MovieChat Forums > Michael Clayton (2007) Discussion > Limited Liability Corporation

Limited Liability Corporation


The idea of a LLC is to protect the owners/investors from PERSONAL bankruptcy in case their business venture goes broke, it also protects them in other ways.

The head of a large multinational company would almost certainly not face any prison time for of a memorandum she did not see. She would be relieved of her job as CEO and her name would be dragged through the mud. But she could reasonably argue that she was placed in charge years after the decision and had no idea of the existence of the memorandum.

That is what makes her decision of assassination so odd. Why would a women who would receive a golden parachute worth millions resort to such a extreme act?

reply

You make a valid point. Most people outside the business world wouldn't have thought of it.

I guess a movie about corporate malfeasance with a realistic ending (an exec gets let go with a severance package, stock options, etc.) doesn't make for such high drama. It's also hard for the average Joe to relate to that ending, and it probably seems a little depressing.

But your point gets right at the heart of the problem with corporations and the question of responsibility in cases like this: the corporation acts like a legal person without real accountability, while the individuals who make up the corporation are usually shielded & protected as well. (Not from plotting assassination with car bombs, though.)

reply

Look up "Lifting the Corporate Veil".

Limited Liability doesn't let you do anything in the world and get away with it. It also only covers reasonable actions committed as a Director of the company. I'd like to see her stand in court and claim "I was just reasonably acting as director when I ordered the death of my senior counsel, then another man to cover that up, then offered a 10 million dollar bribe when that car bomb failed.... your honour"

Also there is a duty placed on Directors to know and understand various aspects of their own business. There would be a legal duty for her to know of this memorandum with very strict regulations on how she could rebutt the presumption that she did know. These presumptions would be impossible to meet in light of the fact that she ordered TWO HITS to suppress the document.

She's going to hypothetical movieland jail.

reply

Thank you for your response,

However I was making a point on her choice TO use a assassin.

Say the hits never happened and a whislte blower blew the lid off the company. While her career would be ruined, she would still live a comfortable life of a multi-millionare after congressional hearings.

Large companies have hundreds of thousands of memorandums, she never signed this one, and can plausibly argue that she never knew of its existance.

But perhaps the ambtion of a young CEO who valued her career a little too much was the answer to my question of why she chose that dark path.



reply

I think there is a misunderstanding running through this thread. Generally, the limited liability corporate structures are there to protect the personal assets of shareholders from the debts incurred by a company they're tied to financially. So if you own a company that goes under, usually the company's debts can only be paid out of company funds. Therefore, any personal assets of an owner/shareholder, e.g. personal checking/investment accounts, real estate, inheritances, etc., are generally untouchable by the company's debt-holders. The piercing of the corporate veil concept only comes into play when a court cannot see a delineation between the funds of the company and the personal assets of the shareholders. This comes into play most commonly in smaller, closely-held companies where the owner(s) is/are using company funds to supplement their lifestyle, e.g. vehicles purchased with company funds but held in the name of the owner, using company funds to pay for vacations or trips unrelated to business, children's tuition, living in homes paid for with company money, (these are real examples) etc.. That type of commingling of assets is what prompts piercing the corporate veil and seizing personal assets of the owner/shareholder. Without that kind of commingling, limited liability isn't an issue. NB, limited liability doesn't protect a Board of Directors, only shareholders (although often directors are shareholders). The Business Judgment rule is what protects executives and directors from liability for decisions that affect a company negatively.

In this film, given that UNORTH is likely a publicly-traded company, the limited liability aspect isn't really at issue. Any civil liability incurred by UNORTH will not wreck its individuals shareholders' personal finances. However, UNORTH will incur a great deal of billion dollar liability due to evidence of its knowledge of contaminating substances in its products. Shareholders' stocks will be affected, and in that way, the shareholders will be affected. The shareholders would likely sue the board of directors and the senior executive staff for that loss in stock. I know an attorney who brings those kinds of suits against corporations, for basically making stupid decisions or doing stupid things that lower stock prices. It's very interesting.

