Superhero Corporations I: Vicarious Liability

There are several superhero characters that also happen to be executives of major corporations. Batman, as Bruce Wayne, is the head of Wayne Industries. Tony Stark runs Stark Industries. Reed Richards is in charge of the Fantastic Four’s corporate activities. The list goes on.

A question we haven’t talked about much yet is whether the activities of our heroes can cause liability for their respective corporations and vice versa. There are distinct issues here. The first is “respondeat superior” a Latin phrase meaning “Let the master answer” which is a species of vicarious liability, and “piercing the corporate veil“. The former can create liability for employers as a result of the actions of employees. The latter can create personal liability for executives and owners of a corporation for actions of the corporation. As one can see, these might be issues for our heroes. This time, we’re going to take a look at respondeat superior.

I. Basic doctrine

The basic concept here is that if an employee does something wrong while in the service of his employer, the employer is responsible even if the employer did not directly authorize the action. The most common example is if an employee is driving at the behest of his employer and gets in an accident. If the employee is still within the “course and scope” of his employment, the employer will be liable.

This may at first seem a little unfair, as what we’ve got here truly is “vicarious liability,” i.e. one person being liable for the actions of another. But there are two main justifications for the doctrine. First, if an employee is acting on behalf of his employer and screws something up, it seems a little unfair to let the employer off without any consequences. The employer certainly stood to benefit by having the employee make the trip, so it only stands to reason that they should also bear the risk of that trip. Second, a person acting on behalf of his employer has the potential to get in far, far more trouble than acting on their own. Returning to the driving example again, an eighteen-wheeler can cause vastly more damage than even a big SUV, but most people don’t use eighteen-wheelers to commute. There’s just no cause for an individual to use one of those things in most circumstances, as almost nothing a private individual might want to do requires moving that much stuff around. But businesses can and do need that kind of hauling capacity and so regularly put those vehicles on the road. The risk there is not just to other drivers, but to the owner of whatever stuff is in the trailer. Same goes for moving things around a warehouse: it’s entirely possible for a single trip with a forklift to be worth more than the employee operating it will make this year and next. So the other reason for making employers responsible for the torts of their employees is that employers (or their insurers) are the only ones likely to be able to afford to pay for said torts.

This is true even with insurance, by the way. Most personal auto carriers don’t even sell policies with limits in excess of $300,000 per person, but $1 million is pretty much the default commercial auto liability limit. And it goes up from there. Commercial excess policies with $25 million limits are pretty commonplace, but personal umbrella policies rarely go beyond $1 million.

One last thing to understand here is the distinction between corporate and personal assets. Take Tony Stark as an example. He’s the single largest shareholder in Stark Industries, so he “owns” a significant chunk of the company. But that isn’t the same thing as owning corporate assets. Stark has an interest in the company and as a shareholder has the right to vote on corporate actions. But he does not have any interest in corporate assets as such. This is part of how corporations work. So when we talk about respondeat superior, we mean that a plaintiff can sue Tony directly and potentially get his stock in the company, as those are his personal assets, but also sue the company directly, and have access to corporate assets. So depending on the size of the verdict, it’s theoretically possible for a plaintiff to wind up both owning a company and being owed a big check from the company. This isn’t likely to happen to any of the characters we’re talking about, as Wayne Industries etc. are all worth billions, but it’s not that uncommon an occurrence in small businesses with few assets.

II. Respondeat superior and superheroes

With that basic explanation of the doctrine, let’s turn our attention to whether superhero executives can create liability for their corporations. The answer here is going to be highly fact specific, turning mostly on whether or not the superhero was acting on behalf of the corporation at the time. Fortunately, our superheroes form something of a spectrum illustrating almost the entire spread of possibilities here.

On one end, we’ve got Batman. Yes, Bruce Wayne is the president and largest shareholder, and yes, he uses corporate assets to be Batman. But his activities as Batman are almost completely distinct from Wayne Industries wider corporate activities. It’s a multinational conglomerate with its fingers in almost everything, and only a tiny fraction of its resources are being redirected to Wayne for his Batman activities. More to the point, Wayne goes to some lengths to hide this from the other shareholders, who would probably vote against this sort of thing if they knew about it. Wayne Industries as such does not really stand to gain anything by Batman’s activities either, aside from the general benefit to everyone that is law and order. So in Batman’s case, it seems unlikely that what he does could subject Wayne Industries to liability, as nothing he does really seems to be within the course and scope of whatever employment he might have there.

In the middle is Iron Man. Tony Stark is the largest shareholder of Stark Industries (or something like that), and people know that he’s also Iron Man. But again, Stark Industries does a lot of things which have nothing to do with Iron Man, and Tony’s employment with the company—when he even is employed—doesn’t seem to have anything to do with being Iron Man. Granted, until he went public with his identity, Iron Man did do a lot to serve Stark Industries’ interests, e.g. protecting corporate assets, but once Stark went public, unless Stark Industries explicitly puts Iron Man on the payroll as such or explicitly puts serving as Iron Man in Tony’s job description, the case for vicarious liability is murky at best. It’s possible that it could be there, especially if Iron Man is acting in the company’s interest, but it isn’t a slam dunk case most of the time.

On the other end of the spectrum is Reed Richards and the rest of the Fantastic Four. Fantastic Four, Inc. is the corporate entity that they use to sell things based on Reed’s patents and to generally fund their activities. But that’s about it. Not only is FF, Inc.’s business pretty much entirely about the Fantastic Four, but it’s mission is pretty explicitly to let them do what it is that they do. Vicarious liability should be pretty easy to establish here.

III. Conclusion

So, as we see, respondeat superior is something that at least some superheroes are going to have to worry about. Next time we’ll take a look at the flip side and piercing the corporate veil.

6 responses to “Superhero Corporations I: Vicarious Liability

  1. As long as we’re teaching respondeat superior, why don’t we explain the independent contractor exception? Black Cat, Paladin, or other thieves/mercenaries for hire might be an example of this. When J. Jonah Jameson hired Black Cat and X-Factor to serve as his bodyguards, to what extent was he liable for their property damage? (I think I already know the answer, but I bring it up just to be thorough.)

  2. What about Batman Inc.? It is explicitly announced by Bruce as “Wayne Enterprises’ newest venture” in Batman and Robin #16.

    • i think this is the part where I say “Bueller? Bueller?”

      • Ryan Davidson

        We’re working on it. Gotta read those comics. This is fun and all, but we do, in fact, have day jobs.

      • Alright, so having read some Batman, Inc issues, it looks like they went about it in pretty much the worst way possible: having Wayne Enterprises fund, equip, and coordinate the international Batmen directly. This level of involvement in their activities makes it likely that the international Batmen would be viewed as Wayne Enterprises employees for tort liability purposes, rather than independent contractors. Thus, respondeat superior would probably apply.

        A much more sensible arrangement would be for Wayne Enterprises to fund a separate non-profit (i.e. not owned or directly controlled by Wayne Enterprises), which would then fund the Batmen. That would provide Wayne Enterprises with a liability shield.

        Taking that model one step further, Wayne Enterprises could fund non-profits in each local country, and the non-profits would source equipment locally. This smooths out some of the export/import problems. Having Wayne ship Batman-level equipment to private citizens in dozens of countries would be an expensive nightmare of red tape.

  3. Mraow.

    I fully agree that we should be respectful to our masters. But it’s also understandable if your fans are eager to hear from you, and feel like they can talk to you casually as fellow geeks.

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