Question Re: Walkovszky v. Carlton

What are the roles of agency law and respondeat superior in the Walkovszky v. Carlton case on page 207 of the text?

This is a good question about a not very well-explained issue raised by the court's confusing discussion of agency. Here's my attempt to clarify:

Agency is not really a proper part of the discussion here, in my view. The rule established, it appears, is that if a shareholder controls the corporation to further his or her own personal business, and not the corporation’s business, he or she will be held liable for the corporation’s acts and debts on a principal-agent theory. This sounds a lot like the traditional veil-piercing/alter ego rule, resulting (it would seem) in liability for all of the shareholders (not just Carlton).

The idea behind the court's agency rationale seems to be that the corporation acted as an agent of Carlton. To prove that, the concept would require that Carlton was using the corporation to further his own interests, and not those of the corporation. But corporations are set up to benefit the shareholders economically, and if you can find that the company was acting solely as an alter ego for the principal, you should be able to find liability under a veil-piercing theory. Also, in directing the corporation, Carlton was acting as a director or officer, not as a shareholder, so it's hard to see why agency liability would be proper here where there is a proper director's role.

The main things to take from this are the issues related to enterprise liability and veil piercing. Respondeat superior here should be appropriate in the basic tort context, holding the principal (e.g., taxi company) liable for injuries cause by an agents (e.g., a taxi driver), but should not add much to the veil piercing analysis other than providing additional support for an alter-ego theory.

Class Slides for April 8, 2009

I promised to make the class slides available for the April 8, 2009, class. Due to a variety of concerns, I will not post them here, but I will bring hard copies to class; if you are not in class today, I will make additional copies available from the faculty secretary, Karen Martin.