In the May 12, 2025 edition of The Legal Intelligencer, Aaron Peskin writes, “Where Do I Have to Go to Get a Decent Beer? —State of Taprooms in Pa. and NJ in 2025.”

It is fair to say that the craft beer boom of the 2010s is largely over. The year 2024 saw the first decline in the overall number of craft breweries nationwide since 2005. There are a lot of factors that have led to this decline, including the rise of hard seltzers, RTD (ready to drink) cocktails, and even the rise of recreational cannabis. With all of that said, Pennsylvania has both recently either passed new laws or reinterpreted existing ones to be friendlier to those in the business of brewing beer.

Attorneys were recognized in the following practice areas for Philadelphia, Pennsylvania:

Henry J. Donner
Construction Law

Employee Benefits (ERISA) Law

Litigation – Construction

Gregory H. Mathews
Commercial Litigation

Kandis L. Kovalsky (Ones to Watch)
Commercial Litigation

Kyle T. Garabedian (Ones to Watch)
Commercial Litigation

Lawyers who are nominated for consideration are voted on by currently recognized Best Lawyers working in the same practice area and located in the same geographic region. Awards and recognitions are based purely on the feedback received from these lawyers. Attorneys are not required or allowed to pay a fee to be listed; therefore, recognition by Best Lawyers is considered a singular honor.

Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation, with more than 13 million evaluations recorded. For Best Lawyers: Ones to Watch, the methodology is the same as that of Best Lawyers.

In the May 12, 2022 edition of The Legal Intelligencer, Edward T. Kang of Kang Haggerty co-authored “Enterprise Liability and When to Seek Piercing the Corporate Veil, Part II.“

Most practitioners are familiar with the concept of piercing the corporate veil, but the nuances of this area of law can still mystify even the most seasoned litigators. Because veil piercing is a highly fact-intensive inquiry, it can be difficult to predict in advance when a court will grant such a remedy. This is because, in addition to the multi-factor analysis that often goes into the decision of whether to pierce, there are also a variety of different forms that veil piercing can take. One form in particular, the enterprise theory of liability, is a relatively recent development to Pennsylvania law in this area. See our recent column on this topic.

The enterprise, or “single entity,” theory of liability is a means of imposing liability on quasi-affiliated companies with common ownership engaged in a shared commercial endeavor. While recognized in many jurisdictions, until Mortimer v. McCool, 255 A.3d 261 (Pa. 2021), it was debated as to whether Pennsylvania recognized this form of veil piercing. And while the Pennsylvania Supreme Court’s decision in Mortimer answered the question of whether this doctrine is available, it left unanswered the specifics of how it would be applied. This column discusses the enterprise theory of liability generally, Mortimer, and a recent federal court decision analyzing its holding.

Mortimer dealt with a dram shop action where the plaintiff was seriously injured by an intoxicated driver that had recently been served by the defendant-restaurant. The management and ownership structure of the restaurant was an intricate web of related parties and single-purpose entities, and a total of 10 defendants were named in the original action. After trial, a jury awarded a $6.8 million verdict against these defendants. Even after taking possession of the restaurant’s liquor license and auctioning it off, however, the vast majority of the judgment amount remained unsatisfied.

To remedy this deficiency, Ryan Mortimer filed actions seeking to impose liability on the individual owners and their property management company, which she believed could be held liable under an enterprise theory of liability. Both the trial and Superior Court refused to grant this relief, principally because the Supreme Court had never endorsed such a theory. The plaintiff appealed, and the Supreme Court granted review solely on whether the enterprise theory of liability is available in Pennsylvania.

On appeal, the Supreme Court stated that its past silence on the issue “did not reflect any discernible disfavor” and that the court simply did not have the opportunity to review the issue until Mortimer. And while the court clarified that the enterprise theory of liability is available in Pennsylvania, it declined to apply it in the case before it. The key fact precluding its application in Mortimer was that the entities did not share substantially the same ownership, and that veil piercing is only available where the rights of innocent parties will not be prejudiced. The court also noted that while the entity holding the liquor license did not carry insurance, it was not required to by law, and that this was a common practice in the restaurant industry.

