o t i n g t h i s t r e a t i s e . 94 3S e e ch 51. 4S e e 5 9 0 7 e t s e q . s S e e 5 9 3 9 e t s e q . 6Effect o f o w n e r s h i p o f a l l t h e stock or a controlling interest, see 5910. 7 M o n t . - G u l l e t t v. V a n D y k e C o n s t r u c t i o n Co., 3 2 7 M o n t 30, 111 P 3 d 2 2 0 ( M o n t 2005). T e n n . - H a d d e n v. City of Gatlinburg, 746 SW2d 687 (Tenn 1988l. Taxation of S corporations, s e e 6 9 7 0 . 1 9 1 ; t a x a t i o n o f c o r p o r a t i o n s g e n e r a l l y , s e e c h 14A. 8Requirement that corporation conduct and defend litigation t h r o u g h a n a t t o r n e y , s e e 4217. CORPORATE ENTITY OR PERSONALITY 36 t h e p r o p e r d e f e n d a n t , i n o r d e r t o o b t a i n j u d g m e n t i n accordance w i t h t h e r i g h t . a W h i l e i t i s t r u e t h a t a n i n d i v i d u a l cannot s u e h i m o r herself, s h a r e h o l d e r s o f a corporation m a y sue t h e c o r p o r a t i o n , o r be s u e d b y i t , s i n c e t h e c o r p o r a t i o n a n d i t s s h a r e h o l d e r s a r e n o t i n a n y l e g a l s e n s e t h e s a m e . 10 I n accordance w i t h t h e s e principles, a s h a r e h o l d e r c a n n o t toll s t a t u t o r y t i m e r e q u i r e m e n t s b y c o m m e n c i n g a n a c t i o n t h a t r e q u i r e s e n f o r c e m e n t o f a r i g h t b y t h e c o r p o r a t i o n . 11 So a shareholder has no capacity to sue or to maintain a counterclaim or a third-party claim as an individual on a d e r i v a t i v e c l a i m e v e n t h o u g h t h a t s h a r e h o l d e r i s a sole o r p r i n c i p a l s h a r e h o l d e r o f t h e c o r p o r a t i o n . 12 N o r d o e s a c o r p o r a t i o n h a v e i n d e p e n d e n t s t a n d i n g t o s u e for i n j u r i e s done t o a s i s t e r o r s u b s i d i a r y c o r p o r a t i o n , d e s p i t e t h e f a c t t h a t t h e i r b u s i n e s s e s a r e i n t e r t w i n e d a n d t h e s u c c e s s o f one is d e p e n d e n t o n t h a t o f t h e o t h e r . 13 S u i t s c a n n o t b e b r o u g h t aA l a . - A l a b a m a I n d e p e n d e n t S e r v i c e S t a t i o n A s s ' n v. McDowell, 242 A l a 4 2 4 , 6 S o 2 d 5 0 2 . M d . - L l e w e l l y n v. Q u e e n C i t y D a i r y , I n c . , 1 8 7 M d 49, 4 8 A 2 d 322, q u o t i n g t h i s t r e a t i s e . Pleadings in actions by and a g a i n s t c o r p o r a t i o n s , s e e 4 4 8 2 e t seq.; n a m i n g p a r t i e s i n s h a r e h o l d e r d e r i v a t i v e s u i t s , s e e 6004. 1 O U . S . - C u l b e r t s o n v. W a b a s h N a v . Co., 4 M c L e a n 5 4 4 , F e d C a s No. 3 , 4 6 4 . Ga.-Commonwealth United Corp. v. R o t h b e r g , 221 G a 175, 143 S E 2 d 741 ( a c t i o n b y m a j o r i t y s h a r e holder against corporation). N e v . - S e a b o r n v. W i n g f i e l d , 56 N e v 260, 4 8 P 2 d 881. S . C . - T o d d v. Zaldo, 3 0 4 S C 275, 4 0 3 S E 2 d 6 6 6 (SC A p p 1 9 9 1 ) ; W a r i n g v. C a t a w b a Co., 2 B a y 109. T e x . - E v a n s v. G e n e r a l I n s . Co. o f A m e r i c a , 3 9 0 S W 2 d 8 1 8 ( T e x Civ A p p ) ( s u i t b y p r e s i d e n t - m a j o r i t y s h a r e h o l d e r a g a i n s t c o r p o r a t i o n for personal injuries). V t . - R o g e r s v. D a n b y U n i - v e r s a l i s t S o c i e t y , 1 9 V t 187. A c t i o n s b y a n d a g a i n s t corpor a t i o n s g e n e r a l l y , s e e c h 51. 