Gardemal v. Westin Hotel Co.
186 F.3d 588 (5t Cir. 1999)

  • Westin was a parent corporation that owned a number of hotel chains including one in Mexico.
  • Gardemal’s husband drowned while at a Westin hotel in Mexico. She sued both the American Westin corporation, as well as the Mexican Westin corporation, in a Texas court.
  • The Trial Court dismissed. Gardemal appealed.
    • The Trial Court found that there was a lack of personal jurisdiction to sue Westin Mexico in Texas.
    • The Court found that as a parent, Westin is a separate corporate entity from Westin Mexico and cannot be held liable for acts by its subsidiary.
  • The Appellate Court affirmed.
    • Gardemal argued that Westin Mexico was functioning as the alter ego of Westin. However the Appellate Court found that Westin maintained a separate corporate identity, and the two companies were not so intermingled that they were alter egos of each other.
      • Under the alter ego doctrine, a parent corporation can be held liable for the acts of another if the subject corporation is organized or operated as a mere tool or business conduit.
      • One of the major factors for establishing liability under this doctrine would be if Westin Mexico was undercapitalized, but there was no evidence of that in this case.
    • Gardemal argued that Westin and Westin Mexico operated as a single business enterprise. However the Court didn’t find evidence that this was the case.
      • Under the single business enterprise doctrine, a corporation can be held liable for the acts of another if they are not operated as separate entities, but integrate their resources to achieve a common business purpose.
    • The Court noted that Gardemal should go sue Westin Mexico directly in a Mexican court.
      • Gardemal probably sued in the US because at the time Mexico had a damage cap of $25k for wrongful death.
      • Since piercing the corporate veil done for reasons of equity, maybe it isn’t right to do it when someone is just forum shopping?