In addition to declining to pierce the corporate veil in Mortimer, the court also declined to provide a specific framework to determine when such a remedy would be warranted. While it specifically identified commonality of ownership as a key factor in the enterprise theory of liability analysis, it also refused to adopt a “perfect identity of ownership” requirement. The court recognized the ambiguity in its opinion and concluded with “but it remains for the lower courts in future cases to consider [the doctrine’s] application consistently with the approach described above, in harmony with prior case law, mindful of the salutary public benefits of limited liability, and with an eye always toward the interests of justice.”

Mortimer is a momentous, albeit somewhat murky, decision that adds Pennsylvania to a growing list of states that recognize the enterprise theory of liability. This is a welcome development. As business organizations and commercial transactions have grown increasingly complex, the law must adapt as well to impose liability where it is warranted. And while Mortimer left many questions unanswered, U.S. District Judge Stephanie Haines of the Western District of Pennsylvania recently discussed its application at length in Seven Springs Mountain Resort v. HHHess, (W.D. Pa. Apr. 4, 2022).

Seven Springs dealt with a $77 million townhome project in Somerset County and the widespread leakage problems found in many of these units. The homeowners association brought suit against the builder and, after agreeing to arbitration, was ultimately awarded a $14 million judgment. The defendant-builder then refused to satisfy the plaintiff’s judgment and filed for bankruptcy after the plaintiff’s attempts to execute on the judgment. The plaintiff then sought leave of court to file an action in recovery on behalf of the trustee, which was granted.

When it filed its action in the Western District, the plaintiff also included the building company’s owner and two of his other companies unrelated to the original project. The plaintiff claimed that these entities should be liable by virtue of their common ownership and relationship with the judgment debtor. Key factual allegations made by the plaintiff were that all the defendant companies shared owners, office space, equipment, and employees, and that funds were regularly commingled. According to the plaintiff, it could proceed against these entities under the enterprise theory of liability. The defendants moved to dismiss for failure to state a claim.

In their briefing, all parties agreed that Mortimer governed the court’s review, although both sides had a different view of its application in the case at hand. The court began by chiding the defendants for ignoring the procedural posture of Mortimer and other veil-piercing cases, namely, that the vast majority of these cases involved fully developed evidentiary records. Where the plaintiff “has alleged numerous, detailed factual allegations in support of its veil-piercing claims,” a court should allow these allegations to be proven or refuted through the discovery process.

The Seven Springs court next discussed the absence of any definitive test in the Supreme Court’s Mortimer opinion. It noted that the court had “recognized” the five-factor test originally announced in Miners v. Alpine Equipment, 722 A.2d 691 (Pa. Super. 1998), which had been the most in-depth opinion on the enterprise theory of liability before Mortimer. Miners dealt with attempts by a judgment creditor to execute on its judgment against alleged sister corporations, a novel strategy in Pennsylvania at the time. The court, in assessing this “quite distinct” method of piercing the corporate veil, outlined five factors which it considered relevant to the inquiry: identity of ownership, unified administrative control, similar or supplementary business functions, involuntary creditors, and insolvency of the corporation against which the claim lies. The Seven Springs court found that the plaintiff had alleged sufficient facts to meet most of these factors, given the substantially overlapping control and ownership of the defendant companies.

The fourth prong of the Miners test, requiring that the plaintiff be an involuntary creditor, was discussed at length in both Mortimer and Seven Springs. On its face, there appears to be a key distinction between the tort victim in Mortimer and the breach of contract claims at issue in Seven Springs. The Seven Springs defendants argued that to the extent the enterprise theory of liability is available, Mortimer and Miners limit it to involuntary creditors. The Supreme Court in Mortimer was somewhat opaque on this, noting the “theoretical distinction between the two classes of creditors” but stating that “nor is it obvious that only involuntary creditors like tort plaintiffs should have the benefit of the doctrine while voluntary contractual creditors like commercial lenders should not, even if the equities in a given case may vary accordingly.”

