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View Diary: Senate Democrats mull response to Hobby Lobby decision (143 comments)

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  •  SCOTUS Just Tenderized the Corporate Veil (8+ / 0-)

    If privately held corporations are not really separate entities from the owners, then the rationale for limited liability no longer makes sense. If corporate ownership can reach through the corporate veil to get the company exempted from legal requirements on religious grounds, then victims of corporate torts should also be able to be compensated from the private funds of corporate ownership. The Supreme Court may have just inadvertently opened the floodgates for a full-on assault on corporate personhood. Democratic leadership should seize the opportunity for payback. The biggest loser in the Hobby Lobby case may turn out to be privately held Koch Industries.

    •  Unlikely (4+ / 0-)

      It's actually pretty rare that the victims of corporate torts lose out because the company goes bankrupt, at least, for all but the smallest corporations.  Koch Industries has a whole lot of money and assets to pay its torts.  And since it's all privately held, there's not that much difference anyway.  

      But besides that, the corporate veil isn't a creation of federal law or the Constitution, it's a specific statutory choice made by all 50 states.  Before this or after it, state legislatures could pull it away.  

      •  It's exactly that received wisdom... (2+ / 0-)
        Recommended by:
        PsychoSavannah, Yonit

        ...that SCOTUS is sweeping away. Don't think in terms of specific legal rules but the rationale behind them. The majority on the court was a bit too results-oriented for its own good. Don't make their mistake your own.

        •  Rationale and $3 will get you a Starbucks coffee (0+ / 0-)

          What practical results do you think will come from this "sweeping away" of rationale?

          Do you think the states will start passing laws eliminating limited liability?

          It would be amusing to see it happen in one state.  Every corporation would pull out.  Whichever state went first would suddenly have an economy that looked like North Korea's.

          •  Well... (0+ / 0-)

            ...I'm not sure what this "sweeping away of rationale" you speak of is. Perhaps you were homeschooled. At law, a decision's power comes from its underlying reasoning, the rationale that supports the majority's ruling. My point was that the SC majority got the result they wanted by weakening the corporate veil. That's going to have unintended consequences where closely held private companies' policies create criminal or tortious liabilities. It may now become possible for tort victims to reach through the corporate veil from their side to collect damages directly from the principals rather tan just the corporate agent. No legislative act would be necessary--just an enterprising trail lawyer.

    •  that's not what they held, though. (1+ / 0-)
      Recommended by:
      nextstep

      They held that RFRA applies to corps, which has literally nothing to do with limited liability.

      •  You missed it. (0+ / 0-)

        If the majority applied a rigorous corporate personality analysis (the root of limited liability), then they couldn't have gotten the result they wanted. So, instead, they applied the older contract analysis where the corporation is reducible in purpose to the ends of the persons forming / controlling it. That leaves less room for absolutism about the corporate veil and may limit limited liability. It's only a matter of time before the shield SCOTUS created for Hobby Lobby ownership becomes a sword for those harmed by private companies with ideology-driven practices. Keep your eyes open for a case where the principals' values drive a crime or tort on the part of the corporate agent. A good argument can now be made that the principals (owners) should be personally liable. (If you want to see how this works compare Lord Lindley's contract approach to liability in AC to the eventual HL decision in Salomon v Salomon & Co. (1897)). SCOTUS just muddled the Halisbury / Macnaughten understanding of the corporate person--at least with respect to closely held private companies.

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