Piercing the veil of limited liability companies (LLCs) allows a court to disregard the separate corporate personality of the company and its member(s) to reach the assets of the members and hold them liable for all or part of the LLC’s debts under Pennsylvania law. Previously, I’ve written on the general substantive and procedural requirements of piercing the corporate veil of an entity and alter ego jurisdiction over corporate groups. This column addresses the Pennsylvania law on the doctrine of piercing the corporate veil as applied to LLCs.
The availability of piercing the veil of LLCs has not been deeply analyzed, as the limited liability company form is still considered relatively “new” (in the legal world where it adapts to the real world at a glacial pace) and there have only been a few state and federal cases on the piercing of LLCs in Pennsylvania. The Pennsylvania Superior Court’s analysis of the status of the case law on piercing the veil of LLCs in Advanced Telephone Systems v. Com-Net Professional Mobile Radio, 846 A.2d 1264 (Pa. Super. 2004) at the time is informative about its development. The Superior Court notably stated that the plaintiff “conceded that there are no federal or state decisions under Pennsylvania law that permitted the piercing of the corporate veil of a limited liability company.” Nevertheless, the court agreed with the plaintiff that “the Limited Liability Company Law of 1994 contemplated ‘that in the appropriate case the doctrine of piercing the corporate veil will be applied to a limited liability company.’” (quoting the committee comment on 15 Pa.C.S.A. Section 8904, fully repealed as of April 2017.) The court affirmed the trial court’s refusal of piercing the veil of the LLC defendant, citing the specific facts of the case, rather than the lack of legal basis to support piercing the veil of the LLC.
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