Likewise, the Seven Springs court left this theoretical distinction unresolved at the motion to dismiss stage. The court noted not only the absence of any clear guidance on the issue, but also that there was a factual and legal dispute in the case before it as to whether the plaintiff was a voluntary or involuntary creditor. The plaintiff in Seven Springs was at least nominally the assignee of the homeowners’ claims under Pennsylvania’s Unfair Trade Practice and Consumer Protection Law, which it claimed caused it to inherit their involuntary creditor status. Additionally, plaintiff emphasized that it was not able to discover the defendant’s insolvency until after the arbitration and judgment, let alone contract for protective provisions relating to this in the original agreement. In any event, the Seven Springs court declined to rule on this issue at the early stage of the case.

Ultimately, the plaintiff’s claims survived the motion to dismiss in Seven Springs, including its enterprise theory of liability claims. And while the Seven Springs court did not outline a definitive test for when such a remedy is warranted, it is the most in-depth post-Mortimer opinion to date. Savvy practitioners should follow this case closely to remain apprised as this doctrine continues to develop. While Seven Springs may be the first case to analyze Mortimer’s enigmatic holding in detail, it will certainly not be the last.

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.

Kang Haggerty associate Ryan Kirk served as co-author of this article.

Reprinted with permission from the May 12, 2022 edition of “The Legal Intelligencer” © 2022 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

The Pennsylvania Rules of Civil Procedure are modeled after their federal counterparts and share much of the same language. Both contain provisions codifying the attorney work-product doctrine, and both use the phrase “prepared in anticipation of litigation” in defining the scope of this privilege. Despite this seemingly similar language, however, a stark distinction has emerged between the two.

Specifically, in the Federal Rules of Civil Procedure, this language affirmatively requires that materials be prepared in anticipation of litigation for them to be privileged. In contrast, as the Pennsylvania Supreme Court recently recognized, this identical phrase in Pa.R.C.P. 4003.3 does not impose such a requirement. See BouSamra v. Excela Health, 210 A.3d 967 (Pa. 2019).

The seminal case relating to the work-product doctrine is Hickman v. Taylor, 329 U.S. 495 (1947), which arose from the sinking of a tugboat in the Delaware River. The cause of the accident was unknown, but it resulted in the deaths of five crew members. In the wake of these events, the owners of the tugboat hired a law firm, who interviewed the survivors “and took statements from them with an eye toward the anticipated litigation.” When the representatives of the decedents sought these notes, the lawyers for the tugboat refused on the grounds of privilege. The district court disagreed, holding that they were not privileged, but the U.S. Court of Appeals for the Third Circuit then reversed.

On appeal, the Supreme Court analyzed this issue of great importance under the then recently enacted Federal Rules of Civil Procedure. The court discussed the delicate balance found in American jurisprudence that values liberal discovery, juxtaposed with a lawyer’s need for “a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel.” The court ultimately espoused a view of the work-product doctrine that is still largely in force today; absent a strong showing of a particularized need, an attorney’s notes and memoranda prepared in anticipation of litigation will almost always be privileged. In the case before it, the court held that such a showing had not been made, and that the interview notes of the tugboat survivors were privileged work-product.

Long a doctrine at common law, the work-product privilege now has explicit rules. Fed.R.Civ.P 26(a)(3)(A) provides that “ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial …” Pennsylvania’s counterpart Pa.R.C.P. 4003.3 states that “a party may obtain discovery of any matter discoverable … even though prepared in anticipation of litigation or trial … [but this] shall not include disclosure of the mental impressions of a party’s attorney or his or her conclusions, opinions, memoranda, notes or summaries, legal research or legal theories.”

Importantly, the federal rule begins by describing what is not discoverable, while the Pennsylvania begins by defining what is discoverable. That is, unlike its federal counterpart, the Pennsylvania rule states that a potential work product is discoverable even if it is prepared in anticipation of litigation. Pa.R.C.P. 4003.3 then exempts from this discoverability a broad category of documents and other work-product materials, without requiring that such materials be prepared in anticipation of litigation. This structural distinction is at the heart of the disparate approaches that state and federal courts have taken to this language, despite both rules containing the phrase “prepared in anticipation of litigation.”

