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What Does Veil Piercing Success Mean Anyway?

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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2 Responses

  1. Is this a cautionary tale for defense litigators and defendants: don’t give up too early, as the ultimate merits success rate is onlhy 6%??? I’m just blown away by this paper and these results–it seems to turn the notion of limited liability on its head, dragging us back to the era of unlimited liability, at least for SMEs. Are these defendants caving too early when motions practice goes against them? Are the large numbers of defaults the real story–”so what?,” the defendants say, “I have no deeper pockets than my little corporation, so come get me”?

  2. Dave Hoffman says:

    On the default front, I think a large fraction aren’t actually contested — the defendant never shows up because there are no corporate assets to be had. The default is then as a tool to get a bank attachment, which drives the parties (often multi-employer pension plan related) to settlement. I can check, but my rough guess is that at least half of the defaults arise in this context.

    I do think that you can’t infer from the fact that only six percent of cases turn out to be adjudicated winners the conclusion that judges are ultimately going to be hostile to claims. That’s exactly the inference that selection prohibits! Maybe, if the parties didn’t settle, the ultimate win rate would look very different. As it is, in the 25 trial motions we’ve got represented about, about 15 are winners for the party seeking veil piercing (either resulting in the case advancing or an adjudicated piercing). 10 are loses.

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