Enterprise liability is a
legal doctrine
A legal doctrine is a framework, set of rules, procedural steps, or test, often established through precedent in the common law, through which judgments can be determined in a given legal case. A doctrine comes about when a judge makes a ruling ...
under which individual entities (for example, otherwise legally unrelated corporations or people) can be held
jointly liable for some action on the basis of being part of a shared enterprise. Enterprise liability is a form of
secondary liability
Secondary liability, or indirect infringement, arises when a party materially contributes to, facilitates, induces, or is otherwise responsible for directly infringing acts carried out by another party. The US has statutorily codified secondary li ...
.
United States
Suppose high-risk manufacturing activities are shunted into one corporation, while a second "marketing" corporation keeps all the profits. In the case that someone was injured by the manufacturing activity, a court might apply the enterprise liability doctrine to allow recovery from the marketing corporation, which holds all the assets.
The doctrine emerged from litigation in the wake of the 1977
Beverly Hills Supper Club fire
The Beverly Hills Supper Club fire in Southgate, Kentucky, is the seventh deadliest nightclub fire in history. It occurred on the night of May 28, 1977, during the Memorial Day holiday weekend. A total of 165 people died and more than 200 were i ...
.
[Alexander, Roberta Sue (2005). ''A place of recourse: a history of the U.S. District Court for the Southern District of Ohio, 1803-2003.'' Ohio University Press, ][''In Re: Beverly Hills Fire Litigation'', 695 F.2d 207 (6th Cir. 1982), cert, denied 461 US 929 (1983)][''In Re: Beverly Hills Fire Litigation'', 672 S.W.2d 922 (Ky.1984)] The doctrine is examined in ''
Walkovsky v. Carlton'', 223 N.E.2d 6 (
N.Y. 1966).
Enterprise Liability has been used as alternative terminology for
Industry-Wide Liability.
[Sindell v. Abbott Laboratories, 607 P.2d 924 (Cal. 1980)]
''
Sindell v. Abbott Laboratories
Sindell v. Abbott Laboratories, (1980), was a landmark products liability decision of the Supreme Court of California which pioneered the doctrine of market share liability.
Background
The plaintiff in ''Sindell'' was a young woman who devel ...
'', 607 P.2d 924 (Cal. 1980) cites ''
Hall v. E.I Du Pont De Nemours & Co., Inc.'', 345 F.Supp. 353 (E.D.N.Y. 1972) to explain Industry-Wide Liability, which was equated to Enterprise Liability:
The concept of Enterprise Liability is distinguished from
Market share liability, a legal doctrine introduced in ''Sindell v. Abbott Laboratories''.
United Kingdom
The idea of enterprise liability was supported by the Court of Appeal in ''
DHN Food Distributors Ltd v Tower Hamlets London Borough Council'', a case on
piercing the corporate veil
Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is s ...
.
More generally in the law of
tort
A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...
, the principle has been argued to have been recognised, albeit indirectly, by cases such as ''
Lister v Hesley Hall Ltd
''Lister v Hesley Hall Ltd'' 001UKHL 22is an English tort law case, creating a new precedent for finding where an employer is vicarious liability, vicariously liable for the torts of their employees. Prior to this decision, it had been found tha ...
''. A general principle of joint liability in tort between different contractors that work in a supply chain was also recognised in ''
Viasystems Ltd v Thermal Transfer Ltd
is an English tort law and UK labour law case, which held that a worker can have more than one employer at the same time, who will be vicariously liable for the worker.
Facts
Viasystems Ltd, a printed circuit board manufacturer with two factori ...
''.
005
''005'' is a 1981 arcade game by Sega. They advertised it as the first of their RasterScan Convert-a-Game series, designed so that it could be changed into another game in minutes "at a substantial savings". It is one of the first examples of a ...
EWCA Civ 1151
See also
*
UK company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary lega ...
*
US corporate law
United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governa ...
Notes
{{reflist
References
*
AA Berle
Adolf Augustus Berle Jr. (; January 29, 1895 – February 17, 1971) was an American lawyer, educator, writer, and diplomat. He was the author of ''The Modern Corporation and Private Property'', a groundbreaking work on corporate governance, a pro ...
, 'The Theory of Enterprise Entity' (1947
47(3) Columbia Law Review 343
Public liability
Legal doctrines and principles