At the Risk of Repetition, Piercing the Veil is a Remedy

At the Risk of Repetition, Piercing the Veil is a Remedy

      Under Kentucky law, it applying the same rule that is applied largely throughout the country, piercing the veil is a remedy, and is not itself a cause of action. A recent decision from the US Court of Appeals for the Fourth Circuit applying Virginia law, held that to be the case. Bennett v. Garner, 2019 WL 209106 (4^th Cir. Jan. 16, 2019).

      Bennett sued his former employer, Virtus Consulting, LLC, and its member, James Garner, in order to enforce a state law judgment. Most of the case would turn upon res judicata; in that context the timing and therefore the nature of a piercing claim were described. The court wrote:

With respect to Bennett’s alter-ego claim, we similarly conclude that the claim could not have been brought before the state court judgment was entered against Virtus. When an individual uses a corporate form to “disguise wrongs, obscure fraud, or concealed crime,” Virginia law permits a plaintiff to pierce the corporate veil and to impose liability directly on the individual as the “alter ego” of the corporation. However, before bringing an action to pierce the corporate veil, the plaintiff must “first obtain[] a judgment against the corporation.” (Slip op. at 11; citations omitted).

Thanks to Adam Back for the lead on this decision.