She sued the wrong company first - and lost. A court just reopened the door
A failed lawsuit against a company's foreign parent doesn't block the same worker from suing its US subsidiary, a federal appeals court ruled.
The Sixth Circuit Court of Appeals reversed a lower court's dismissal on August 28, 2026, allowing a worker's discrimination case to proceed against Mastronardi Produce-USA, the US subsidiary of a Canadian produce company.
The worker alleged race and gender discrimination, harassment, and retaliation during her employment at a Mastronardi facility in Livonia, Michigan. The court did not decide whether any of that happened. It answered a narrower question: whether her earlier, unsuccessful lawsuit against the parent company barred her from suing the subsidiary.
She had sued twice on the same facts. She first named the Canadian parent, Mastronardi Produce, Ltd., arguing it was her employer. The company produced W-2 forms showing the US subsidiary paid her, and a district court agreed the parent was not her employer. Just before that ruling issued, she sued the subsidiary on nearly identical facts, adding a hostile work environment claim under Michigan law.
The subsidiary moved to dismiss. It argued the worker had already had a full chance to litigate against a related company, pointing to shared ownership, shared defense counsel, and a shared corporate officer who had filed a declaration in the first case. The district court agreed and dismissed the suit, treating the two companies as close enough to count as one.
The appeals court took a different view. Parent companies and their wholly owned subsidiaries are separate entities that own separate claims, liabilities, and contracts - which the court noted is one of the main reasons businesses use the corporate form. A company cannot use that separateness to limit its liability and then set it aside so a related entity can borrow a favorable ruling.
The court also found nothing in the record showing the subsidiary had controlled the first lawsuit. Sharing a lawyer, filing a declaration, and coordinating a defense did not meet the high bar for control. Those facts pointed to coordination, the court said, not control.
For HR teams inside corporate groups - especially cross-border structures where a US company sits under a foreign parent - the implication is direct. The separateness that limits one entity's liability also means a favorable ruling for one company will not shield its affiliates from the same worker's claims. Which company actually employs a worker stays the deciding fact, and payroll records like the W-2s here usually settle it.
