Corporate Judgment, Personal Liability? California Court Clarifies the Alter-Ego Standard

In Villasenor v. Schneiter, No. B337209, the California Court of Appeal, Second District, Division One, issued a published opinion on October 26, 2026. A jury found two corporate restaurant employers liable for sexual harassment and other violations of California’s Fair Employment and Housing Act (FEHA). ¹

The corporate awards included $345,061.17 in compensatory damages and $100,000 in punitive damages. The court subsequently awarded $949,672.50 in attorney fees and $103,241.65 in costs against the corporations. Together, those amounts total approximately $1.5 million, including attorney fees and costs. The combined amount was not solely a jury verdict, nor was it a judgment against owner Kurt Schneiter personally.

The plaintiff separately sought to impose the corporations’ obligations on Schneiter through alter ego. The trial court found that she had established neither required element and entered judgment in his favor. The corporate liability findings and the owner’s potential responsibility were separate questions.

Alter ego is a theory for imposing an existing corporate obligation on another person, rather than an independent cause of action. ⁴

California presumes that a corporation has an identity separate from its owners. The party seeking alter-ego liability bears the burden of overcoming that presumption and must establish both requirements. ²

First, there must be such unity of interest and ownership that the corporation and owner no longer have genuinely separate identities. The inquiry concerns the actual relationship between them, not simply whether one person owns or controls the business.

Second, treating the challenged acts as those of the corporation alone must produce an inequitable result. This is a separate requirement: establishing close control does not automatically establish inequity. Both elements must be supported by the circumstances and evidence.

Ownership or control alone therefore does not automatically make an owner liable for every corporate obligation. Conversely, incorporation does not guarantee protection from personal liability. Neither the business structure nor adherence to corporate formalities is a universal answer to every claim.

On appeal, the plaintiff did not challenge the evidentiary sufficiency of the trial court’s alter-ego findings. Instead, she argued that FEHA required a different presumption favoring alter-ego liability. The Court of Appeal rejected that argument and affirmed the judgment for Schneiter: FEHA does not alter the ordinary presumption of corporate separateness. ³

The decision did not excuse the underlying misconduct, reverse the corporations’ liability findings, or eliminate their obligations. It did not create blanket immunity for owners. Because the appeal addressed the asserted FEHA presumption rather than evidentiary sufficiency, it should not be read as deciding every factual route to alter-ego liability.

For business owners, the practical lesson is to evaluate corporate obligations and personal exposure separately. For judgment creditors, obtaining a corporate judgment does not itself supply the evidence needed to impose that debt on an owner. An asserted alter-ego theory should identify evidence supporting each element rather than assume that ownership closes the gap.

There is also a distinct question: an individual’s independently actionable personal misconduct may create liability without shifting corporate obligations through alter ego. ⁵ That distinction is general context, not an additional issue decided in this appeal. Our related Ashtel article discusses reported fraud liability and its separate qualifications.