“The more things change, the more they stay the same.” Or so it seems, based on the results of this Empirical Study of how courts apply the doctrine of piercing the corporate veil.
This Study began with an eye towards identifying if, and to what extent, the Great Recession had influenced the way courts handle veil-piercing questions. The results support no conclusions that the Great Recession has changed courts’ attitudes towards piercing the corporate veil.
While piercing rates have declined since Robert B. Thompson published his groundbreaking empirical study of corporate veil-piercing cases, aggregating and supplementing the data of post-Thompson studies shows that there is no significant downward trend in how often courts pierce the corporate veil, contrary to the conclusion of more recent studies.
Finally, this Study examines and comments on the ways the veil-piercing doctrine has been applied, unchanged, to a dynamically changing business landscape. The astronomic rise of the limited liability company (“LLC”) has changed the way businesses structure themselves. Yet, courts have almost universally adopted the corporate veil-piercing doctrine to deal with these new business models. This Study highlights results that raise the issue of whether LLCs and small, closely held corporations have inherent characteristics such as undercapitalization and domination and control that predispose them to higher rates of veil piercing.
