Torts and Wrongful Acts

Generally, corporate directors and officers will not be held individually liable for torts or crimes committed by the corporation solely by virtue of their status as corporate directors and officers. However, personal liability for corporate liability may attach when the individual’s conduct causes a violation of a law or regulation. A director or officer likely will be found personally liable for corporate torts where the director or officer actively participated or acquiesced in the commission of the tort. In many cases, a key issue is whether the director or officer was the “central figure” in a wrongful activity or scheme. Liability also may attach upon proof that the corporation was under the direction or control of the officer or director when the tort was committed. The degree of involvement in the tortious act often dictates whether a court will pierce the corporate veil and impose personal liability. Another factor is whether the director or officer knew or had reason to know of the wrongful conduct or activity.

An officer can be held personally liable for injuries sustained by persons to whom the corporation owes a duty of care when the corporation has delegated that duty to the officer. In Texas, corporate officers were absolved of any personal liability for injuries sustained by company employees where the corporation was not functioning as the officers’ alter ego. Additionally, there was insufficient proof that the officers had breached the delegated duty of care other than the duty to provide the employees with a safe workplace.

A corporation can be held liable for torts and wrongful criminal acts committed by directors, officers, and employees who are acting within the scope of their corporate authority. There are numerous federal laws under which directors and officers may be held both criminally and civilly liable, such as the Racketeer Influenced and Corrupt Organizations Act and the Sherman Anti-Trust Act.