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District Court of New Jersey Dismisses Individual Owners of Company Who Were Not Personally Involved in Alleged Wrongdoing

What conduct by corporate owners and officers will subject them to individual liability? A recent decision from the federal district court in the District of New Jersey shows it must be something more than actions that are consistent with normal, routine business operations. In Circuit Lighting, Inc. v. Progressive Products, Inc., Civil Action No. 12-5612 (D.N.J. Aug. 23, 2013), the court ruled that two individual corporate owners and officers could not be held liable for acts of the corporation without some evidence that they personally participated in the alleged wrongful conduct. The court denied a motion to amend Circuit Lighting’s complaint to add as defendants Robert and Todd Allison, two owners and officers of the defendant corporations. The plaintiffs alleged that the two men had participated in the acts of fraud, conspiracy and conversion alleged in the complaint. The court ruled that the proposed amended complaint contained no valid basis for imposing individual liability on the two men. The only basis for their involvement was an ambiguous email that had been sent by a third party to the two men, and Todd Allison’s later invoice indicating that certain repairs to Circuit Lighting were not covered under warranty. The court found these allegations were not enough to establish that they affirmatively engaged in any of the wrongful conduct alleged in the complaint. Without any personal involvement or any basis for "piercing the corporate veil" to impose the corporation’s liability on the individuals, the court held that the proposed amended complaint against the two corporate officers was futile.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume IV, Number 22


About this Author

Vincent Gentile, Commercial Litigation Lawyer, Drinker Biddle

Vincent E. Gentile litigates a broad range of civil and commercial matters from trial through appeal. He has represented major corporate clients in complex, multiparty cases and individuals and small businesses in both state and federal courts.

Vince concentrates his practice on financial litigation including defense of accountants and auditors, and on shareholder disputes involving closely held corporations, including shareholder "oppression" cases and appraisal actions. He successfully tried and defended an appeal on one of the early seminal...

Stephen Long, Litigation lawyer, Drinker Biddle

Stephen R. Long is a trial lawyer with extensive experience in the litigation, trial, arbitration and mediation of complex commercial cases, employment disputes and the defense of professional negligence claims and asbestos injury product liability cases. He represents national law and accounting firms, Fortune 500 companies and liability, life and health insurers.

Steve has appeared in courts and administrative agencies across the country at trials, preliminary injunction hearings, dispositive motion hearings, appeal arguments and other proceedings. He has counseled corporate clients on employment matters and has handled numerous investigations of allegedly improper conduct in the workplace. Steve has defended accounting firms and individual auditors in securities class actions, “deepened insolvency” litigation and SEC investigations. He has also handled cases for large and small law firms in the defense of malpractice claims arising from transactional work, trust and estate engagements, IP matters and litigation. He recently tried to a successful conclusion a mesothelioma death case on behalf of a major valve manufacturer.

Karen A. Denys , Drinker Biddle, Construction & Real Estate Attorney

Karen A. Denys is counsel in the firm's Commercial Litigation Practice Group. Karen's practice focuses on construction contract drafting and litigation, real estate and land use litigation and general commercial litigation. 

Construction Law. The primary focus of Karen's practice is on construction law. Karen drafts and negotiates all forms of construction, architectural and engineering agreements (including agreements involving the design and construction of environmentally-sound green buildings) and counsels clients in project management and...