The Transformation of Modern Corporation Law: The Law of Corporate Groups

Phillip Blumberg, University of Connecticut School of Law

Abstract

... The response of the law to the challenge presented by the emergence of multinational corporations and other corporate groups as the dominant institutions in the world's economy is a major development in American and world jurisprudence. ... Over the past century, courts and legislatures have been increasingly faced in numerous areas by this choice between focusing on the individual corporate entity or the enterprise in resolving the legal questions before them. ... In numerous areas, American courts and legislatures have turned to concepts of enterprise and have attributed the rights or liabilities of one interrelated affiliate of a corporate group to another affiliate in resolving legal questions. ... While the literature about "piercing the veil," particularly the literature reviewing the economic dimensions of the doctrine of limited liability, tends to concentrate on the choice between traditional entity or enterprise concepts in contract and tort, the fact of the matter is that much, if not most, of the law of corporate groups is found in other areas. ... In these areas including procedure and in personam jurisdiction, entity law rests solely on the traditional jurisprudential concept of the separate juridical personality of the corporation. ... Traditional "piercing" jurisprudence rests on a demonstration of three fundamental elements: the subsidiary's lack of independent existence; the fraudulent, inequitable, or wrongful use of the corporate form; and a causal relationship to the plaintiff's loss. ...