Piercing the corporate veil

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Piercing the corporate veil is when the court evaluates what is going on behind the corporation's decision making to determine if what they are doing is appropriate. In order to pierce the corporate veil, the court has to prove 3 elements: complete dominance of the corporation's owners, the owner's control is used to cause a wrong, and the control was the proximate cause of the injury. If these 3 elements are proven, the corporate veil is pierced and the court can hold individuals liable. In the case of Woodyard, it was important to accomplish piercing the corporate veil as it showed that Blue Cross owned all of ADS stock and also owned all of ADIC stocks, the president of Blue Cross was also the president of ADS and ADIC, and all of the entities had the same location and similar letterhead; thus, they were not separate corporate entities. Blue Cross had complete domination over ADS and ADIC and no separate identities amongst the corporations. Blue Cross was trying sell life insurance through a subsidiary entity to try to gain financial advantage over competitors.

Reference no: EM133854967

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