The company formerly known as Delavan was, as noted, the
manufacturer of the trailer at issue. Prior to the merger with
RAOI, Delavan was a wholly owned subsidiary of RSI. When RAOI
merged with Delavan, RAOI assumed the obligations and
liabilities of Delavan regarding trailers manufactured before
January 1, 1994.*fn5
RACG and RAOI belong to RSI's Automotive Carrier Division
("ACD"). The ACD is not a corporate entity. Rather, it is a
term used to describe a group of sister subsidiary trucking and
trucking-related service corporations of RACG and RAOI.*fn6
The ACD does not have offices, administrative staff, or
employees. All employees who are considered to be employees of
the ACD are actually employees of either RACG, RAOI, or another
trucking or trucking-related corporation within the ACD.
II. STANDARD — SUMMARY JUDGMENT
Under Fed.R.Civ.P. 56(c), summary judgment shall be granted if
the record shows that "there is no genuine issue as to any
material fact and that the moving party is entitled to a
judgment as a matter of law." Black v. Henry Pratt Co.,
778 F.2d 1278, 1281 (7th Cir. 1985). The moving party has the
burden of providing proper documentary evidence to show the
absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
A genuine issue of material fact exists when "there is
sufficient evidence favoring the nonmoving party for a jury to
return a verdict for that party." Anderson v. Liberty Lobby
Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202
(1986). Unquestionably, in determining whether a genuine issue
of material fact exists, the evidence is to be taken in the
light most favorable to the nonmoving party. Adickes v. S.H.
Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142
(1970). Once the moving party has met its burden, the opposing
party must come forward with specific evidence, not mere
allegations or denials of the pleadings, which demonstrates
that there is a genuine issue for trial. Howland v. Kilquist,
833 F.2d 639 (7th Cir. 1987).
The instant summary judgment motion pertains only to Joiner's
claims against RSI — the parent holding company. It appears to
the Court that Joiner offers three independent arguments as to
why RSI should remain in this case. First, Joiner claims that
RSI is the alter ego of its ACD — namely, RACG and RAOI (which
includes Delavan by merger). Second, Joiner claims that RSI
held itself out as the "apparent manufacturer" of the alleged
defective trailer; thus, RSI should be held liable as if it
were in fact the manufacturer. Third, Joiner claims that RSI
had the right to control the products and/or services of its
subsidiaries — namely, Delavan (the manufacturer of the
trailer) — thus, RSI should be held liable for the injuries
resulting from the alleged defective trailer. Each argument
will be addressed in turn.
A. Alter Ego
Before discussing the merits of Joiner's alter ego argument,
the Court would like to comment on an issue the parties
ignored. Both parties have assumed, without discussing, that
Illinois law applies to the alter ego issue. It appears to the
Court, however, that the parties' assumption is likely
erroneous. Since RSI is the parent corporation and RSI is
incorporated in the State of Florida, under Illinois choice of
law principles it appears that Florida law governs disputes
surrounding whether RSI's corporate form will be disregarded —
not Illinois law.*fn7 Mark I, Inc.
v. Gruber, 38 F.3d 369, 371 (7th Cir. 1994) (Analyzing
Connecticut law to determine whether a Connecticut
corporation's veil should be pierced); Kolson v. Vembu,
869 F. Supp. 1315, 1323 (N.D.Ill. 1994) (Analyzing Wisconsin law to
determine whether the corporate veil should be pierced where
corporation was incorporated and had principal place of
business in Wisconsin and sole shareholder was a citizen of
Wisconsin); United Nat'l Records Inc. v. MCA, Inc.,
616 F. Supp. 1429, 1431 (N.D.Ill. 1985) ("In this case, [the parent
company] is a California corporation, . . . California law must
be utilized" to determine if the parent is liable for the acts
of its subsidiary.); Heyman v. Beatrice Co., No. 89-C-7381,
1995 WL 151872 (N.D.Ill. April 3, 1995).
Regardless, since both parties assume that Illinois law applies
to the alter ego issue, the Court will not disturb that
assumption, nor will it hold otherwise. Illinois law therefore
applies. Vukadinovich v. McCarthy, 59 F.3d 58, 62 (7th Cir.
