The Court of Appeals recently affirmed the Third Department’s determination that BCL § 630 does not apply to foreign corporations, but rather only domestic ones.

New York State BCL § 630 serves as a method to “pierce the corporate veil” for New York Corporations.  New York BCL § 630, provides in relevant part that “the ten largest shareholders of a non-publically traded company shall be jointly and severally liable for all debts, wages, or salaries due and owing to any of its laborers, servants or employees other than from contactors for services performed by them for such corporation.”

The issue as to the application of New York BCL § 630 to foreign corporations in allowing employees to obtain unpaid wages from the 10 largest shareholders was addressed in Stuto v. Kerber.

In the case of Stuto v. Kerber, et al, the plaintiff was employed by a corporation organized under Delaware law with its principal place of business in New York.  After running into financial difficulty, the corporation stopped paying plaintiff’s salary.  She, however, continued to work for the corporation until it officially closed.  She then obtained a judgment for her unpaid wages against the corporation.

In an effort to recover the judgment, plaintiff initiated an action against the corporation’s 10 largest shareholders to recover the wages pursuant to BCL § 630.

The Supreme Court granted defendant shareholders motion to dismiss the complaint on the ground that the statute does not apply to foreign corporations.  The Supreme Court held that “while BCL applies to domestic and foreign corporations, the use of the term ‘corporation’ in BCL 630 plainly limits its ambit to domestic corporations.  Stuto v. Kerber, 26 Misc. 535, 538, 888 N.Y.S.2d 872 (Sup. Ct. Albany County, 2009).  An appeal was taken and the Appellate Division Affirmed.

With leave to appeal to the Court of Appeals granted, the Court of Appeals affirmed the lower courts decisions.