Illinois Jury Instruction - 1.9.5.2 Subsidiary As Alter Ego Of Parent Corporation

• Category: Federal - Jury Instructions
• State: Multi-State
• Control #: US-11CF-1-9-5-2
• Format: Word; Rich Text

Description

This form contains sample jury instructions, to be used across the United States. These questions are to be used only as a model, and should be altered to more perfectly fit your own cause of action needs. Illinois Jury Instruction — 1.9.5.2 Subsidiary As Alter Ego Of Parent Corporation In Illinois, the legal concept of "alter ego" is employed to analyze whether a subsidiary corporation can be considered the alter ego of its parent corporation. Illinois Jury Instruction 1.9.5.2 provides guidance to juries on this matter in civil cases. This instruction is invoked when one entity alleges that another entity should be held liable for the actions or debts of its subsidiary, contending that the subsidiary and parent corporation operate as a single entity and that the subsidiary is merely a "sham" or "instrumentality" of the parent corporation. The instruction outlines the factors the jury should consider when determining whether the subsidiary is indeed the alter ego of the parent corporation. These factors may include: 1. Unity of Ownership and Control: The jury should assess whether there is a significant overlap in ownership and control between the parent and subsidiary corporations. If the parent corporation effectively controls the subsidiary's decision-making and exercises influence over its operations, it strengthens the argument for alter ego liability. 2. Commingling of Finances: The jury should evaluate whether the finances of the parent and subsidiary corporations are intermingled or treated as separate entities. If funds are regularly transferred between the entities without proper documentation or accounting, it may indicate an alter ego relationship. 3. Inadequate Capitalization: The jury should consider whether the subsidiary is inadequately capitalized, resulting in it being unable to fulfill its financial obligations. An under capitalized subsidiary, often heavily reliant on the parent for financial support, may signify an alter ego scenario. 4. Failure to Observe Corporate Formalities: The jury should determine whether the parent and subsidiary corporations maintain proper corporate formalities, such as holding regular board meetings, documenting decisions, and observing required legal procedures. A failure to do so could be indicative of an alter ego relationship. 5. Diversion of Assets: The jury should assess whether the parent corporation uses the subsidiary's assets for its own purposes without appropriate compensation or records. This factor suggests that the subsidiary is being treated merely as an extension of the parent. It is important to note that Illinois Jury Instruction 1.9.5.2 does not establish a presumption of liability. Instead, it informs the jury about the factors they should consider in evaluating the alter ego claim. The jury must weigh the evidence presented in the case against these factors to determine whether the subsidiary corporation should be treated as the alter ego of the parent corporation. While Illinois Jury Instruction 1.9.5.2 provides general guidelines, different types of alter ego claims may arise depending on the specific circumstances of each case. These can include: 1. Single-Victim Alter Ego Claim: One claimant alleges that the subsidiary should be viewed as the alter ego of the parent corporation to hold the parent liable for the subsidiary's actions or debts, seeking to recover damages from the parent. 2. Multiple-Victim Alter Ego Claim: Multiple claimants assert alter ego liability against the parent corporation collectively, aiming to establish that the parent should be held responsible for the subsidiary's obligations to all claimants. 3. Piercing the Corporate Veil: This is a broader legal doctrine that may involve an alter ego claim. It allows a court to disregard the corporate entity of a subsidiary and hold the parent corporation directly liable for the subsidiary's actions or debts in situations involving fraud, injustice, or other inequitable circumstances. In summary, Illinois Jury Instruction 1.9.5.2 provides guidance to juries in determining whether a subsidiary corporation can be considered the alter ego of its parent corporation. By considering factors such as unity of ownership and control, commingling of finances, inadequate capitalization, failure to observe corporate formalities, and diversion of assets, the jury can assess whether the alter ego relationship exists and hold the parent corporation liable accordingly.

Illinois Jury Instruction — 1.9.5.2 Subsidiary As Alter Ego Of Parent Corporation In Illinois, the legal concept of "alter ego" is employed to analyze whether a subsidiary corporation can be considered the alter ego of its parent corporation. Illinois Jury Instruction 1.9.5.2 provides guidance to juries on this matter in civil cases. This instruction is invoked when one entity alleges that another entity should be held liable for the actions or debts of its subsidiary, contending that the subsidiary and parent corporation operate as a single entity and that the subsidiary is merely a "sham" or "instrumentality" of the parent corporation. The instruction outlines the factors the jury should consider when determining whether the subsidiary is indeed the alter ego of the parent corporation. These factors may include: 1. Unity of Ownership and Control: The jury should assess whether there is a significant overlap in ownership and control between the parent and subsidiary corporations. If the parent corporation effectively controls the subsidiary's decision-making and exercises influence over its operations, it strengthens the argument for alter ego liability. 2. Commingling of Finances: The jury should evaluate whether the finances of the parent and subsidiary corporations are intermingled or treated as separate entities. If funds are regularly transferred between the entities without proper documentation or accounting, it may indicate an alter ego relationship. 3. Inadequate Capitalization: The jury should consider whether the subsidiary is inadequately capitalized, resulting in it being unable to fulfill its financial obligations. An under capitalized subsidiary, often heavily reliant on the parent for financial support, may signify an alter ego scenario. 4. Failure to Observe Corporate Formalities: The jury should determine whether the parent and subsidiary corporations maintain proper corporate formalities, such as holding regular board meetings, documenting decisions, and observing required legal procedures. A failure to do so could be indicative of an alter ego relationship. 5. Diversion of Assets: The jury should assess whether the parent corporation uses the subsidiary's assets for its own purposes without appropriate compensation or records. This factor suggests that the subsidiary is being treated merely as an extension of the parent. It is important to note that Illinois Jury Instruction 1.9.5.2 does not establish a presumption of liability. Instead, it informs the jury about the factors they should consider in evaluating the alter ego claim. The jury must weigh the evidence presented in the case against these factors to determine whether the subsidiary corporation should be treated as the alter ego of the parent corporation. While Illinois Jury Instruction 1.9.5.2 provides general guidelines, different types of alter ego claims may arise depending on the specific circumstances of each case. These can include: 1. Single-Victim Alter Ego Claim: One claimant alleges that the subsidiary should be viewed as the alter ego of the parent corporation to hold the parent liable for the subsidiary's actions or debts, seeking to recover damages from the parent. 2. Multiple-Victim Alter Ego Claim: Multiple claimants assert alter ego liability against the parent corporation collectively, aiming to establish that the parent should be held responsible for the subsidiary's obligations to all claimants. 3. Piercing the Corporate Veil: This is a broader legal doctrine that may involve an alter ego claim. It allows a court to disregard the corporate entity of a subsidiary and hold the parent corporation directly liable for the subsidiary's actions or debts in situations involving fraud, injustice, or other inequitable circumstances. In summary, Illinois Jury Instruction 1.9.5.2 provides guidance to juries in determining whether a subsidiary corporation can be considered the alter ego of its parent corporation. By considering factors such as unity of ownership and control, commingling of finances, inadequate capitalization, failure to observe corporate formalities, and diversion of assets, the jury can assess whether the alter ego relationship exists and hold the parent corporation liable accordingly.