1995) ("[C]hoice of law, not being jurisdictional, is normally
. . . waivable."); Wood v. Mid-Valley, Inc., 942 F.2d 425,
426-27 (7th Cir. 1991) ("The operative rule is that when
neither party raises a conflict of law issue in a diversity
case, the federal court simply applies the law of the state in
which the federal court sits. * * * [The] courts are not
required to create issues where the parties agree. * * * Courts
do not worry about conflict of laws unless the parties disagree
on which state's law appalies.").
In the State of Illinois (as in every state), "[a] corporation
is a legal entity separate and distinct from its shareholders,
directors, and officers." In re Rehabilitation of Centaur Ins.
Co., 158 Ill.2d 166, 198 Ill. Dec. 404, 406, 632 N.E.2d 1015,
1017 (1994). That same principle "applies even where one
corporation wholly owns another and the two have mutual
dealings." Id. To disregard that well-established principle,
a plaintiff has a "substantial burden" to overcome. Kelsey
Axle & Brake Div. v. Presco Plastics, 187 Ill. App.3d 393, 135
Ill.Dec. 4, 8, 543 N.E.2d 239, 243 (1989). Indeed, "in general,
a parent corporation may not be held to account for the
liabilities of a subsidiary unless the legal separateness of
parent and subsidiary has been disregarded in a wide range of
corporate matters." Esmark Inc. v. N.L.R.B., 887 F.2d 739,
753 (7th Cir. 1989).
Pursuant to the Illinois alter ego doctrine, the courts will
pierce the corporate veil only when: (1) there is "such unity
of interest and ownership that the separate personalities of
the [corporations] no longer exist;" and (2) the circumstances
are "such that adherence to the fiction of separate corporation
existence would sanction a fraud or promote injustice."*fn8
Lumpkin v. Envirodyne Indus., Inc., 933 F.2d 449, 462 (7th
Cir. 1991), cert. denied, 502 U.S. 939, 112 S.Ct. 373, 116
L.Ed.2d 324 (1991); accord, Hystro Products Inc. v. MNP
Corp., 18 F.3d 1384, 1388-89 (7th Cir. 1994).
1. Unity of Interest and Ownership
Regarding the first element, the plaintiff must show the degree
of control by the parent corporation by presenting evidence of:
(1) misrepresentation; (2) commingling of funds, assets, or
identities; (3) undercapitalization; (4) failure to operate at
arms length; and (5) failure to comply with corporate
formalities. Lumpkin, 933 F.2d at 463 (citing, Koch Refining
v. Farmers Union Central Exch. Inc., 831 F.2d 1339, 1345 (7th
There is no argument by Joiner of misrepresentation, nor is
there an argument that
any of the subsidiaries within RSI's ACD — namely RACG and
RAOI (and Delavan, the manufacturer of the trailer at issue) —
are or were ever undercapitalized.*fn10 To the contrary, it
appears the subsidiaries were and continue to be very
profitable — they have no debt and always maintain a positive
Additionally, there is no argument that RSI or any of its
subsidiaries ever failed to comply with corporate formalities.
Indeed, the unchallenged affidavit testimony of Serge Martin
(Assistant General Counsel of RSI) and Michael Wagner
(Executive Vice President of RACG) established that: (1) the
corporate minute books of RSI, RACG, and RAOI are maintained
separately; (2) there are no joint meetings of the RSI, RACG,
RAOI (including Delavan) Boards of Directors; (3) RSI's
corporate offices are in Miami, Florida, while RACG and RAOI's
corporate offices are in Troy, Michigan; (4) RACG and RAOI
maintain financial records and bank accounts separate and
distinct from RSI; (5) the subsidiaries finance their
day-to-day operations through their own cash flow; and (6) RSI
does not get involved in the day-to-day operations of any of
the companies in the ACD.*fn11 Finally, there is no argument
that RSI and its subsidiaries failed to operate at arms length
or commingled funds or assets.
