FirstEnergy defeats lawsuit seeking liability for alleged acts of former bankrupt subsidiary

Client(s) FirstEnergy Corp.

Jones Day successfully defeated an attempt by personal injury plaintiffs to pierce the corporate veil and hold FirstEnergy Corp. liable for the alleged acts of former bankrupt subsidiaries. The plaintiff was allegedly injured while working as a contractor at a power plant owned by a bankrupt former subsidiary of FirstEnergy. The plaintiff could not sue the bankrupt entity so instead sued FirstEnergy under the theory that they could pierce the corporate veil and impose the subsidiary's liability on the parent corporation. Jones Day moved to dismiss on the basis that Ohio law applies to these Ohio companies, and the Ohio Supreme Court has held that personal injury tort claims do not give rise to a veil piercing remedy. The trial court granted that motion. After plaintiffs appealed, the U.S. Court of Appeals for the Third Circuit affirmed the victory. Under the Third Circuit's decision, allegedly injured plaintiffs with a tort claim against an operating subsidiary do not have a veil piercing claim against FirstEnergy.

McElroy v. FirstEnergy Corp., Nos. 19-3881 (3d Cir.), 2-18-cv-01612 (W.D. Pa.)