1 1 0 k l a . - G a r r e t t v. D o w n i n g , 185 O k l a 77, 9 0 P 2 d 636. 12U.S.-Shareholders who had personally guaranteed corporation's d e b t s could not, o n s u i t b y c r e d i t o r , c o u n t e r c l a i m a s s h a r e h o l d e r s , although they were permitted to counterclaim as guarantors of an insolvent principal. Continental G r o u p , I n c . v. J u s t i c e , 5 3 6 F S u p p 6 5 8 CD D e l 1 9 8 2 ) , c i t i n g t h i s treatise. Alaska-Guarantors, as s h a r e h o l d e r s a n d officers o f a c o r p o ration, have no right to assert a corporation's counterclaims on their o w n behalf. A r c t i c C o n t r a c t o r s , Inc. v. S t a t e , 5 7 3 P 2 d 1 3 8 5 ( A l a s k a ) , quoting this treatise. N . Y . - R o g e r s v. C i p r i a n , 2 6 A D 3 d 1 , 8 0 5 N Y S 2 d 3 6 (2005); V a l m a r t F o o d B u y i n g S e r v i c e , I n c . v. Sterngass, 30 AD2d 551, 290 N Y S 2 d 671. 1~.S.-Picture L a k e C a m p 95 36 FLETCHER CYCLOPEDIA CORPORATIONS by or against the individual shareholders on the corporation's c o n t r a c t , b u t m u s t b e b r o u g h t b y o r a g a i n s t t h e c o r p o r a t i o n . 14 It is equally true that a shareholder's contract is not the contract of the corporation, on which it must sue and the s h a r e h o l d e r c a n n o t . 15 T h e s a m e r u l e a p p l i e s t o t o r t s 16 a n d t o t h e e l e m e n t s o f d a m a g e s . 17 Shareholders are not parties to an action by or against the c o r p o r a t i o n a l o n e , 1 8 n o r i s i t a p a r t y b e c a u s e t h e y a r e . 19 A suit brought against the shareholders or the corporation g r o u n d , Inc. v. H o l i d a y I n n s , I n c . , 497 F S u p p 8 5 8 <ED Va 1980). D o c u m e n t o b t a i n e d from s u b s i d i a r y could n o t be u s e d a s a d m i s sion a g a i n s t p a r e n t a b s e n t showing that corporations should be regarded as identical. Zenith Radio Corp. v. M a t s u s h i t a Elec. I n d u s t r i a l Co., L t d . , 505 F S u p p 1190 (ED P a 1980). 1 4 U . S . - B o a t r i g h t v. S t e i n i t e Radio Corp., 46 F 2 d 385. D i s t i n c t n e s s o f c o r p o r a t e ent i t y r e s p e c t i n g c o n t r a c t s a n d obligat i o n s , s e e 29. 1 5 U . S . _ C a m p v. G r e s s , 2 5 0 U S 308, 63 L E d 997, 3 9 S C t 478, r e v g i n p a r t 2 4 4 F 121. N e b . - C o o p e r v. B a n e , 1 1 0 Neb 74, 196 NW 119 (single principal-shareholder-director and p r e s i d e n t of b a n k i n g corporation as n o t c o r p o r a t i o n itself). T e x . - H e i n r i c h s v. E v i n s Personnel Consultants, Inc., 486 S W 2 d 935 (Tex). 1 6 C a I . - W a s h b u r n v. W r i g h t , 261 C a l A p p 2 d 789, 6 8 C a l R p t r 224 ( a l l e g e d l i b e l o r d e f a m a t i o n o f officers o r m e m b e r s o n l y i n t h e i r p e r s o n a l capacity). N . C . - R . H . B o u l i g n y , Inc. v. United Steelworkers of America, 2 7 0 N C 160, 154 S E 2 d 3 4 4 (corporat i o n n o t t o m a i n t a i n a c t i o n for d a m a g e s for l i b e l o r s l a n d e r o f i t s s h a r e h o l d e r s , officers, e m p l o y e e s o r 96 r e p r e s e n t a t i v e s ). T e x . - R . G . D u n & Co. v. S h i p p , 91 S W 2 d 3 3 0 (Tex Com AppJ; P a r a m o u n t F a m o u s L a s k y Corp. o f New Y o r k v. S t i n n e t t , 17 SW2d 125 (Tex C i v App) ( i n j u r y t o c o r p o r a t i o n by c o m b i n a t i o n i n r e s t r a i n t o f t r a d e a s n o t t o s h a r e h o l d e r s s u i n g i n own namesJ. 