It appears Joiner's sole argument regarding the unity of
interest issue involves a commingling of identities.
Specifically, due to the amount of control exerted, Joiner
claims that RSI and its ACD — namely RACG and RAOI — are in
reality one entity. Joiner offers numerous instances of alleged
improper control by RSI over its ACD. As discussed below,
however, the Court does not find any of the alleged instances
of control improper. Indeed, the Court finds that the alleged
improper acts amount to nothing more than a parent corporation
exercising permissible control over its corporate offspring.
First, Joiner notes that RSI owns 100% of the stock of RACG,
which in turn owns 100% of the stock of RAOI, and the
corporations have common officers and directors. Of course, as
noted by the Seventh Circuit several decades ago, such factors
are "common business practice and exist in most parent and
subsidiary relationships." Steven v. Roscoe Turner
Aeronautical Corp., 324 F.2d 157, 161 (7th Cir. 1963);
accord, Main Bank of Chicago v. Baker, 86 Ill.2d 188, 56
Ill.Dec. 14, 21, 427 N.E.2d 94, 101 (1981); Logal v. Inland
Steel Indus., Inc., 209 Ill. App.3d 304, 154 Ill.Dec. 152,
157, 568 N.E.2d 152, 157 (1991) ("To hold otherwise would
render virtually every subsidiary the alter ego of its
parent."); Fletcher v. Atex, Inc., 68 F.3d 1451, 1460 (2nd
Cir. 1995) ("Parents and subsidiaries frequently have
overlapping boards of directors while maintaining separate
business operations."). Accordingly, based on the paltry record
before the Court on this particular issue, we cannot find
anything improper here.
Similarly, Joiner is troubled by the fact that RSI elects the
officers of the ACD. Of course, as discussed, above, many
parent/subsidiary relationships have common officers, i.e.,
they serve as officers of both the parent and subsidiary.
Additionally, as sole shareholder, RSI has the power to elect
the Board of Directors of its wholly owned subsidiaries and, of
course, the elected directors generally select the officers.
Thus, RSI could achieve the same result by electing the wholly
owned subsidiaries' directors (which may of course consist of
some of RSI's officers and/or directors) and those directors
could subsequently elect the same officers. Granted, the fact
that RSI — instead of the subsidiaries' directors — elects the
officers of the ACD is atypical of wholly-independent
companies. But, that fact alone — without
more — is insufficient to pierce the corporate veil.*fn12
Especially, considering the fact that there is no evidence that
RSI exerts improper control over the officers of the ACD.
Second, Joiner claims RSI's transfer of funds to the ACD
subsidiaries evidences improper control. The unchallenged
deposition testimony of Anthony Burns (President and Chief
Executive Officer of RSI) established that — because the
subsidiaries within the ACD are on a positive cash flow and
have no debt — the only time cash is infused by RSI within the
respective subsidiaries is when a particular subsidiary seeks
to make an acquisition, i.e., to purchase another company.
Burns Dep. pgs. 20-22. Such transactions reflect nothing more
than additional and continuing investments by RSI in its
We also have no problem with the fact that RSI's approval is
required before the purchase by the particular subsidiary.
Indeed, several courts have acknowledged that it is entirely
appropriate for a parent corporation to approve major capital
expenditures of its subsidiaries. See, e.g., Fletcher, 68
F.3d at 1459-60 ("Indeed this type of conduct is typical of a
majority shareholder or parent corporation."); Phoenix Canada
Oil Co. Ltd. v. Texaco, Inc., 842 F.2d 1466, 1476 (3rd Cir.
1988) (Subsidiaries required "to secure approval from their
parent corporations for large investments and acquisitions or
disposals of major assets."), cert. denied, 488 U.S. 908, 109
S.Ct. 259, 102 L.Ed.2d 247 (1988); Akzona Inc. v. E.I. Du Pont
De Nemours & Co., 607 F. Supp. 227, 238 (D.C.Del. 1984) (Parent
corporation "oversees and approves major capital
Third, Joiner claims that the interaction between RSI and its
subsidiaries regarding the annual capital budgeting process is
evidence of improper control. The testimony of Mr. Burns
established that RSI approves the annual capital budgets of its
subsidiaries — the subsidiaries and RSI meet and they agree on
a capital budget. The annual capital budget apparently
represents the costs of purchasing new equipment and vehicles.
