10 - What Is a Corporate Mind?

Summary

Attributing mental states to business entities requires law to embrace a double fiction. We must first deem these entities to “exist” even though they lack corporeal substance and are only described in documents. Then, we must somehow attribute mental states to these fictional entities – —not because we believe them to have minds but because we need to do it for the law to work. Unsurprisingly, courts struggle to attribute mental states to business entities and mostly default to respondeatrespondeat superior superior and attribute some human’s mental state to the entity. For entities with many diverse shareholders, members, officers, employees, subsidiaries, and affiliates, attributing some mental state to the entity poses a particular challenge. This chapter probes how we attribute mental states to business entities by focusing on how we attribute scienter or fraudulent intent to business entities in securities cases.