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Parent Corporations and Their Subsidiaries' Liabilities: Guidelines

BY Stanley R. Weinberger
June 26, 2008

'[H]e might put on a hat ' and so escape.' Shakespeare, The Merry Wives of Windsor, IV, 2.

In February 2007 the Illinois Supreme Court in a unanimous decision held as a matter of first impression that a parent corporation could be directly liable for its negligence to the estates of two employees of its subsidiary corporation. Forsythe v. Clark USA, 864 N.E. 2nd 227.

The Illinois Court relied extensively on the unanimous 1998 opinion of the U.S. Supreme Court in U S v. Bestfoods, 524 U.S. 51. The court there ruled that a parent corporation could be held directly liable for the clean up costs under the Comprehensive Environ-mental Response, Compensation and Liability Act caused by its subsidiary's operation of a chemical plant owned by the subsidiary.

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