Mr. Burns also testified that the individual subsidiaries
supply the funds (from their own earnings) for their capital
budgets. Burns Dep. pg. 177: Similar to RSI's approval of its
subsidiaries' acquisitions, we find nothing improper with a
parent approving its subsidiaries' capital budgets, especially
considering Mr. Burns' unchallenged testimony that RSI has
never reduced or denied a subsidiary's capital budget request.
Burns Dep. pgs. 25-29.*fn13
Fourth, Joiner apparently has a problem with the
subsidiaries' transfer of cash to RSI. Mr. Burns' testimony
established that the subsidiaries dictate the amount of money
they need to fund their respective operations. Burns. Dep. pgs.
20-21. The funds in excess of that amount are transferred to
RSI in the form of a dividend. Such a transaction represents
nothing more than a return on an investment. Indeed, that's why
RSI owns other corporations — to make money. Surely, RSI cannot
make money from its investments in other corporations unless
those corporations transfer their respective profits to RSI.
Next, Joiner argues that RSI's implementation of a safety
policy, an environmental policy, a code of conduct, and a code
of ethics evidences improper control. Mr. Burns' unchallenged
testimony established that RSI has a general safety
policy,*fn14 an environmental policy, and a code of conduct
and ethics*fn15 which each subsidiary must adhere
to. Mr. Burns' testimony also provided, however, that each
subsidiary is free to expand on RSI's general policies as they
see fit and to adapt such policies to their individual
environments. Burns Dep. pgs. 46-52, 144-45. The Court has no
problem with RSI's implementation of such policies throughout
its subsidiaries. Indeed, such policies demonstrate sound
business judgment by a parent corporation. Fletcher v. Atex,
Inc., 861 F. Supp. 242, 245 (S.D.N.Y. 1994) ("[I]t is entirely
appropriate for a parent corporation to approve major . . .
policies involving the subsidiary . . . ."), aff'd,
68 F.3d 1451 (2nd Cir. 1995).
Similarly, RSI reviews the longterm strategies and goals of
its subsidiaries to assure that such strategies and goals are
in accordance and in line with RSI's expectations. The Court is
not troubled by RSI's actions. Indeed, once again, such actions
demonstrate responsible business judgment by a parent
corporation. Id. ("[I]t is entirely appropriate for a parent
corporation to approve major policies involving the
subsidiary. . . ."). There is no evidence that RSI gets involved
in the day-to-day operations of the subsidiaries to aid or
support the subsidiaries in reaching those goals.
Next, Joiner claims that RSI provides services to its
subsidiaries. Joiner is correct, RSI does provide services to
its subsidiaries. The unchallenged testimony of Mr. Burns and
affidavit testimony of Mr. Martin provide, however, that RSI
offers centralized services — such as legal services, printing
services, and cash management services — to its subsidiaries
for a fee. Mr. Burns also noted that the subsidiaries are not
forced to obtain the services through RSI, rather, they have
the option to "go outside" RSI and obtain such services from
another source. Burns. Dep. pg. 175. We find nothing improper
here. The fact that RSI requires the subsidiaries to pay a fee
and allows them to obtain the services from another source
supports RSI's argument that it is not the alter ego of any of
Additionally, Joiner claims that RSI sets the prices charged
by the subsidiaries within the ACD. Mr. Burns' testimony and
Mr. Wagner's affidavit provide that RSI does not control the
prices charged by the subsidiaries within the ACD. The sole
evidence in support of Joiner's claim is a statement by Mr.
Burns in a 1990 periodical: "Ryder has strengthened our stride,
quickened our pace in our marketing activities and raised some
prices, such as in our auto carriage business." That statement
— clearly referring to "Ryder" as a family of corporations — is
insufficient, by itself, to create a factual dispute as to
whether RSI sets the prices its subsidiaries charge.*fn16
Indeed, it provides no evidence that RSI gets involved in the
pricing decisions of its subsidiaries.
