Piercing the Corporate Veil: Deleware Law
Delaware law permits a court to pierce the corporate veil of a company and hold its owners personally liable “where there is fraud or where [the corporation] is in fact a mere instrumentality or alter ego of its owner.” See, e.g., Geyer v. Ingersoll Publ’ns Co., 621 A.2d 784, 793 (Del.Ch.1992). In order to state a claim for piercing the corporate veil under the “alter ego” theory, a party must show (1) that the corporation and its principals sought to be held liable operated as a single economic entity, and (2) that an overall element of injustice or unfairness is present. See, e.g., Trevino v. Merscorp, Inc., 583 F.Supp.2d 521, 528 (D. Del. 2008) (applying Delaware law). The fraud or injustice that must be demonstrated in order to pierce the corporate veil must be found in the principal’s use of the corporate form. See Mobil Oil Corp. v. Linear Films, Inc., 718 F. Supp. 260, 267 (1989); Blair v. Infineon Technologies AG, 720 F. Supp. 2d 462, 473 (D. Del. 2010).
Continue reading →