Federal courts have long applied a strict, formalistic interpretation to the federal work-product rule, requiring materials be prepared in anticipation of litigation to be privileged. Pennsylvania courts, beginning with Bagwell v. Pennsylvania Department of Education, 103 A.3d 409 (Pa. Commw. 2014) and culminating with Bousamra, have also taken a textualist approach to Pa.R.C.P. 4003.3 as well. But, given the inverse structural framework of the rules, this has resulted in the opposite outcome; in Pennsylvania, it is irrelevant for work-product purposes whether materials are prepared in anticipation of litigation.

Bagwell dealt with a Right-to-Know-Law request by a plaintiff who sought records pertaining to the Sandusky scandal and related investigation. This investigation had been conducted by outside counsel, and the plaintiff argued that its purpose was mere fact-finding, not to prepare for litigation. The state refused this request on privilege grounds, citing the attorney-client and work-product privileges.

On appeal, the Pennsylvania Commonwealth Court characterized the plaintiff’s construction of Pa.R.C.P. 4003.3 as “novel” and stated that “the anticipation of litigation part of the work-product doctrine is not an absolute requirement.” Recognizing that “materials prepared in anticipation of litigation” is merely an example of the rule’s coverage, the court held that materials “do not need to be prepared in anticipation of litigation for work-product privilege to attach.” Applying this interpretation, the court held that the sought-after records were within the scope of the work-product privilege.

Bagwell was a significant departure from the traditional interpretation of the analogous federal rule, but one that would quickly be followed. Three years later, in another case dealing with the Sandusky scandal, the Pennsylvania Superior Court would come to an identical interpretation of Pa.R.C.P. 4003.3. In Estate of Paterno v. National Collegiate Athletic Association, 168 A.3d 187 (Pa. Super. 2017), the plaintiffs also sought records relating to the outside counsel investigation, claiming that these records would demonstrate “an unreliable rush to judgment” on the part of defendants in levying punishment against the late Joe Paterno. As in Bagwell, the defendants in Paterno claimed privilege based on the work-product doctrine.

Quoting Hickman, the Superior Court in Paterno outlined the policy rationales still involved in privilege determinations, namely the need for attorneys to protect their mental impressions, conclusions, opinions and memoranda. The court recognized that Pa.R.C.P. 4003.3 “does not limit work product protection to materials prepared in anticipation, rather, materials prepared in anticipation are not automatically protected.” The Superior Court in Paterno explicitly rejected plaintiffs’ reliance on the analogous federal rules, which “cabins work product protection to matters prepared in anticipation of litigation.” Ultimately, the Superior Court agreed with the Commonwealth Court in Bagwell that “mental impressions are protected regardless of whether they are prepared in anticipation of litigation.”

Two years later, the Pennsylvania Supreme Court had the opportunity to consider this issue in BouSamra. In a case largely about waiver, the court was tasked with determining what materials were discoverable following an investigation into a cardiology practice in Westmoreland County. The allegations against this practice were that it was performing medically unnecessary stenting, a charge that the physicians involved obviously disputed. When the defendants went public with these allegations, plaintiff sued for defamation and tortious interference with contractual relations. During discovery, a dispute arose over the discoverability of an email from outside counsel forwarded by the defendant to its public relations consultant, which the plaintiff claimed waived any applicable privilege.

While tangential to the core issue of waiver, the Supreme Court in BouSamra explicitly held that “the purpose of the work product doctrine is to protect the mental impressions and processes of an attorney acting on behalf of a client, regardless of whether the work product was prepared in anticipation of litigation.” To support this statement, the majority cited Bagwell, Paterno, and like cases. In a footnote, the majority emphasized that Pa.R.C.P. 4003.3’s use of “even though” before “prepared in anticipation of litigation” made this language inclusive, not exclusive for discovery purposes. The rule’s later exemption of a broad class of work-product materials from discovery, however, does not reference any litigation requirement. Turning to the main issue of waiver, the court held that the defendant had waived the attorney-client privilege through its actions, but remanded for further factual development on the potential waiver of the work-product privilege.

