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Taken together, Mortimer and Dewberry define both opportunity and constraint. They confirm that Pennsylvania trial courts may develop an enterprise liability doctrine but also underscore that no amount of judicial sympathy can justify collapsing corporate distinctions without rigorous analysis.
In the September 11, 2025 edition of The Legal Intelligencer, Edward Kang writes, “No End-Run Piercing: Lessons from ‘Mortimer’ and ‘Dewberry.’“
Pennsylvania law is not settled on the matter of piercing the corporate veil—particularly with regard to horizontal or “enterprise” liability. While the Pennsylvania Supreme Court recognized the possibility of holding sister corporations jointly liable in Mortimer v. McCool, 255 A.3d 261 (Pa. 2021), it ultimately declined to apply that theory on the facts. The U.S. Supreme Court has since weighed in, albeit under the Lanham Act context, to remind lower courts nationwide that corporate separateness is to be respected absent a properly pleaded and proven veil-piercing theory. See Dewberry Group v. Dewberry Engineers, 604 U.S. 321 (2025).
In this column in September 2021, I discussed Mortimer, the enterprise theory of liability generally, and the common sequencing decisions plaintiffs need to make when bringing a veil piercing claim in “Enterprise Liability and When to Seek Piercing the Corporate Veil.”
Taken together, Mortimer and Dewberry define both opportunity and constraint. They confirm that Pennsylvania trial courts may develop an enterprise liability doctrine but also underscore that no amount of judicial sympathy can justify collapsing corporate distinctions without rigorous analysis. For practitioners on both sides of the “v.”—whether trying to collect against shell entities or defend against overreach—these cases chart the terrain for the next decade of veil-piercing litigation.
In Mortimer, the injured plaintiff secured a multimillion-dollar judgment against the entity, whose only asset was a liquor license, insufficient to satisfy the judgment. As such, the plaintiff sought to hold a related real estate entity owned by the same family liable as part of a unitary enterprise. The Pennsylvania Supreme Court acknowledged that “sister corporations” might, under some circumstances, be held jointly liable for each other’s debts. But it emphasized that the liquor-license entity was adequately capitalized, and that the two companies operated distinctly. The court noted a single purpose entity, such as the liquor-license entity, need not be capitalized any more than it had based on Pennsylvania’s common practice of using a single purpose entity for holding liquor licenses. The court invited lower courts to apply enterprise liability when the equities demanded but declined to do so itself in that case.
Fast-forward to Dewberry, the U.S. Supreme Court analyzed the enterprise liability theory within the Lanham Act context. The Lanham Act allows prevailing plaintiffs in trademark cases to recover the “defendant’s profits” as part of remedies under the act. See 15 U.S.C. Section 1117(a). The plaintiff sought to sweep in the profits of affiliates of the corporate defendant, Dewberry Group, even though those affiliates had not been named as parties. The lower courts—both the district court and the U.S. Court of Appeals for the Fourth Circuit—agreed, reasoning that all those companies should be “treated as a single corporate entity,” and that the affiliates’ earnings were so intertwined with the defendant’s that they could be treated as part of the same profit pool.
The Supreme Court unanimously reversed. The court emphasized the statutory text: the “defendant’s profits” means exactly that, the profits of the named defendant, not those of affiliates or related entities. The court acknowledged that the lower courts’ reasoning was based on the “economic reality” of how the defendant and its affiliate entities operated and acknowledged the lower courts’ concern that strict adherence to corporate formalities would let infringing conduct escape penalty. However, the court held that ignoring the distinction between the corporate defendant and its separately incorporated affiliates improperly swept nondefendants’ profits into the award and went further than the Lanham Act allows.
But the court’s ruling went beyond simple textualist interpretation of a federal statute to reaffirm one of the bedrock principles of American corporate law: corporate separateness. Its language was unambiguous: “The courts below were wrong to treat Dewberry Group and its affiliates as a single entity in calculating the ‘defendant’s profits.’ Dewberry Group is the sole defendant here, and under that language only its own profits are recoverable.”
Notably, the opinion pointedly declined to address whether traditional veil-piercing might be available on remand. Neither did the court decide when courts may look behind accounting records to examine the “economic realities” of a transaction, nor how far the Lanham Act’s “just sum” provision might extend in cases where corporate structures are used to disguise true profits.
In a separate opinion, Justice Sonia Sotomayor highlighted these open questions and underscored that corporate separateness is not absolute: courts are not required to ignore economic reality or accept “clever accounting” designed to disguise a defendant’s true financial gain through affiliate arrangements. She offered concrete examples, such as when a defendant provides infringing services to an affiliate at artificially low rates, thereby shifting profits on paper while retaining the economic benefit. In such cases, she explained, a court’s equitable powers may allow it to treat the affiliate’s revenues as part of the defendant’s profits. Her concurrence concluded by directing the lower courts on remand to “explore that important issue and consider reopening the record if appropriate.”
Implications for Veil Piercing Claims
The immediate holding of Dewberry is narrow and limited to the Lanham Act’s calculation of a “defendant’s profits,” but its implications extend much further. At bottom, the court reaffirmed that related companies cannot be treated as interchangeable absent a properly proven veil-piercing theory. It also underscored the plaintiff’s burden to identify and join the parties whose assets are at stake, rather than relying on judicial willingness to collapse affiliates into a single enterprise. Where Mortimer invited Pennsylvania courts to explore enterprise liability in appropriate cases, Dewberry reminded all courts of the doctrinal limitations on doing so: end-runs are not permitted.
For plaintiffs, the combined lesson of Mortimer and Dewberry is that veil-piercing remains possible but will require precision. Pleadings must be carefully drafted to bring in all relevant entities, since courts will not read “defendant” to include affiliates not before them. Discovery must be used carefully and strategically to develop facts showing undercapitalization, asset-shuffling, and systemic commingling. Courts are most receptive when the record tells a story of exploitation or injustice—for instance, when a defendant has hollowed out one entity while leaving a creditor with no meaningful recourse, or when affiliates are used as conduits to dodge liability. Plaintiffs who can frame their cases in these terms are more likely to persuade a court that veil-piercing is warranted.
For defendants, Dewberry is a reassuring reminder that corporate separateness is still the rule. Sympathy for injured plaintiffs is not a license for courts to disregard the form of incorporation. But the decision also highlights the importance of corporate hygiene. Each entity must maintain its own records, hold meetings and file required documents. Finances must be kept distinct, with no commingling or undocumented inter-company loans. Entities should be sufficiently capitalized for their intended purposes and insured (for operating entities) so they cannot be portrayed as judgment-proof shells. Even public-facing materials matter: branding that blurs the lines between affiliates may be used as evidence of a “single enterprise” in future litigation. In both internal governance and outward presentation, the safest course is to respect boundaries consistently.
Edward T. Kang is the managing member of Kang Haggerty. He devotes the majority of his practice to business litigation and other litigation involving business entities. Contact him at ekang@kanghaggerty.com.
Reprinted with permission from the September 11, 2025 edition of “The Legal Intelligencer” © 2025 ALM Global, LLC. All rights reserved. Further duplication without permission is prohibited. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more information visit Asset & Logo Licensing.