100 Cornell L. Rev. 99 (2014-2015)
Finding Order in the Morass: The Three Real Justifications for Piercing the Corporate Veil

handle is hein.journals/clqv100 and id is 107 raw text is: FINDING ORDER IN THE MORASS: THE THREE
REAL JUSTIFICATIONS FOR PIERCING
THE CORPORATE VEIL
Jonathan Maceyt &Joshua Mittstt
Few doctrines are more shrouded in mystery or litigated more often than
piercing the corporate veil. We develop a new theoretical framework that
posits that veil piercing is done to achieve three discrete public policy goals,
each of which is consistent with economic efficiency: (1) achieving the pur-
pose of an existing statute or regulation; (2) preventing shareholders from
obtaining credit by misrepresentation; and (3) promoting the bankruptcy val-
ues of achieving the orderly, efficient resolution of a bankrupt's estate. We
analyze the facts of veil-piercing cases to show how the outcomes are ex-
plained by our taxonomy. We demonstrate that a supposed justification for
veil piercing-undercapitalization-in fact rarely, if ever, provides an inde-
pendent basis for piercing the corporate veil. Finally, we employ modern
quantitative machine learning methods never before utilized in legal scholar-
ship to analyze the full text of 9,380judicial opinions. We demonstrate that
our theories systematically predict veil-piercing outcomes, that the widely in-
voked rationale of undercapitalization of the business poorly explains these
cases, and that our theories most closely reflect the actual textual structure of
the opinions.
INTRODUCTION .................................................... 100
I. THE CURRENT MORASS .................................. 104
A. Limited Liability and Veil-Piercing Doctrine ........ 104
B. Scholarly Attempts to Chart a Path Forward ........ 110
II.  A  NEW   TAX ONOMY  ......................................  113
A. Achieving the Purpose of a Regulatory or Statutory
Schem  e  .............................................  115
1.  Environmental Law   ..............................  115
2.  ERISA  ..........................................   118
B. Avoiding Misrepresentation by Shareholders ........ 123
1.  Contract Creditors  ................................  123
2.  Tort  Creditors  ....................................  127
C.  Bankruptcy  Values ..................................   130
III. EMPIRICAL STUDY ........................................... 135
t Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law,
Yale Law School.
tt Postdoctoral Fellow in Empirical Law and Economics, Ira M. Millstein Center for
Global Markets and Corporate Ownership, Columbia Law School.

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