August 31, 2011 Articles

How Parent Corporations Can Be Directly Liable for a Subsidiary Product

By Jay P. Mayesh

When does a parent corporation become liable for the products of its subsidiaries? Usually, the answer is found in the law of corporate veil piercing, often called alter ego liability. Corporations are well aware of the case law in any number of states outlining the conduct essential to maintaining the requisite separateness between parent and subsidiary. Adversaries, however, are simultaneously searching for more original and less-traveled paths to parent liability for subsidiary products. This is particularly true when products are sold by offshore subsidiaries that are thinly capitalized and underinsured by U.S. products liability standards.

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