Justice Christine Donohue, joined by Justices Debra Todd and Kevin Dougherty, concurred with the majority’s attorney-client privilege waiver analysis. But she took issue with the majority’s “dicta” that an attorney’s mental impressions and processes are privileged, regardless of whether the work-product was prepared in anticipation of litigation. In an 852-word footnote, Donohue outlined her deep skepticism of the distinction between the divergent state and federal interpretations of “prepared in anticipation of litigation.” Despite Donohue’s impassioned concurrence, later decisions have clearly treated BouSamra’s “dicta” in this regard as more than dicta. E.g., Carlino East Brandywine v. Brandywine Village Associates, 260 A.3d 179, 205 (Pa. Super. 2021); Ford-Bey v. Professional Anesthesia Services of North America, 229 A.3d 984, 993 (Pa. Super. 2020).

While superficially similar, Pa.R.C.P. 4003.3 and Fed.R.Civ.P 26(a)(3)(A)’s joint use of the phrase “prepared in anticipation of litigation” should not be confused as establishing the same requirements. A more comprehensive review of these rules reveals that they are describing very different scopes. Namely, the federal rule limits the work-product privilege to these materials, while the Pennsylvania rules impose no such requirement. While these materials are not automatically protected in Pennsylvania, Pa.R.C.P. 4003.3’s later exemption for “conclusions, opinions, memoranda, notes or summaries, legal research or legal theories” adopts an expansive scope for the work-product privilege. And while the Pennsylvania Supreme Court’s opinion in BouSamra is not without its critics, it is now the black-letter law of the state that an attorney’s mental impressions and conclusions are covered by the work-product privilege, regardless of whether these materials were prepared in anticipation of litigation.

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.

Kang Haggerty associate Ryan Kirk served as co-author of this article.

In the September 9, 2021 edition of The Legal Intelligencer, Edward T. Kang of Kang Haggerty co-authored “Enterprise Liability and When to Seek Piercing the Corporate Veil.“

Piercing the corporate veil, a simultaneously ubiquitous and arcane doctrine, has been the subject of extensive commentary and critique. While the Pennsylvania Supreme Court admitted that this is already “among the most confusing” areas of corporate law, its recent decision Mortimer v. McCool, Nos. 37 MAP 2020, 38 MAP 2020 (Pa. July 21, 2021) adds yet another layer of intricacy to this knotty enigma. With Mortimer, Pennsylvania has joined a growing number of jurisdictions that explicitly allows for the so-called enterprise theory of liability.

Sometimes described as a “single-entity” theory of liability, enterprise theory of liability is conceptualized as a “horizontal” form of veil piercing. This contrasts with the traditional “vertical” form, where a corporation’s owner may be held liable for judgments against it when equity requires. Enterprise liability, as described by the Supreme Court, allows an analogous form of veil piercing for “affiliated or sister corporations—corporations with common ownership, engaged in a unitary commercial endeavor.” In this column, we discuss Mortimer, the enterprise theory of liability generally, and the common sequencing decisions plaintiffs need to make when bringing a veil piercing claim.

Before Mortimer, the most in-depth discussion of enterprise liability in Pennsylvania was Miners v. Alpine Equipment, 722 A.2d 691 (Pa. Super. Ct. 1998). There, the plaintiff obtained a default judgment against a defendant and sought to pierce the corporate veil against a corporation with the same controlling shareholder under an alter ego theory of liability. Importantly, while the two corporations had the same controlling shareholder, they had different minority shareholders. The trial court allowed the corporate veil piercing, and defendants appealed.

