Is There Now a Federal "Veil Piercing" Standard?

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A recent ruling on a motion to dismiss by the Federal District Court for the District of Delaware raises some very difficult questions about the strength of the “corporate veil” in cases where the plaintiff seeks recovery under a federal statute. In fact, the court may have opened Pandora’s box, particularly since so many corporations are incorporated in Delaware and are therefore subject to the jurisdiction of courts in Delaware. The case is Blair et al. v. Infineon Tech. A.G., Civ. No. 09-295 (SLR), 2010 WL 2608959 (D. Del. June 29, 2010). Contrary to a statement by the Blair court in a footnote to its opinion, it seems that there is a different standard for “veil piercing” in federal court than in state court, at least where the plaintiff’s claim rests on a federal statute. If that is true, shareholders of every insolvent corporation have more to worry about than losing their investment.

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