Piercing the corporate veil, a simultaneously ubiquitous and arcane doctrine, has been the subject of extensive commentary and critique. While the Pennsylvania Supreme Court admitted that this is already “among the most confusing” areas of corporate law, its recent decision Mortimer v. McCool, Nos. 37 MAP 2020, 38 MAP 2020 (Pa. July 21, 2021) adds yet another layer of intricacy to this knotty enigma. With Mortimer, Pennsylvania has joined a growing number of jurisdictions that explicitly allows for the so-called enterprise theory of liability.
Sometimes described as a “single-entity” theory of liability, enterprise theory of liability is conceptualized as a “horizontal” form of veil piercing. This contrasts with the traditional “vertical” form, where a corporation’s owner may be held liable for judgments against it when equity requires. Enterprise liability, as described by the Supreme Court, allows an analogous form of veil piercing for “affiliated or sister corporations—corporations with common ownership, engaged in a unitary commercial endeavor.” In this column, we discuss Mortimer, the enterprise theory of liability generally, and the common sequencing decisions plaintiffs need to make when bringing a veil piercing claim.
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