The South Park episode aired on October 27, 2010 featured a meeting of the childrens’ superhero group “Coon and Friends” named after Eric Cartman’s alter ego “The Coon.”  The meeting began with a lengthy discussion on why the group is named after The Coon instead of another child’s superhero name.  Once they resolve that pressing issue, Coon and Friends set out to find out what’s behind a recent crime wave.  As the episode progresses, Coon and Friends discovers a true super hero by the name of Captain Hindsight.  Eric then decides they must convince Captain Hindsight to join Coon and Friends.  So the children attempt to beat Captain Hindsight to the scene of the next major disaster in order to convince him.  The Beyond Petroleum oil company provide that opportunity by creating a second oil leak in the Gulf.  Unfortunately Captain Hindsight beats Coon and Friends to the oil leak and employs his astonishing super power of hindsight.  After telling everyone at the oil leak what could have been done differently to prevent the leak, Captain Hindsight leaves.  As the oil leak gets bigger, the president of Beyond Petroleum apologizes and changes the company’s name to Dependable Petroleum.

It may seem far-fetched that a corporation would change its name after experiencing a large disaster but it does happen.  For example after merging with MCI, WorldCom was at the center of one of the largest corporate scandals in U.S. history.  After emerging from Chapter 11 bankruptcy protection, WorldCom changed its name to MCI and moved its corporate headquarters.    Another example comes from the accounting firm that enabled the WorldCom scandal, Arthur Andersen.  After much friction between the accounting and consulting divisions Arthur Andersen and Andersen Consulting went their separate ways.  Bitter arbitration led to Anderson Consulting having to give up the Anderson name and take on the new name Accenture.  However, months later when the WorldCom scandals involving Arthur Andersen unfolded was it really a concession?  More recently Blackwater, the private security contractor plagued by scandal in Iraq, announced it would operate under the new name Xe.

The question arises, what are the legal ramifications when a corporation changes its name?  First, the corporation must amend the articles of incorporation that created the corporation in the state in which it was formed.  In Louisiana, for example, two-thirds of the voting power held by various types of shareholders must approve the name change just as when the corporation was created under La Rev Stat Ann § 12:31.  Once the proper paper work is filed with the Louisiana Secretary of State the corporation has a new name.  Another means of arranging for a new corporate name to the general public is to register a DBA (Doing Business As), otherwise known as a Trade Name, with the Secretary of State.  This is simply accomplished by filling out the appropriate form, getting it signed by an authorized corporate representative, and paying a $50 fee.

Unfortunately for corporations like Beyond Petroleum/Dependable Petroleum while the general public may be fooled, its past indiscretions do not simply go away.  The Louisiana Second Circuit addressed this point in Pro Source Roofing, Inc. v. Boucher. In Pro Source Roofing a Texas roofing company had legally changed its name in Texas, but did not update its Louisiana Contractors license until about three months later.  During that time the roofing company entered into a repair contract with an apartment owner.  The apartment owner refused to honor the contract and the roofing company sued them for breach of contract.  The trial court granted summary judgment in favor of the apartment owner because the roofing company was not technically licensed in Louisiana under its current name.  The Louisiana Second Circuit reversed with its holding, “[t]he mere change in a corporation’s name generally does not create a new entity, nor does it affect the corporation’s property, rights or liabilities.”  Therefore, while the general public may accept Dependable Petroleum with open arms, Beyond Petroleum’s oil spill would still be its problem.

California law similarly states that corporate name changes do not affect corporate property, rights, and liabilities.  In McClellan v. Northridge Park Townhome Owners Ass’n, a licensed contractor performed earthquake repair work for a condominium complex.  After the contractor completed the project, the condominium association failed to pay for the work.  The parties entered into an arbitration proceeding in which the association filed a counterclaim, but failed to appear at the hearing.  At the hearing the arbitrator awarded the contractor a default award and denied the association’s counterclaim.  Unfortunately for the contractor the association had declared bankruptcy, dissolved, and incorporated under a new name.  In response the contractor filed a motion to amend the judgment to include the name of the new association.  Ultimately, the McClellan court held the new association liable because it was “merely a continuation of the [previous] corporation.”

While this may be comforting to know, I’ll leave you with one final example. Valujet was an infamous airline plagued by safety problems such as the May 11, 1996 crash of Flight 592 in the Florida Everglades.  After the crash Valujet faced severe financial problems and so they merged with a much smaller Airways Corporation airline to form AirTran.  Currently AirTran is the 3rd largest discount airline operating in the United States with a revenue of $2.4 billion in 2009.  The question was asked, “Who remembers Valujet?”  The answer to that question identifies one reason a corporation would change it name after expending substantial resources to develop name recognition.  After all the negative press on safety issues Valujet received few people would want to fly with them.  However, about 23.7 million people flew with AirTran last year.