17Ind.-Additional expenses incurred by corporation by reason o f a s h a r e h o l d e r - e m p l o y e e ' s absence d u e t o i n j u r y a l l e g e d l y c a u s e d by a third person are not admissible as an element of damages in the s h a r e h o l d e r - e m p l o y e e ' s a c t i o n for personal injuries against the third p e r s o n . T e r r y v. Y a n c e y , 344 F 2 d 789; B e n s o n v. W a r b l e , 146 I n d App 307, 255 N E 2 d 230. S . C . - T o d d v. Zaldo, 304 SC 2 7 5 , 4 0 3 S E 2 d 6 6 6 (SC A p p 1991). 1 8 C o l o . - B a l l a s v. C l a d i s , 167 Colo 248, 4 4 7 P 2 d 224. N.Y.-H.D.S. Mercantile C o r p . v. M o n e t F a s h i o n s , I n c . , 37 M i s e 2 d 8 2 , 2 3 4 N Y S 2 d 547. S h a r e h o l d e r s o f p a r e n t corporation are not proper parties, let alone necessary parties, in a cause o f a c t i o n by u n i o n a l l e g i n g f r a u d u lent conveyance by which all of a subsidiary's assets allegedly were encumbered, w i t h o u t consideration, i n o r d e r to finance a c a s h d i s t r i b u tion to shareholders of the parent t h e r e b y l e a v i n g t h e s u b s i d i a r y insolvent, o r w i t h u n r e a s o n a b l y small CORPORATE ENTITY OR PERSONALITY 36 generally does n o t affect t h e o t h e r . 20 W h e t h e r a n o n p r o f i t o r other c o r p o r a t i o n , a p a r t from i t s m e m b e r s , h a s s t a n d i n g to challenge t h e c o n s t i t u t i o n a l i t y o f a s t a t u t e g e n e r a l l y d e p e n d s upon w h e t h e r t h e c o r p o r a t i o n i t s e l f h a s a n y l e g a l i n t e r e s t affected by t h e s t a t u t e . 21 Two c o r p o r a t i o n s m a y be a d v e r s e i n l i t i g a t i o n t h o u g h t h e y h a v e t h e s a m e m e m b e r s . 22 O r d i n a r i l y , s h a r e h o l d e r s o r m e m b e r s a r e n o t p r o p e r coparties w i t h a c o r p o r a t i o n u n l e s s t h e y h a v e a n i n t e r e s t a s s u c h or a r e t h e r e a l p a r t i e s i n i n t e r e s t . 23 The d i s t i n c t n e s s o f t h e corporation from i t s m e m b e r s a n d capital. I n t e r n a t i o n a l A s s ' n o f Mac h i n i s t s & A e r o s p a c e W o r k e r s v. AIlegis C o r p . , 1 4 4 M i s c 2 d 9 8 3 , 5 4 5 NYS2d 6 3 8 ( 1 9 8 9 ) . N . C . - T r o y L u m b e r C o . v. H u n t , 251 N C 624, 1 1 2 S E 2 d 132. l~.S.-Looney v . T h o r p e Bros., 2 7 7 F 3 6 7 . F l a . - F r i e d u s v. F r i e d u s , 8 9 So 2d 6 0 4 (Fla); T u r n e r v. T u r n e r , 175 So 2 d 4 7 ( F l a App). N . Y . - S t u a r t v. M e c h a n i c s ' & F a r m e r s ' B a n k , 1 9 J o h n s 496. Vt.-Searsburgh Turnpike Co. v. C u t l e r , 6 V t 3 1 5 . 