Finally, Joiner devotes most of his response to discussing
RSI's creation of a Task Force pertaining to safety issues
within the subsidiary corporations. The deposition testimony of
James Herron (Senior Executive Vice President and General
Counsel of RSI) established that RSI was concerned with the
rising workers' compensation costs of its subsidiaries. Herron
Dep. pg. 10. Accordingly, RSI directed Mr. Herron to organize a
Task Force to analyze the workers' compensation costs
throughout RSI's subsidiaries and draft a plan or policy to
reduce such costs. Herron Dep. pg. 10. The Task Force's purpose
was to raise consciousness and awareness about safety and
accidents throughout the RSI subsidiaries. Herron Dep. pg. 17.
Mr. Herron was joined on the Task Force with senior members
from each of RSI's divisions. Herron Dep. pg. 15. As a result
of the Task Force's efforts, a safety policy was created and
adopted by RSI.
The Court does not find problematic the creation by RSI of a
Task Force which was in existence only for a limited period
time. RSI directed its subsidiaries to join together with it to
seek to improve safety and reduce injuries and costs associated
with work-related accidents.*fn17 Without more, the Court
does not believe the creation of such a short-lived Task Force
evidences improper control on RSI's part.*fn18 If anything,
RSI should be applauded for its attempt to improve safety
throughout its "family" of corporations.
In summary, the Court cannot conclude that any of the
subsidiaries within the ACD (or the division as a whole) are
the alter ego of RSI. Granted, RSI is active in the affairs of
its subsidiaries; but such activity does not infringe
improperly upon the autonomy of the individual subsidiaries.
See Esmark, Inc. v. N.L.R.B., 887 F.2d 739, 759 (7th Cir.
1989) ("Parents and dominant shareholders are almost always
`active participants' in the affairs of an owned corporation.
And, in the usual case, the exercise of such control over a
subsidiary's actions is entirely permissible and does not
result in the owner's personal liability.").
The Court grants that RSI is pushing the limits in some
aspects; but, it also appears that RSI exerts only "general"
control over its subsidiaries. That is, RSI ensures that its
subsidiaries are on the "right" path: RSI approved their
budgets and major capital expenditures, adopted general and
long-term strategic policies, established a Task Force to
improve safety, et cetera. That is not improper.
Importantly, there is no evidence that RSI interferes with the
day-to-day management or operations of any of the subsidiaries.
RSI allows the subsidiaries to manage their day-to-day
activities as each sees fit. Thus, in that sense, RSI respects
the separateness of the corporations. In short, based on the
largely undeveloped record before us, the Court cannot conclude
that the requisite "unity of interest" exists between RSI and
any of its subsidiaries such that RSI's corporate veil should
be justifiably pierced.*fn19
2. Promote Injustice
Even if the unity of interest prong is satisfied, to pierce
RSI's corporate veil Joiner is also "required to prove that
adherence to the fiction of separate identities would
`sanction a fraud or promote injustice.'" Hystro Products,
Inc. v. MNP Corp., 18 F.3d 1384, 1390 (7th Cir. 1994). In
Hystro the Seventh Circuit noted that in order to satisfy the
second requirement, "some element of unfairness, something akin
to fraud or deception, or the existence of a compelling public
interest must be present in order to disregard the corporate
Assuming RSI is the alter ego of its ACD (or any of its
subsidiaries therein), it does not appear that Joiner could
satisfy the second requirement. As noted by the Seventh Circuit
in Sea-Land Services, Inc. v. Pepper Source, 941 F.2d 519,
522 (7th Cir. 1991), plaintiffs generally initiate claims
against the parent corporation because of the prospect that the
subsidiary will be unable to satisfy a judgment. But, that is
not the case here. Indeed, the subsidiaries within RSI's ACD
are very profitable — each could easily satisfy a large
judgment against it. Although the undercapitalization of a
subsidiary alone is not enough to establish the second
requirement, id. at 522-23, it is generally considered a
prerequisite.*fn20 Thus, considering that each subsidiary
within RSI's ACD is very profitable and could readily satisfy a
large judgment, why should the Court pierce RSI's veil? What
fraud or injustice would ensue?
