Piercing the Corporate Veil

The defendant, in my opinion, does not have a case, at all. Although, one ruling cited the timing of the filing as an issue and the company argued

This case shows that Shaffer filed a shareholder’s derivative suit in Delaware state court against Heitner and 28 corporate officers for violating their duties while in Oregon resulting in corporate liability for lots of damages in an antitrust suit, plus a fine in criminal actions. In demand, he filed motion for possession of Delaware property of the defendants. Heither didn’t sign residency in Delaware and owned one share of Greyhound stock. Heither filed for motion legal possession of Greyhound’s stock owned by 21 of the corporate officers in order to keep quasi-in-rem jurisdiction. Delaware’s statute allowed assets in the state to be seized by the court to keep personal ownership. Shaffer challenged the court’s jurisdiction on obtaining

The dissent argued that the corporate veil should be pierced in this case. 
The argument was that Westerlea was organized solely to benefit Defendant, not to operate as a separate entity. Westerlea did not have a separate corporate identity because it was Defendant’s wholly owned subsidiary that had the same directors and management as Defendant. Westerlea was undercapitalized because Defendant provided Westerlea with small capital and Westerlea maintained insufficient funds to cover the cost of building the homes. Westerlea’s purpose

Rationale: The court found extreme negligence concerning fiduciary duty on the part of the corporate directors because they did

This case was categorized under the contract law, as it involved two parties disputing over a contract. The two parties’ contract was formed when Rosney’s previous company, Concept 2000 Management, did business with the Copy Cats, resulting in Concept 2000 Management to own the plaintiff $551.05. However, the defendant’s company went out of business before the owed money was paid. Soon after, the defendant send a letter to the plaintiff that a new company, Rosney (B.D.) Corp. would be the one that pays the Copy Cats the rest of the money for the debt Concept 2000 had. Couple days later, Rosney contacted the plaintiff to not cash the cheque yet, due to insufficient funds, to which the plaintiff agreed to. By the time the Copy Cats went ahead and cashed in the cheque, it continued to state that the Rosney Corp still had insufficient funds. After the plaintiff notified the defendant about this information, the defendant made the claim that they were not liable to the debt, because it was Concept 2000’s responsibility.

As a general rule of thumb, shareholders of US corporations are not personally liable for the debts, taxes, obligations or actions of the corporation in which they are a member. This shield from personally liability is known as the corporate veil. The corporate veil, a cornerstone of American corporate law, derives from the fact that corporations in America are regarded as legal personalities, distinct and separate from their shareholders; a concept that gives a little context to the now infamous “Corporations are people!” “blunder” by former presidential candidate Mitt Romney during the 2012 election cycle. The corporate veil also protects parent companies from the debts, taxes, and obligations of subsidiaries. This protection is hailed by many scholars in the area of corporate law because it is believed to be an encouraging factor in the formation new business, which helps to develop and maintain a healthy economy. While it is true and widely accepted that under certain circumstances corporate entities should be regarded as separate and distinct from their individual shareholders, it is also true and accepted that sometimes this concept of separate and distinct should be disregarded by the courts in the interest of preventing fraud or injustice to third parties.

As discussed earlier in the chapter, one of the primary reasons to organize a business as a corporation or as a limited liability company (LLC) is to protect the personal assets of the principals. As a general rule of corporate law, which has been a part of the U.S. legal system for over two centuries, the principals of a corporation are not personally liable for a corporation’s debts and obligations. In other words, a corporation’s principals are generally immune from personal liability for the decisions they make and the actions they undertake on behalf of a corporation. For example, assume that Corporation A contracts with Corporation B to purchase equipment valued at $500,000. If Corporation A fails to pay Corporation B for the equipment it purchased, the principals of Corporation A are not personally liable to Corporation B. Rather, Corporation A, the party in privity of contract with Corporation B, remains liable for the liability it incurred. A so-called “corporate veil” protects the principals of Corporation A, which insulates them from legal actions taken by Corporation B to

“Piercing the corporate viel” refers to the judicially imposed exception to this rule by which courts disregarded the separateness of the company and consider a shareholder responsible for the company’s action as if it were the shareholder’s own. A fundamental rule of corporate law is that shareholders in an organization are not liable for the obligations of the enterprise beyond the capital that they contribute in exchange for their shares.

This is not an easy burden to meet. In determining whether or not a third party has met this burden, a court will consider several factors, including: the absence of business records, undercapitalization of the business, failure to observe mandatory formalities, fraudulent representation by shareholders and/or directors, the promotion of fraud or illegal activity, payment of personal obligations by the corporation, commingling of assets, conduct that manipulated or ignored the corporate form, or is otherwise found to be an “alter ego” of the corporate mangers or shareholders. It is not necessary that the third party make a showing of the existence of all those factors in order to support a finding that the corporate veil should be pierced. Once pierced, or lifted, courts can look beyond the independent personality of a corporation and hold individual shareholders, board members, or employees liable for the obligations of the corporation. In deciding whether the burden has been met, courts will weigh two competing interests. The first being fairness, or the desire to reach an equitable outcome, and the second being societies interests in upholding the principle of limited liability.

Whether the Court should grant Defendant’s motion to dismiss Plaintiffs’ claims that Pied Piper’s comments about the future of the company and failure to disclose information about the safety of its app constituted a violation of §10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated under its authority?

My second point as to why they should not be protected is because companies and corporation are not people. The definition of a corporation now is “a body formed and authorised by law to act as a single person although constituted by one or more persons and legally endowed with various rights and duties including the capacity of succession” (Merriam-Webster). Another main reason companies are allowed by law to call themselves and act as people is because of legal personality (which is “the quality or state of being a person” (Merriam-Webster) or corporate personhood. Even when you read these terms, though, “legal” and “corporate” are still in play. Before this case even happened “the moment the 14th amendment was passed in 1868, lawyers for

The article “The Strange Case of Long Island Savings Bank - Or How a Contract Self-Destructed into Voidness“ briefly discusses the court case, which involves James J. Conway, Jr., chairman and CEO of Long Island Saving Bank. The article involves everything about the case such as the misdeeds of Conway for his own benefits. Being a CEO and chairman, Conway was also a partner in a law firm. The firm was controlled by him and his daughter. In the firm he also hired his daughter-in-law, who was also the director of the firm and salaried officer.

Running a company, small or large, can be an extremely difficult, because there are many pieces that need to fit together to make the company work like a well-oiled machine. There is the product or service to be sold, the team to be hired and trained, and the finances and expenses to all be worked out. There is also a legal element of a company that is commonly overlooked.

Again he is looking for a crystal clear rule that specifically stated the “responsible corporate officer” jury instruction in the district court. The appellant court following the Principle of Rights “which asserts that whether a business decision is ethical depends on how the decision affect the rights of all involved.” This nonconsequential thinking supports this principle as foundational to Western culture.”

The Martha Stewart insider trading case was a high profile case filled with uncertainty. In order to say whether or not Stewart handled her indictment responsibly, it is necessary to start with an assumption regarding her guilt or innocence. For the purposes of this paper, based on the information I have read about the case, and based on the fact that she was found guilty of all counts (although not all specifications) in her stock conspiracy trial (with the exception of the security fraud charge which was thrown out), I will assume that she is guilty. (courttv.com) Based on that assumption, there are several reasons that Martha Stewart did not handle her indictment responsibly which can be summarized