White-collar contracts also usually contain numerous clauses that withhold certain compensation when a company officer or director acts with moral negligence (a morality clause) or with abandon for company policy. Here, given that Crowder was likely a high-ranking in-house counsel member (possibly a board member), what she did likely will ruin her financially (both due to criminal fines and civil damages) and professionally (it's especially not good when a lawyer kills people, because, you know, they're supposed to follow the law). So indeed, assuming the evidence is there, she will go to jail, she will likely never see any "golden parachute," nor will she likely even have a license by the end.

reply

There would be a legal duty for her to know of this memorandum with very strict regulations on how she could rebutt the presumption that she did know. These presumptions would be impossible to meet in light of the fact that she ordered TWO HITS to suppress the document.


Putting aside that she ordered two hits to suppress the document, how would a judge go about putting restrictions on her lawyer rebutting the presumption she knew about it? (If she had not ordered the two hits, that is, but the document was leaked in some other way.)

reply

If she never saw the document until the night she read it (using the hotel trash bag as a rubber glove), I'm surprised she didn't decide to sell out uNorth and its CEO as a whistleblower.

I was under the impression she knew about the memorandum or at least had other corroborating evidence of it. There was a scene in Marty's office where she explains that documents were lost in a storage warehouse fire and her explanation was delivered in a less than convincing way, leading me to believe that the fire was a setup to eliminate the evidence.

reply

Any sane person would not resort to such extreme act, but she is a sick person in a sick culture - confused and lost. I know plenty of people who sacrifice their personal health for their jobs, out of fear and not being aware that they have an option. There are people who keep on drinking, doing drugs, etc. - even to the point of killing themselves. That kind of addiction to destruction is basically what the movie explores (that is why you see Clayton being a gambler, his brother abusing drugs, etc). She just doubled down and went all-in on a destructive path, being completely lost, and would have succeeded if it wasn't for Clayton to break his destructive habits, literally going off his path when driving and stepping out of it.

reply

The executive officers of this company, based on the memo signed by Don Jeffries, are basically straight-up guilty of an entire laundry list of criminal activities related to the continued production and distribution of a product known to be toxic. They could conceivably be tried for manslaughter over this, let alone securities fraud (failure to disclose known liabilities), a criminal conspiracy to

Karen's problem is proving she didn't know about the memorandum and that Don didn't tell her about it. It's not believable to a jury. Don and Karen would both have to testify to deny it, he's not going on the stand at all, let alone to defend her. Karen testifying opens her to long lines of questioning and she would surely provably perjure herself if not gain additional charges.

uNorth is going bankrupt, its assets seized and liquidated to pay out billions in claims. Its board and officers will face years of shareholder lawsuits for fraud and conspiracy and massive personal liability. Whatever they have left trying to stay out of jail will be spent trying to not end up homeless.

Karen's only hope is try for some immunity deal to get Don and the rest of the officers, but she's on tape agreeing to bribery, conspiracy and full complicity, so she's not getting any immunity deal. She might negotiate cooperation with the prosecution against uNorth for some small favor, like not going to the worst women's federal penitentiary.

reply

Hence Michael's statement that she's fucked.

reply

She's success driven to the point of obsession, and will literally kill anyone who gets in her way. She doesn't want to lose her job. The real issue is she's incompetent, and has been promoted beyond her level of ability. Her personal insecurity is illustrated by her continued nervousness, and she appears on the verge of a complete breakdown.

reply

< The real issue is she's incompetent >

Excellent point, and one I should have seen. All that practicing in front of the mirror, emphasis on makeup and looks. And when we finally see her interview, we get run-of-the-mill everyday corporate babble. Somehow she’s conned them all into thinking she’s some kind of superwoman, but she knows she’s nothing of the sort.

Given the choice of evil or incompetence as the root of bad choices, always pick the latter. With even the most evil acts, incompetence is often still the core.

reply

Yes, people forget that Karen is also a ticking timebomb.

reply