Quick service question – fyi I do not know the jurisdiction, etc., and I just pass along the question as posed to me:
Is service on a parent company effective to serve a wholly owned subsidiary?
I understand as a practical matter you may think it doesn’t matter, but it does in this case for certain reasons.
In this case, the parent has been properly served, but the caption lists two subsidiaries as well, one that is now defunct and one that is a Chinese corporate subsidiary and which operates a separate type of business.
If the Chinese company is not served, but the parent is, can the defense counsel move to dismiss the Chinese company for lack of process?
Thanks for any help – sorry it’s not the preferred I’m illegally (not) sleeping with a married woman or other such fun question.
This is as close as I’ve gotten in my 6 minutes of research. Of course, this is an ALABAMA SC case, so it’s not exactly controlling the world over, but it cites federal decisions at least 
. One problem is that this case deals with the opposite question, whether service on a subsidiary is proper to effect service on a parent. Same rationale for service of a subsidiary through the parent??
"[T]he parent-subsidiary relationship alone is not ordinarily enough to establish agency for the purpose of service of process. Jones v. Volkswagen of America, Inc., 82 F.R.D. 334, 335 (E.D. Tenn. 1978).
"The party seeking to prove proper service must at least show that the parent corporation ‘exercises such control and domination over the subsidiary that it no longer has a will, mind or existence of its own, and operates merely as a department of the parent corporation.’ Professional Investors Life Ins. Co., Inc. v. Roussel, 445 F. Supp. 687, 698 (D. Kan. 1978). Alternatively, the party seeking to have service on the subsidiary and the parent may show that
Service on the parent is ineffective on the sub if the sub has operations of its own (a separate existence). Let me guess, the parent is US, the sub is PRC, and there’s product liability in the US for products of the sub. No way, Jose, in that fact pattern. I would look for board directors who sit on both boards, or common officers, and “greet” them as they come to work.
If it’s really important, pay a lawyer for real advice. But here’s my pro bono. . .
Not if the subsidiary is an actual company and not just a business unit. Service has to be on the correct company and if the parent and subsidiaries are actual distinct companies, each with separate Articles, Bylaws, etc., then service on one definitely does not qualify as service on the other.
I would never think that. It matters very much. One MUST sue/serve the proper company; otherwise a strong defense should exist.
[quote]In this case, the parent has been properly served, but the caption lists two subsidiaries as well, one that is now defunct and one that is a Chinese corporate subsidiary and which operates a separate type of business.
If the Chinese company is not served, but the parent is, can the defense counsel move to dismiss the Chinese company for lack of process?[/quote]
Why move to dismiss? If one hasn’t been served one has no obligation to respond and no legal actions should be possible against that party. Instead, the subsidiary can ordinarily just sit and wait if it hasn’t been served.
On the other hand, if the parent is named as a defendant and has been served, it must respond to the Complaint to avoid losing a default.
Why do you feel the unserved subsidiary needs to take action?
Thanks very much for the help. I’m not sure if the subsidiary should do anything, I haven’t thought that far ahead really.
By the “as a practical matter bit” I just meant that a judgment against a parent that receives all earnings from a subsidiary in the form of a dividend or otherwise is nearly as effective as a judgment against the subsidiary. Maybe not, but that was my thinking anyhow.
While the subsidiary may not have to reply, the broader issues are related to insurers, stacking, who is primary, etc., etc. Too boring and nuanced to get into, but I’m sure you get the jist.
Maunaola – likely not far off. Parent is Taiwanese I believe. But the underlying action may well be a PL suit, I see a lot of that.