Joiner offers a two-sentence argument — unsupported by
authority or citation to the record — as to why an injustice
would result.*fn21 The extent of Joiner's argument is as
The corporate structure of this family of corporations
encourages the employers to forego trailer modifications to
render the equipment safer for the sole purpose of enabling
those subsidiaries to pay higher divisions to RSI. This, in
turn, results in the allocation by RSI of increased operating
expenses and the issuance of higher bonuses to those subsidiary
officers and directors.
The Court is uncertain as to the substance of Joiner's
argument.*fn22 It appears Joiner is arguing that RSI, as a
whole, jeopardizes safety for profits. If so, a similar
conclusory argument was recently rejected by the Second
Circuit. Fletcher, 68 F.3d at 1461 ("[T]he plaintiffs offer
nothing more than the bare assertion that Kodak `exploited'
Atex `to generate profits but not to safeguard safety.'").
Or, is Joiner attempting to argue that RSI directed Delavan or
its other subsidiaries to forego trailer modifications
(assuming the trailer is defective) in order to reduce expenses
and promote greater profits? But, there is no evidence that RSI
was ever involved in the design of the Delavan trailers or that
RSI ever instructed its subsidiaries (which purchase Delavan
trailers) to forego trailer modifications. Indeed, the
unchallenged testimony of Mr. Burns indicated that the
subsidiaries could modify the trailers with their own funds
without seeking permission from RSI. Burns Dep. pg. 31. Mr.
Burns also indicated that RSI has no involvement with its
subsidiaries' expenses pertaining to trailer maintenance. Burns
Dep. pgs. 177-78. Accordingly, the Court concludes that Joiner
has also failed to satisfy the second prong of the alter ego
B. Apparent Manufacturer
Next, Joiner claims that RSI is the "apparent manufacturer" of
the Delavan trailers and, therefore, it should be liable as if
it manufactured the trailer. Under the apparent manufacturer
doctrine — a doctrine unique to strict products liability
jurisprudence — "a company which holds itself out to the public
as the manufacturer of a product is liable for the injuries
caused by that product if it is found to be unreasonably
dangerous." Ogg v. City of Springfield, 121 Ill. App.3d 25,
76 Ill.Dec. 531, 536, 458 N.E.2d 1331, 1336 (1984) accord,
Root v. JH Indus., Inc., 277 Ill. App.3d 502, 214 Ill.Dec. 4,
660 N.E.2d 195 (1995). "The primary rationale for imposing
liability on the apparent manufacturer of a defective product
is that it has induced the purchasing public to believe that
it is the actual manufacturer, and to act on this belief — that
is, to purchase the product in reliance on the apparent
manufacturer's reputation and skill in making it." Hebel v.
Sherman Equip., 92 Ill.2d 368, 65 Ill.Dec. 888, 892,
442 N.E.2d 199, 203 (1982) (emphasis in original).
Based on a review of the rationale underlying the apparent
manufacturer doctrine, it is clear that Joiner's argument is
flawed fundamentally and RSI cannot be considered the apparent
manufacturer of the trailers manufactured by Delavan. As
stressed by the Illinois Supreme Court, whether a holding out
has occurred must be judged from the viewpoint of the
purchasing public." Hebel, 65 Ill.Dec. at 892, 442 N.E.2d at
203 (emphasis ours). Here, the "purchasing public" is CAT —
Joiner's employer. CAT purchased the trailer at issue directly
from Delavan.*fn23 Certainly, CAT — a member of the "family"
— was aware that Delavan manufactured the trailer, and not RSI.
Is Joiner attempting to argue that CAT — a member of the Ryder
"family" — does not realize that RSI is a holding company, but
instead believes that RSI manufactures trailers?
