Curtis v. Lehigh Footwear, Inc

In Curtis v. Lehigh Footwear, Inc., 516 A.2d 558 (Me. 1986), the Law Court considered the question of whether a corporate shareholder is liable for severance pay under section 625-B, when the covered establishment was owned by a subsidiary of the shareholder's corporation. In other words, is the owner of the owner of the covered establishment liable under section 625-B? The Curtis Court was asked to address a more indirect ownership relationship, which raised more serious questions about the extent to which the legislature intended to abrogate traditional common law notions of shareholder immunity. In Curtis, the Law Court held that section 625-B did not reveal a clear legislative intent to render a corporate shareholder liable for the debts of a covered establishment owned by a corporate subsidiary. Curtis, 516 A.2d at 560. In response to Curtis, the legislature amended its definition of employer by adding the following sentence to the provision considered by the Curtis Court: "For purposes of this definition, a parent company is considered the indirect owner and operator of any covered establishment that is directly owned and operated by its corporate subsidy." P.L. 1989, c. 667, 1; see also 26 M.R.S.A. 625-B(1)(C) (Supp. 2000). In Curtis, the Law Court focused its consideration on whether the legislature had clearly expressed an intention to abrogate the common law principle that shareholders are not liable for the debts of corporate subsidiaries. The Court held that the phrase "indirectly owns" did not embody a legislative goal of exposing corporate shareholders to the statutory severance pay liabilities of its subsidiaries. After the Court concluded that the legislature had not clearly expressed such an intention, the legislature in fact amended section 625-B(1)(C) to provide that corporate shareholders are liable for the debts of subsidiary corporations.