In Re Silicone Gel Breast Implants Products Liability Litigation

Name:In Re Silicone Gel Breast Implants Products Liability Litigation

Cite:887 F.Supp. 1447 (N.D. Ala. 1995).

• Background and Description:

Bristol-Myers Squibb is the sole shareholder of Medical Engineering Corp. (MEC) after purchase. MEC purchased 2 other companies, but all negotiations went through Bristol and paid for through a Bristol account. MEC's board of directors generally consisted of the Bristol VP, another Bristol exec, and MEC's president. The Bristol VP could not be outvoted and several former MEC presidents were completely out of the loop as to board meetings, several not even knowing of the board's existence. Bristol set the employment policies and wage scales for MEC. MEC submitted reviews and 5-year plans. MEC submitted budgets for approval. Bristol's name and logo appeared in the package inserts and on promotional products of MEC.

• Issues:

1. Did Bristol have corporate control over MEC?

2. Did Bristol have direct liability of MEC?

• Holding:

1. Yes. Many of the factors to be considered are present. This would be sufficient to pierce the corporate veil.
Factors to be considered are whether:
a. The parent and the subsidiary have common directors or officers
b. The parent and the subsidiary have common business departments
c. The parent and the subsidiary file consolidated financial statements and tax returns
d. The parent finances the subsidiary
e. The parent caused the incorporation of the subsidiary
f. The subsidiary operates with grossly inadequate capital
g. The parent pays the salaries and other expenses of the subsidiary
h. The subsidiary receives no business except that given to it by the parent
i. The parent uses the subsidiary's property as its own
j. The daily operations of the two corporations are not kept separate
k. The subsidiary does not observe the basic corporate formalities, such as keeping separate books and records and holding shareholder and board meetings.

Specifically in this case, the court as most persuaded by the grossly inadequate capital and the parent paying the expenses of the subsidiary.

2. Yes. The theory of negligent undertaking applies. By allowing the Bristol name to be applied to MEC packaging, Bristol held itself out as supporting the product. Bristol also held press releases speaking to the safety of the products at issue.