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What Factors Correlate With Veil Piercing Success?

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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1 Response

  1. August says:

    Dave,

    After looking through the piece, I have a few comments.

    Seeing as how veil piercing is usually attached to a state law cause of action (tort or contract), a look at veil piercing litigation at the state or federal level may produce different results. Obviously, state law causes of action are litigated in federal court through diversity or some pendent jurisdictional avenue, but this may be an important variable. If for some reason, the pleadings and docket documents involving veil piercing litigation at the state level are different than those at the federal level, your results may be skewed or unrepresentative.

    Second, to determine legal sophistication (as a proxy for observance of formalities), you ask whether an entity is organized in multiple states. But why? You give no minimum rationale as to why this is an appropriate proxy, or even reasonable, one to use for legal sophistication and in turn for observance of formalities.

    Third, your theoretical expectation that judges are more likely to pierce small entities, measured by number of employees, is vaguely explained. You assert that because judges are trained in a tradition that sees a remedy for all vindicated rights, small entities are more likely to be pierced. But what is the connection. The data doesn’t bear this conclusion out.

    Aside from these comments, I like the piece.