alter ego

Four years prior to commencement of suit, the plaintiff was severely injured in New York City when run down by a taxicab owned by Seon Cab Corporation and negligently operated by Márchese. Carlton is a stockholder of ten corporations including Seon, each having only two cabs registered in its name with the minimum automobile liability insurance of $10,000 carried on any one cab. Although seemingly independent, the corporations are alleged to be operated as a single entity, unit and enterprise with regard to financing, supplies, repairs, employees and garaging, and all are named as defendants. The plaintiff asserts he is entitled to hold the stockholders personally liable because the multiple corporate structure constitutes an unlawful attempt to defraud members of the general public who might be injured by the cabs. The complaint alleges that none of the corporations had a separate existence of their own, that the separate corporations were undercapitalized, and that their assets have been intermingled. Carlton moved pursuant to CPLR 3211(a)(7) to dismiss the complaint on the ground that as to him it fails to state a cause of action. Special Term granted the motion, but the Appellate Division by a divided vote reversed. Carlton appeals to the Court of Appeals from the nonfinal order by leave of the Appellate Division on a certified question.

The United States prosecuted Buffalo Pharmacal Company, Inc., and its president and general manager Joseph Dotterweich by two informations consolidated for trial under the Federal Food, Drug, and Cosmetic Act of June 25, 1938. The company operated as a jobber purchasing drugs from manufacturers and shipping them repacked under its own label in interstate commerce. Three counts reached the jury, consisting of two charges for shipping misbranded drugs in interstate commerce and one charge for shipping an adulterated drug. The jury disagreed regarding the corporation but convicted Dotterweich on all three counts. The Circuit Court of Appeals determined that the evidence adequately supported the findings of adulteration and misbranding. It reversed Dotterweich's conviction, however, on the ground that only the corporation qualified as the person subject to prosecution under the Act. After rehearing, the Circuit Court of Appeals remanded the case for a new trial. The Supreme Court granted certiorari to review the construction of the statute limiting liability to the corporation.

In 1968, Ernest Fitzgerald, a management analyst with the Department of the Air Force, testified before the Subcommittee on Economy in Government of the Joint Economic Committee of the Congress that a new transport plane, the C-5A, was substantially over its projected cost. This testimony apparently embarrassed the Department of Defense and the Air Force. Shortly thereafter, Fitzgerald's job was abolished in a reorganization of the Air Force. Fitzgerald brought suit against a number of officials of the Executive Branch, including petitioners Bryce Harlow and Alexander Butterfield. Fitzgerald alleged that Harlow and Butterfield had participated in a conspiracy to violate his constitutional and statutory rights by arranging to have him dismissed from his position in the Air Force in retaliation for his testimony. As evidence of Harlow's involvement, Fitzgerald relied on a series of conversations in which Harlow discussed Fitzgerald's dismissal with Air Force Secretary Robert Seamans. He also relied on a recorded conversation in which the President later voiced a tentative recollection that Harlow was "all for canning" Fitzgerald. As evidence against Butterfield, Fitzgerald cited a May 1969 White House memorandum. In it Butterfield claimed to have learned that Fitzgerald planned to "blow the whistle" on some "shoddy purchasing practices" by exposing these practices to public view. Fitzgerald also cited communications between Butterfield and Haldeman in December 1969 and January 1970 as evidence that Butterfield participated in the conspiracy to conceal his unlawful discharge and prevent his reemployment. Harlow asserted that Secretary Seamans had advised him that considerations of efficiency required Fitzgerald's removal by a reduction in force. Harlow had no reason to believe that a conspiracy existed. Butterfield stated that he was not involved in any decision concerning Fitzgerald's employment status until more than a month after the termination had been scheduled and announced publicly. Butterfield never communicated his views about Fitzgerald to any official of the Defense Department. The District Court denied the motions of Harlow and Butterfield for summary judgment based on absolute Presidential immunity or, alternatively, qualified immunity. The Court of Appeals for the District of Columbia Circuit affirmed in part and remanded. The Supreme Court granted certiorari.