A Cautionary Tale For U.S. Corporations With Canadian Subsidiaries

If one sets up an American subsidiary to do business in the United States and a Canadian subsidiary to do business in Canada, then only the latter would find itself sued as a defendant in Canadian courts, right? Perhaps not.

The recent decision of the British Columbia Supreme Court in Canadian Olympic Committee v. VF Outdoor Canada Co., 2016 BCSC 238, shows the risk of liability in Canadian courts for American parent or affiliated corporations, notwithstanding the use of a dedicated Canadian subsidiary within the organization.

The Corporate Organization at Issue

The corporations at issue in the case design, manufacture and sell the "The North Face" brand of apparel in North America. VF Corporation, the parent Pennsylvania corporation, holds ownership interests in various "VF Group" companies including VF Outdoor, Inc. ("VF USA") and VF Outdoor Canada Co. ("VF Canada"), which are each indirectly wholly owned subsidiaries of VF Corporation. VF USA