Reference no: EM133312787
Assignment:
Consider the following scenario:
Karen decides to open a new venture, "Karen's Bar, Grill, and TV Lounge." It will feature dozens of flat screen televisions with three installed in each booth. She decides that she will run the business as a Limited Liability Company (LLC) to avoid any personal liability. She names the LLC "Sketchy Karen's, LLC." Other than the initial Articles of Organization, Karen never files any additional documentation with the State. Karen intentionally does not direct a lot of cash towards the business. She figures that if it fails, she will only be out her initial investment.
The business never makes a profit. It only stays running because Karen keeps using her own funds to pay for business expenses. In addition, Karen lets the business use 156 televisions that she and her husband Tom personally bought. Karen pays all of her employees cash, without withholding any taxes. Likewise, she does not maintain any workers compensation or additional insurances for their benefit. To further reduce her overhead, Karen recently dropped the company's liability insurance. She was heard laughing and saying "Let 'em sue the business...it doesn't own anything."
When Karen needs cash, she takes it directly from the till, without documentation. Since she doesn't have a separate account for the business, she figures she doesn't need the hassle of writing it all down - "It's all mine anyway" she says.
Last month, a customer fell while leaving the business. The customer was severely injured. Is the customer able to sue Karen individually (in addition to the LLC)? Why or why not? Your analysis should describe the relevant law and analyze the factors that a court might consider (hint - see the materials relating to Piercing the Corporate Veil).