The Intersection of State Corporation Law and Employee Compensation Programs: Is It Curtains for Veil Piercing?
Dana M. Muir & Cindy A. Schipani | 1996 U. Ill. L. Rev.
As the oldest members of the baby boom generation enter their fifties and begin thinking seriously about retirement, legal issues relating to the security of retirement income are likely to grow in number and importance. In this article, Professors Muir and Schipani address a unique problem that may arise from the intersection of the doctrine of limited liability for corporate shareholders and the Employee Retirement Income Security Act of 1974 (ERISA), the federal statute that regulates privately sponsored retirement benefits programs. Under some circumstances, limited liability may have the effect of shielding culpable shareholders of closely held corporations from liability for ERISA violations. Plan participants may then have to resort to the primarily state-law doctrine of "piercing the corporate veil" in order to recoup their damages. However, ERISA contains a sweeping preemption clause which may prevent aggrieved plan participants from resorting to state-law doctrine. Whether and to what extent ERISA's preemption clause has this effect on corporate veil piercing is the focus of this article. Professors Muir and Schipani begin with an overview of both ERISA and the doctrine of corporate veil piercing in the state-law context. The authors then explain the various ways in which veil piercing may be applied in federal law contexts, particularly with respect to ERISA. The question of whether ERISA's preemption clause prevents use of veil piercing in ERISA cases is then considered in light of the recent U.S. Supreme Court decision in Peacock v. Thomas, which at first glance seems to stand for this proposition. Professors Muir and Schipani conclude, however, that allowing veil piercing under certain circumstances is not only permissible under ERISA, but consistent with the goals of the preemption clause.
* Assistant Professor, University of Michigan. A.B. 1978, University of Michigan; M.B.A. 1980, University of Detroit; J.D. 1990, University of Michigan.
** Louis and Myrtle Moskowitz Research Professor and Visiting Professor of Law, University of Michigan. B.A. 1979, Michigan State University; J.D. 1982, University of Chicago.