Thus, because RSI did not hold itself out to CAT as the
manufacturer of the trailer, i.e., RSI did not induce CAT to
purchase the trailer on the belief that RSI manufactured it,
RSI cannot logically be the apparent manufacturer of the
C. Right to control?
A common theme discussed in Joiner's response is that RSI had
the ability or right to control its subsidiaries. Specifically,
Joiner claims that RSI had the right to control the products
and/or services of its subsidiaries — namely, Delavan — thus,
RSI should be responsible for the injuries resulting from the
alleged defective Delavan trailer.
The Court does not understand Joiner's argument. If Joiner is
arguing that a parent corporation should be held accountable
for its subsidiaries' products merely because the parent has
the right, the power, or the ability to control its
subsidiaries, such an argument is untenable. Indeed, every
corporation — by virtue of its ownership interest — has the
right, the power, and the ability to control the products
of its subsidiary. In other words, the parent owns the
subsidiary, it can do anything it wants with its subsidiary —
the subsidiary has no choice but to obey. See Esmark, Inc. v.
N.L.R.B., 887 F.2d 739, 757 (7th Cir. 1989) ("A parent
corporation, by virtue of its ownership interest, may direct a
subsidiary's actions, and the subsidiary will have no choice
but to obey. A parent corporation may disregard the
subsidiary's independence at its whim.").
Or, perhaps Joiner is arguing that RSI was aware that Delavan
trailers were potentially dangerous and thus should be held
accountable for failing to order Delavan or other subsidiaries
to redesign or modify the allegedly defective trailers. If so,
Joiner essentially is asking the Court to impose upon RSI a
"duty to control" the acts of its subsidiaries.
The Court could not locate a single reported case where such a
duty was imposed. The Eleventh Circuit recently certified that
issue to the Supreme Court of Alabama. In re Birmingham
Asbestos Litig., 997 F.2d 827 (11th Cir. 1993). The Alabama
Supreme Court held that "the `duty to control' could not be
used to hold a parent corporation liable for the acts of its
subsidiary." Id. at 828-29; accord, Fletcher, 861 F. Supp.
at 247 ("[A]bsent a `special relationship' between Kodak and
Atex . . . Kodak had no duty to control Atex's conduct to
prevent harm to the plaintiffs. The parent/subsidiary
relationship is not, without more, a `special relationship' in
this sense.") (emphasis ours); In re Silicone Gel Breast
Implants Products Litig., 837 F. Supp. 1128, 1140 (N.D.Ala.
1993) (Refusing to impose a "duty by shareholders — or at least
corporate shareholders of a close corporation — to supervise
activities of the corporation that can be reasonably
anticipated to be injurious to third persons."); see
Restatement (Second) of Torts § 315 cmt. b (1965) ("[T]he
actor is not subject to liability if he fails, either
intentionally or through inadvertence, to exercise his ability
so to control the actions of third persons as to protect
another from even the most serious harm. This is true although
the actor realizes that he has the ability to control the
conduct of a third person, and could do so with only the most
trivial of efforts and without any inconvenience to himself.")
RSI is certainly active in the affairs of its subsidiaries.
But, the control it asserts is not improper. RSI establishes
general policies and ensures that its subsidiaries stay on the
right path. There is nothing wrong with that. Indeed, RSI is
merely acting as a responsible parent. Importantly, RSI does
not get involved in the day-to-day activities or management of
the subsidiaries. Regard less, Joiner has failed to show why an
injustice would ensue if the Court declined to pierce RSI's
The apparent manufacturer doctrine has no application in this
case. Indeed, CAT — a member of the Ryder "family" — was
certainly aware of the fact that Delavan manufactured the
trailer, not RSI. Thus, RSI did not induce CAT to purchase the
trailer on the belief that RSI manufactured it.
Finally, RSI — as every parent corporation does — obviously has
the power to control its subsidiaries. In fact, RSI owns them
and RSI can "force" them to do anything it wants. That power,
by itself, however, does not impose a duty upon RSI. Only if
RSI abused the power — by exerting too much control — could it
be held liable for the conduct of its subsidiaries as an alter
Such abusive control is not present here.
Ergo, RSI's motion for summary judgment is ALLOWED.