Harris v. American International Group, Inc.
2013 U.S. Dist. LEXIS 17981, 2013 WL 501354, 923 F. Supp. 2d 1299 (2013)
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Rule of Law:
For a court to exercise personal jurisdiction over a non-resident parent corporation based on its subsidiary's contacts with the forum state, the plaintiff must demonstrate that the parent exercises a 'pervasive level of control' over the subsidiary's day-to-day operations, not merely the typical financial oversight and consolidated reporting characteristic of a holding company relationship.
Facts:
- Plaintiff was injured in a motor vehicle collision caused by an uninsured motorist.
- Plaintiff held an automobile insurance policy with Granite State Insurance Company ('Granite') that provided uninsured and underinsured motorist coverage.
- Plaintiff submitted a claim to Granite under this policy.
- Granite denied Plaintiff's insurance claim.
- American International Group, Inc. ('AIG') is the ultimate parent holding company of a complex corporate structure that includes Granite.
- AIG is a Delaware corporation with its principal place of business in New York.
- AIG is not licensed to do business in Oklahoma, does not maintain an office, and does not own property in the state.
- As a holding company, AIG itself does not sell insurance policies, administer claims, or make coverage decisions.
Procedural Posture:
- Plaintiff filed a lawsuit against Granite State Insurance Company and American International Group, Inc. (AIG) in the United States District Court for the Western District of Oklahoma.
- The complaint asserted claims for breach of contract and bad faith, seeking to hold AIG liable under an alter ego theory.
- Defendant AIG filed a motion to dismiss the action against it for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2).
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Issue:
Under the alter ego theory, can a court exercise personal jurisdiction over a non-resident parent holding company based on its subsidiary's forum contacts, if the parent's control does not extend to the subsidiary's day-to-day business operations like issuing policies and handling claims?
Opinions:
Majority - Timothy D. DeGiusti
No. A court cannot exercise personal jurisdiction over a non-resident parent holding company unless the plaintiff shows the parent exercises pervasive control over the subsidiary’s day-to-day business activities. Merely demonstrating the financial relationships and oversight typical of a holding company structure is insufficient to disregard the separate corporate entities and impute the subsidiary's contacts to the parent. In this case, Plaintiff's evidence, including AIG's SEC filings and deposition testimony from other cases, shows a financial relationship but does not establish that AIG controls Granite's daily insurance operations, such as issuing policies or making claim decisions. The existence of a multi-layered corporate structure between AIG and Granite further weakens the alter ego argument. Therefore, the financial benefits and reporting consolidation inherent in a parent-subsidiary relationship do not meet the high standard of 'pervasive control' required to subject AIG to personal jurisdiction in Oklahoma.
Analysis:
This case clarifies the high bar for establishing personal jurisdiction over a parent corporation through an alter ego theory, particularly for multi-layered holding companies. It emphasizes that courts will respect corporate separateness for jurisdictional purposes unless there is evidence of control over the subsidiary's fundamental, day-to-day business, not just its finances. The decision signals that plaintiffs cannot rely on standard corporate disclosures like SEC filings alone to pierce the corporate veil for jurisdiction, but must provide specific proof of operational dominance. This reinforces a jurisdictional shield for large, complex corporations, requiring plaintiffs to target the specific subsidiary that caused the harm rather than its distant parent.
