Earlier today a Nevada federal judge granted summary judgment in a case against a resort company that sought to hold it liable for alleged negligence of its subsidiary in Aruba. A Canadian citizen traveled to a resort on Aruba owned by a subsidiary. While there she tripped, fell and asserted an injury. Rather than suing the subsidiary in Aruba, the guest returned home, and then filed suit in Nevada against the subsidiary’s parent company. She claimed the parent and subsidiary were alter egos, meaning the parent could be liable for the subsidiary’s negligence.
Paul Eisinger and Kathy Parks represented the resort parent company. They repeatedly noted throughout the case that the wrong company was sued, that Nevada lacked jurisdiction over the Aruba subsidiary, and that Dutch personal injury law would likely apply. The guest ignored these warnings and proceeded with the lawsuit. At the end of discovery, Mr. Eisinger and Ms. Parks argued to the court that there was no evidence of anything but a typical corporate parent-subsidiary relationship. There was no basis to find the parent was an alter ego of the subsidiary or to hold the parent liable if the subsidiary had actually been negligent.
The court agreed and dismissed the case. First, the court noted that the guest’s alter ego argument was based upon an incorrect reading of the company’s form 10-K filings about its corporate structure. Second, the fact that the two companies had two directors in common was insufficient. Finally, there was no evidence that corporate formalities to establish and maintain separation had been breached.