Mr. Brian Keyboard was aptly named. He simply loved sitting at the controls of his super personal computer all day. His passion was to create convoluted games wherein tiny electronic characters would maim and mutilate other tiny characters. This battle to the electronic death would mesmerize Brian until he dropped from fatigue. One of Brian’s games was quite a hit on the video game market. “Getcha Monsta” was a runaway hit. Brian’s attorney, Howie Doit, arranged for Brian to incorporate his Business as “Getcha Monsta, Inc.” The business was properly incorporated under the laws of the state of Fredonia. Three of Brian’s family members invested a small amount of cash and made loans to the business, becoming the majority shareholders. Brian only holds 15% of the stock and 25 other investors each own 1% of the outstanding shares. The 3 family members are the Board of Directors. Brian is content with his role as V.P and Chief of Research in charge of testing. He really didn’t want to pay any attention to business matters when he could be concentrating on his video games. He did, however, retain the patents, in his own name, on the games he developed.
The corporation never held an annual shareholders meeting. In fact, the “Board” meetings took place over cocktails when the family occasionally got together for dinner. The Board has spent lavishly, buying ‘corporate’ assets for personal use—each has a BMW. They travel on the corporate plane and vacation frequently.
Unfortunately, there is now a class action lawsuit brought by hundreds of parents who can’t get their children out of the hypnotic trance induced by the Getcha Monsta video game. The family seems to have disappeared to an obscure south Pacific island. The heat is on Brian!
A. The lawsuit names Getcha Monsta, Inc., Brian and each Board member, personally, as defendants. Under what theory could the family members face personal liability? Assess.
B. The 25 minority shareholders are also suing the Board. If they can find the Board, under what theory could the Board face liability?