2 G a . _ T h e p e n d e n c y o f a n act i o n a g a i n s t one c o r p o r a t i o n i s n o t g r o u n d for a b a t e m e n t o f a n y a c t i o n by t h e s a m e p l a i n t i f f o n t h e s a m e cause of action against another c o r p o r a t i o n i n w h i c h t h e p e t i t i o n alleges that the latter corporation owns a n d o p e r a t e s t h e f o r m e r o n e . C o n f e c t i o n e r i e s C o r p . v. H a n i e , 2 6 Ga A p p 7 7 9 , 107 S E 3 4 9 . T e n n . - L i l l a r d v. P o r t e r , 2 H e a d 177. 21Minn.-Minnesota Ass'n of P u b l i c S c h o o l s v. H a n s o n , 1 7 8 NW2d 8 4 6 ( M i n n ) ( n o n p r o f i t c o r p o ration as not to have s t a n d i n g in d e c l a r a t o r y j u d g m e n t action). 22Ark._G.W. Jones Lumber Co. v. W i s a r k a n a L u m b e r Co., 1 2 5 A r k 65, 187 S W 1068. S . C . - T o d d v. Zaldo, 3 0 4 S C 275, 4 0 3 S E 2 d 6 6 6 (SC A p p 1991). 2 3 U . S . - W i l h e l m v. C o n s o l i d a t e d O i l C o r p . , 1 1 F S u p p 444. N o n p r o f i t c o r p o r a t i o n composed of dues-paying members who r e s i d e d a n d o w n e d p r o p e r t y i n local area had standing, as authorized s p o k e s m a n for i t s i n d i v i d u a l m e m bers, to sue to protect their i n t e r e s t s . C i t i z e n s A s s ' n o f Georget o w n v. S i m o n s o n , 4 0 3 F 2 d 175. Shareholders (other corporations) may be real parties i n interest in a suit brought by the corporat i o n for s p e c i f i c p e r f o r m a n c e . I n d i a n T e r r i t o r y I l l u m i n a t i n g O i l Co. v . B a r t l e s v i l l e Zinc Co., 2 8 8 F 273. A controlling corporate s h a r e h o l d e r w h i c h o w n s t h e majority interest is not a necessary party to a suit against the subsidiary c o r p o r a t i o n ; b u t i s i n d i s p e n s a b l e to an injunction from voting its stock for a p r o p o s e d c o n s o l i d a t i o n . G e n e r a l I n v . Co. v. L a k e S h o r e & M.S. Ry. Co., 2 5 0 F 160, affg 2 2 6 F 9 7 6 , w h i c h w a s affd 2 6 0 U S 261, 67 L E d 2 4 4 , 4 3 S C t 106. A l a . - K i n g v. C o o s a V a l l e y M i n e r a l P r o d u c t s Co., 2 8 3 A l a 197, 215 So 2 d 275 ( s h a r e h o l d e r s a s n o t necessary parties). N . Y . - G i n a s v. L o e w ' s I n c . , 1 9 0 Misc 8 8 4 , 7 5 N Y S 2 d 421. N.D.-Sole shareholder was 97 36 FLETCHER CYCLOPEDIA CORPORATIONS they from it applies in the service of process or other p r o c e d u r e t o o b t a i n j u r i s d i c t i o n . 24 T h u s , u n d e r t h e " f i d u c i a r y not entitled to appear through its attorney on behalf of corporation which w a s i n receivership a n d repr e s e n t e d by c o u n s e l . P h i l l i p s - V a n H u e s e n Corp. v. S h a r k Bros., Inc., 289 NW2d 216 (ND). Okla.-Shareholders of a corporation are not necessary part i e s t o i t s s u i t on i t s c a u s e o f a c t i o n , a l t h o u g h i f s u c c e s s f u l i t will p a y t h e proceeds to t h e m . B u r k e G r a i n Co. v. S t i n c h c o m b , 70 O k l a 89, 173 P 204. T e x . - E v e n t h o u g h a n individual owns all of the corporate s t o c k , i t is n o t n e c e s s a r y t h a t h e be joined as a party plaintiff or d e f e n d a n t . F o x v. R o b b i n s , 6 2 SW 815 (Tex Civ App). 2~.S.