A recent paper by Michael Carey at Harvard Law School posted on SSRN adopts a law and economics approach to lifting of corporate veil in tort actions and calls for a shift by beginning with a presumption of liability for parent companies in case of tort debts. Here is the abstract:
Firms that do not have enough assets to cover potential tort liability have a reduced incentive to take safety precautions. Large firms can take advantage of this by compartmentalizing their most dangerous activities into smaller subsidiaries. Under current law it is difficult to reach the assets of a parent corporation when a subsidiary cannot pay its tort debts. Many commentators have suggested that there should be an exception to the rule of limited liability for closely held corporations, tortfeasors, or both. One consequence of doing so would be that some large corporations might forgo dangerous activities and allow smaller firms to dominate the market. Even assuming that small undercapitalized firms will take the same level of care as undercapitalized subsidiaries, this shift in production can reduce social welfare due to lost economies of scale. Courts could balance these factors by beginning with a presumption of liability for the parents of subsidiaries that cannot pay tort debts, but allowing a defense based on a showing that piercing the veil would result in lost efficiency.