Corporate Veil Case Analysis

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Although the decision does not apply to actions governed by Wisconsin law, the result would likely be the same in such cases.

In Consumer’s Co-op of Walworth County v. Olsen, 142 Wis.2d 465, 484, 419 N.W.2d 211, 217-218 (1988), the Wisconsin Supreme Court set forth two tests for determining whether the corporate veil should be pierced, and called those tests “essentially identical.”

The first has three elements: (1) a person or entity other than the corporation completely dominates its finances, policy, and business practices, so that the corporate entity has no separate mind, will, or existence of its own; (2) such control was used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiff’s legal rights; and (3) control and breach of duty proximately caused injury or unjust loss.

The second test has two elements: (1) such unity of, interest and ownership that the separate personalities no longer exist; and (2) if the acts are treated as those of the corporation along, an inequitable result will follow.

Both tests require a finding of injustice or inequity that would place a Wisconsin case squarely within the holding in the case at bar. The second test is virtually identical to the Illinois test.

Furthermore, the Wisconsin Supreme Court has long held that piercing the corporate veil is an equitable remedy. Wiebke v. Richardson & Sons, Inc., 83 Wis.2d 359, 364, 265 N.W.2d 571 (1978).

	Links 7th Circuit Court of Appeals Related Article Court should decide corporate veil issue

Finally, although no published Wisconsin case has ever expressly held that the decision is for the court, rather than the jury, all published cases involve a challenge to a court’s decision, rather than a jury’s (The only Wisconsin case to expressly hold the decision is for the court is an unpublished case, Atlantic Mut. Ins. Co. v. Ole English Ins. Agency, Inc., 136 Wis.2d 557, 402 N.W.2d 390 (1987 WL 267309)(unpublished decision, Jan. 20, 1987)).

Thus, whether a case is heard in Wisconsin state or federal court, the decision whether to pierce the corporate veil is one that is properly in the court’s discretion.

– David Ziemer

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David Ziemer can be reached by email.