-Lamar v. N a t i o n a l B a s k e t b a l l A s s ' n , 4 6 8 F S u p p 1198 (SD NY 1979) ( a p p l y i n g New Y o r k l a w ) ; N a v i o s C o r p . v. N a t i o n a l M a r i t i m e U n i o n o f A m e r i c a , 289 F S u p p 197 ( n o n r e s i d e n t p a r e n t corporation as not subject to jurisdiction in state in which subsidiary does b u s i n e s s ) . Parent company not doing b u s i n e s s i n s t a t e c a n n o t be sued i n s t a t e b y s e r v i c e o f p r o c e s s on s u b sidiary doing business in state. M c l e a n v. Go o d y ear T i r e & R u b b e r Co., 8 5 F 2 d 150, c e r t d e n 2 9 9 U S 600, 81 L E d 442, 57 S C t 193. The holding corporation is not, by r e a s o n o f i t s holding, d o i n g business in the state where the held c o r p o r a t i o n o p e r a t e s , so a s t o b e servable there with process, even t h o u g h t h e y h a v e t h e s a m e officers a n d a g e n t s . C a n n o n Mfg. Co. v. C u d a h y P a c k i n g Co., 2 9 2 F 1 6 9 , affd 267 US 333, 69 L E d 634, 45 S C t 250; I n d u s t r i a l R e s e a r c h Corp. 98 v. G e n e r a l M o t o r s C o r p . , 2 9 F 2 d 6 2 3 ; A t c h i s o n , T . & S . F . R . C o . v. W e e k s , 2 4 8 F 9 7 0 , 978. Shareholders cannot be served by publication by virtue of t h e fact t h a t t h e court h a s custody of property belonging to the c o r p o r a t i o n . E i c h e l b e r g e r v. Arlingt o n B l d g . , I n c . , 2 8 0 F 997. An individual may have his c o r p o r a t i o n ' s c o n t a c t s w i t h t h e for u m a t t r i b u t e d to h i m only i f t h e r e i s a n a l t e r ego r e l a t i o n s h i p b e t w e e n the two that justifies a court in disregarding the separate corporate e n t i t y . B a m f o r d v. H o b b s , 5 6 9 F S u p p 160 (SD T e x 1983). A c t i v i t i e s o f c o r p o r a t e officer i n New York o n b e h a l f o f C a n a d i a n corporations did not constitute t r a n s a c t i o n o f b u s i n e s s by h i m indiv i d u a l l y a s would s u s t a i n e x t r a t e r ritorial service under New York nondomiciliary statute. United S t a t e s v. M o n t r e a l T r u s t Co., 235 F S u p p 345. C o u r t would n o t look b e h i n d incorporation of alien corporation in Panama to determine whether it was owned by American interests, s i n c e t h i s a l s o would b e i m m a t e r i a l for d i v e r s i t y p u r p o s e s . M a z z e l l a v. P a n O c e a n i c N S P a n a m a , 232 F S u p p 29. Cal.-Absent an alter-ego r e l a t i o n s h i p , s e r v i c e o n t h e corporat i o n d o e s n o t c o n s t i t u t e s e r v i c e on the individual shareholder or officer. I k e r d v. W a r r e n T. M e r r i l l & Sons, 9 C a l App 4 t h 1833, 12 Cal R p t r 2 d 3 9 8 (1992). D e l . - P a u l e y P e t r o l e u m , Inc. v. C o n t i n e n t a l Oil Co., 231 A2d 450 ( D e l Ch). F l a . - M e i s e l m a n v . McK- nrOR TE E T I T Y ) R PER..'lC) A L l l : 37 ntitv-~,etofJ and l . o r p o r lion C::>1.~3 1.6(3) or-porate veil 1'3<tLf I FLETCHER CYC~plifl ..../~ ,~ , ~/) OF THE LAW OF ~<) c./ ~, i CORPORATIO' S '. : ~.:: <~~'9}- ~'9 .~_:~ . ,~ ,~ " '} ~ WILLIAM MEADE FLETCHER .... ." -: ; , :'. " .; .'-" 2009.2010:CumuJative~pplemeJit . By The Publisher's EdiWriaI S t a f f .'; .' . INSERT IN POCKET OF VOLUMEI' ", '"., ". ". ... ," ",", " . .' ".','" .". " '\ .