Plaintiffs seeking to recover damages against corporations and their owners now have a new tool in their toolbox—piercing the corporate veil between sister entities to establish “horizontal” or “enterprise” liability. The Pennsylvania Supreme Court made clear, however, that despite its willingness to consider this theory, piercing the corporate veil is still limited to the most egregious of circumstances. Thus, it remains unknown exactly how this tool will be used in the future.

In Mortimer v. McCool, 225 A.3d 261 (Pa. 2021), the court examined the equitable doctrine of corporate piercing (describing the area as “among the most confusing in corporate law”). Justice David Wecht’s unanimous opinion recognized that while there is a strong presumption in favor of preserving the corporation form, such must be disregarded “whenever justice or public policy demand, such as when the corporate form has been used to defeat public convenience, justify wrong, protect fraud, or defend crime.” Indeed, “when the shareholder derives improper personal gain or advantage by misusing the corporate form, the court may reach through the veil already torn by the owner’s abuses.”

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