Deluded SCO CEO on witness stand: "Linux is a copy of UNIX" (ars technica)

Deluded SCO CEO on witness stand: "Linux is a copy of UNIX" (ars technica)

Posted May 2, 2008 18:03 UTC (Fri) by rickmoen (subscriber, #6943)
In reply to: Deluded SCO CEO on witness stand: "Linux is a copy of UNIX" (ars technica) by sbergman27
Parent article: Deluded SCO CEO on witness stand: "Linux is a copy of UNIX" (ars technica)

sbergman27 wrote:

Courts are exceedingly reluctant to pierce the corporate veil, placing liability upon individuals acting on behalf of the corporation. However, if an individual, acting as an officer of a corporation, knowingly lies to the court... how is that handled?

Holding corporate officers accountable for deeds they actually do is not "piercing the corporate veil". That phrase refers to assigning liability directly to corporate shareholders (as owners) for deeds of the corporate entity and its agents (officers), without any showing of their personal involvement, which assignment by law cannot be done unless there's a strong showing that the corporate entity was a sham with no economic substance (i.e., a vehicle for deflecting liability, by hiding personal dealings within a corporate shell). I half-remember from my law classes[1] one of the leading cases of "piercing" involved a city where taxicabs were set up as allegedly independent corporations, one per cab, to limit liability exposure from car-accident plaintiffs. The court applied the sued mini-corporation's liabilities to its owners, holding that it was the "alter ego" of that larger owner.

The larger point is that it's always eminently possible sue corporate officers (and corporate directors) for deeds in which they have actual, provable, personal involvement. That's the whole reason why they tend to carry a million US dollars or more in directors' liability insurance.

(This meme that a corporate entity automatically totally shields from liability anyone associated with the corporation, even for deeds they were personally involved in, seems to have passed around the Linux community for a while. I don't know why, but I've been doing my part to point out this potentially dangerous error, e.g., in the Linux User Group HOWTO (see section "Common Misconceptions Debunked")

In short, any corporate officer who commits perjury in court is potentially in big trouble, exactly to the degree he or she would be, had he or she done the same thing in an individual capacity.

Rick Moen
rick@linuxmafia.com

[1] No, IANAL. However, I studied business law extensively, albeit long ago, in part in preparation to pass the CPA exam.

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