When Does a Parent Have Control? In re Uranium Antitrust Litigation
In re Uranium Antitrust Litigation, 480 F. Supp. 1138 (N.D. Ill. 1979), is a widely cited case in which a federal court set forth a standard as to when a U.S. company is required to produce documents from a foreign subsidiary. The standard is clear when the parent owns more than 50% of a subsidiary's stock, but the parent can also exercise sufficient control in other circumstances. Judge Marshall ruled that:
". . . the issue of control is more a question of fact than of law, and it rests on a determination of whether the defendant has practical and actual managerial control over, or shares such control with, its affiliate, regardless of the formalities of corporate organization.
Once personal jurisdiction over the person and control over the documents by the person are present, a United States court has power to order production of the documents. The existence of a conflicting foreign law which prohibits the disclosure of the requested documents does not prevent the exercise of this power."
With respect to a Canadian corporation that both owned 43.8% of shares in a Canadian business that kept its own books and held separate corporate meetings, and also wholly owned other Canadian, Australian and American subsidiaries, the Court found that it had control over the responsive documents from the latter but not the former.