-' <', T h i s C~mulati:;eSuppleDlEmtC o v e r s R e p o l ' t e d C a s e s Through~:{.,, ' , c ' . ','C", ' " , ',', .' , 1 2 9 8 C t 1938; 'M6F3d 1381; 696 F S u p p 2 d 1379; 965 A2d 1 2 9 0 ; 6 1 Cal R p t r 3 d 928; 854 NYS2d 9 2 1 ; 9 0 0 N E 2 d i292; 761 NW2d 927; 201 P 3 d 1290; 673 S E 2 d 849; 2 So 3 d 1293; 276 SW3d 930;' 4 4 ALR6th 746. WEST~ A T h o m s o n R e u t e r s business For Customer Assistance Call 1-800-328-4880 1T-1 Mat #40867326 33 FLETCHER CYCLOPEDIA CoRPORATIONS A f t e r note 1 5 a d d : Under the direct participant theory of liability, where t h e r e is s u f f i c i e n t e v i d e n c e t o s h o w t h a t a p a r e n t c o r p o r a t i o n directed or authorized the manner in which an activity is u n d e r t a k e n , a d u t y m a y a r i s e to u t i l i z e r e a s o n a b l e c a r e i n d i r e c t i n g o r a u t h o r i z i n g t h e m a n n e r i n w h i c h t h a t a c t i v i t y is u n d e r t a k e n . 15.20 Accordingly, a p a r e n t corporation c a n b e h e l d liable if, for i t s own benefit, i t d i r e c t s o r a u t h o r i z e s t h e m a n n e r i n which i t s s u b s i d i a r y ' s b u d g e t is i m p l e m e n t e d , s u r p a s s i n g t h e control exercised a s a n o r m a l i n c i d e n t o f o w p e r s h i p a n d d i s r e g a r d i n g t h e d i s c r e t i o n a n d i n t e r e s t s o f t h e subsidi a r y , a n d t h e r e b y c r e a t i n g d a n g e r o u s conditions.1u~ U n d e r t h e d i r e c t p a r t i c i p a n t t h e o r y o f l i a b i l i t y , i f a p a r e n t corporat i o n m a n d a t e s a n o v e r a l l c o u r s e o f a c t i o n for a s u b s i d i a r y a n d t h e n a u t h o r i z e s t h e m a n n e r i n w h i c h specific a c t i v i t i e s c o n t r i b u t i n g to t h a t course o f action a r e u n d e r t a k e n , i t c a n be liable for foreseeable i n j u r i e s . 15.40 T h e k e y e l e m e n t s t o t h e application of direct participant liability are a parent c o r p o r a t i o n ' s specific d i r e c t i o n o r a u t h o r i z a t i o n o f t h e m a n n e r i n w h i c h a n a c t i v i t y i s u n d e r t a k e n a n d foreseeability; i f a p a r e n t c o r p o r a t i o n specifically d i r e c t s a n a c t i v i t y , w h e r e i n j u r y i s f o r e s e e a b l e , t h a t p a r e n t c o u l d be h e l d l i a b l e . 1 u o 11l.2OJ11.-Forsythe (2007). 1530Ill._Forsythe (2007). 15.4O}ll.-Forsythe (2007). 15.5OJ1l.-Forsythe (2007). v. C l a r k USA, I n c . , 2 2 4 III 2d 274, 8 6 4 N E 2 d 227 v. C l a r k USA, I n c . , 2 2 4 III 2 d 2 7 4 , 8 6 4 N E 2 d 2 2 7 v. C l a r k USA, I n c . , 2 2 4 III 2 d 274, 8 6 4 N E 2 d 2 2 7 v. C l a r k USA, I n c . , 2 2 4 III 2 d 2 7 4 , 8 6 4 N E 2 d 227 \ t: II N 44 Kt n. eXI 36 n. 2. D i s t i n c t n e s s o f c o r p o r a t e entity-.,;".Litigation b y .a n d a g a i n s t c o r p o r a t i o n o r i t s m e m b e r s (20 444 n.h O k l a . - S t a t e ex reI. C h r i s t i a n v. McCauley, 193 P 3 d 615 (Okla Civ A p p 2008). n . 20. M o n t . - J o h n s o n v. Booth, 343 M o n t 268, 184 P 3 d 289 (Mont 2008) ( i n a c t i o n a g a i n s t c o r p o r a t i o n , s t o c k h o l d e r s g e n e r a l l y m a y n o t d e f e n d for t h e c o r p o r a t i o n ; c o r p o r a t i o n i t s e l f m u s t defend). 200' exps (200' n . 9. Lad Krajc (Mol>. Pluml 22

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