July 3, 2014

I think this gets to part of my issue with the idea that Hobby Lobby (the corporation) has "religious convictions"

MoJo has a good take on the difference between the corporation as a legal entity and the individuals who own that corporation.

That separation is what legal and business scholars call the "corporate veil," and it's fundamental to the entire operation. Now, thanks to the Hobby Lobby case, it's in question. By letting Hobby Lobby's owners assert their personal religious rights over an entire corporation, the Supreme Court has poked a major hole in the veil. In other words, if a company is not truly separate from its owners, the owners could be made responsible for its debts and other burdens.
"If religious shareholders can do it, why can’t creditors and government regulators pierce the corporate veil in the other direction?" Burt Neuborne, a law professor at New York University, asked in an email.
Wouldn't that be a kick in the pants?  If in seeking some kind of religious freedom angle, Hobby Lobby actually exposed corporate owners to the very liability they form corporations to avoid?  

3 comments:

Noah Smith said...

"Piercing the corporate veil" has been something that a load of groups have wanted to do for years. But these groups have stopped short because of what piercing the veil could mean for everyone. But now, as that article points out, the zealots have done it, finally, but by accident! Ironic?

steves said...

Piercing the veil happens a lot when a person fails to have adequate insurance for their corporation or when they set up a corporation as a sham. I think they crafted this decision very narrowly and I haven't seen any indication that this is going to open them up to any major liability. Piercing the veil is nothing new and litigants have been able to do this when the corporation has inadequate insurance or when they co-mingle corporate funds with personal funds.

Streak said...

Like I said on my other post, I am glad that you are so dismissive here. Included in this piece were several lawyers and a NYU law professor. So glad that your view is the only legitimate one out there.