Freeman v. Complex Computing Co.

Jason Glazier (defendant) was a software developer. In September 1992, Complex Computing Co., Inc. (C3) (defendant) was incorporated, with Glazier's friend as its sole shareholder. In November, Glazier, Inc., a corporation with Glazier as its sole shareholder, entered into a consulting agreement with C3. Under the agreement, Glazier, Inc. served as a contractor, developing and marketing Glazier's software. Although the consulting agreement was between C3 and Glazier, Inc., many provisions referred to Glazier personally. Both Glazier, Inc. and C3 were located at Glazier's apartment, and Glazier was the sole signatory on C3's bank account. In September 1993, C3 entered an agreement with Daniel Freeman (plaintiff), under which Freeman would sell and license C3's software in exchange for commissions. The C3-Freeman agreement included a termination clause and an arbitration clause. In August 1994, C3 and Thomson Investment Software (Thomson) entered into a licensing agreement. Freeman claimed this transaction resulted from his efforts. In October 1994, C3 sent Freeman a termination letter signed by Glazier. In January 1995, Glazier was hired by Thomson. Meanwhile, C3 and Thomson entered into an asset-purchase agreement. As a result, Thomson assumed most of C3's liabilities and obligations under the existing agreements, but expressly excluded the C3-Freeman agreement. In May 1995, Freeman sued in district court, demanding commissions due under the C3-Freeman agreement. The district court held that both C3 and Glazier should be compelled to arbitrate according to the C3-Freeman agreement. Specifically, the district court found that Glazier was subject to the arbitration clause, because he dominated and controlled C3. Glazier appealed on the grounds that veil-piercing should not apply, because he was not C3's shareholder and there was no finding that he used his domination of C3 to wrong Freeman.