Most practitioners are familiar with the concept of piercing the corporate veil, but the nuances of this area of law can still mystify even the most seasoned litigators. Because veil piercing is a highly fact-intensive inquiry, it can be difficult to predict in advance when a court will grant such a remedy. This is because, in addition to the multi-factor analysis that often goes into the decision of whether to pierce, there are also a variety of different forms that veil piercing can take. One form in particular, the enterprise theory of liability, is a relatively recent development to Pennsylvania law in this area. See our recent column on this topic.
The enterprise, or “single entity,” theory of liability is a means of imposing liability on quasi-affiliated companies with common ownership engaged in a shared commercial endeavor. While recognized in many jurisdictions, until Mortimer v. McCool, 255 A.3d 261 (Pa. 2021), it was debated as to whether Pennsylvania recognized this form of veil piercing. And while the Pennsylvania Supreme Court’s decision in Mortimer answered the question of whether this doctrine is available, it left unanswered the specifics of how it would be applied. This column discusses the enterprise theory of liability generally, Mortimer, and a recent federal court decision analyzing its holding.