On appeal, the Superior Court recognized that the case was not an alter ego case, but the “quite distinct” single entity theory of liability. Noting that the theory had yet to be adopted in Pennsylvania, the court nevertheless enunciated five factors that it considered as threshold requirements before the imposition of liability under this theory. Because the first of these requirements, a total identity of ownership, was not met, the Superior Court rejected plaintiff’s arguments without a further analysis of the remaining factors.

Between Miners and Mortimer, federal courts applying Pennsylvania law were split on whether the enterprise theory was an available remedy in Pennsylvania, and the Supreme Court’s silence was levied in support of both positions. Proponents asserted that because the enterprise theory had not been explicitly foreclosed, the theory was available, while opponents pointed to the absence of express authority to use the doctrine. This was the uncertain and unsettled state of the law that provided the backdrop for Mortimer.

The underlying suit in Mortimer arose when the plaintiff was seriously injured by an intoxicated driver, recently served by the defendant restaurant. The management and ownership structure of the restaurant was an intricate web of related parties and single purpose entities, and a total of ten defendants were named in the original dram shop action. After trial, a jury awarded a $6.8 million verdict against these defendants.

While Mortimer took possession of the defendant’s liquor license, and sold it for $415,000, the bulk of her judgment remained unsatisfied. To remedy this deficiency, Mortimer filed actions seeking to impose liability on the individual owners and their property management company, which she believed could be held liable under an enterprise theory of liability. Both the trial court and Superior Court refused to grant the requested relief, interpreting the Supreme Court’s past silence on the issue as a tacit rejection of its availability.

The Supreme Court on appeal engaged in an extensive analysis of enterprise liability case law in this commonwealth and beyond. After this review, the Supreme Court announced the black letter law on this issue; the enterprise theory of liability is available in Pennsylvania where equity demands. While the Supreme Court refused to adopt the same five-factor analysis outlined in Miners, it seemingly endorsed the identity of ownership prong by stating “enterprise liability requires that the affiliates that the enterprise comprises have common owners and/or an administrative nexus above the sister corporations.” As opposed to Miners’ itemized analysis, the Supreme Court adopted a more flexible standard, as a “rigidly formalistic approach” would only subvert the underlying goal of achieving equity.

Ultimately, while recognizing enterprise liability as a valid remedy in Pennsylvania, the Supreme Court declined to apply it in the case. As a threshold matter, the enterprise theory could not be used because one of the owners of the alleged affiliate entity was completely uninvolved in any wrongful conduct. In rejecting the imposition of liability on this ground, the Supreme Court noted that “piercing may occur only when the rights of innocent parties are not prejudiced thereby.”

Mortimer is a promising and noteworthy decision, as it provides plaintiffs with another avenue of recompense for injuries sustained at the hands of defendants abusing the corporate form. The specific contours of this decision will surely be developed by trial courts across the commonwealth, and savvy practitioners will help shape its further evolution. But the procedural history of Mortimer is also worth discussing, as it demonstrates a typical conundrum faced by plaintiffs in these types of actions: when to bring a veil piercing claim. In Mortimer, the plaintiff brought her veil piercing action after she had already prevailed in the underlying action, as opposed to simultaneously litigating a veil piercing claim in the underlying. When a plaintiff could bring a veil piercing action is not always clear, and courts are split on this issue.

To understand why there is some confusion in this regard, many courts note that piercing the corporate veil is not an independent cause of action, but an equitable remedy used to impose liability when the corporate form has been abused. See Siematic Mobelwerke GmbH & Co. KG v. Siematic, 643 F.Supp.2d 675, 694 (E.D. Pa. 2009). Often, plaintiffs bring veil piercing claims in their complaint concurrent with other causes of actions in the underlying action, and courts review these claims simultaneously. Sometimes, however, plaintiffs could bring such claims after obtaining judgement in the underlying action first, seeking to pierce the corporate veil as part of their post-judgment collection efforts. See Presidential Facility v. Campbell, 2015 WL 1208261 (E.D. Pa. March 16, 2015). Presidential Facility demonstrates the risks plaintiffs face when they bring a piercing claim post-judgment, as the court expressed disapproval with plaintiffs for bringing the veil piercing action two years after judgement, despite continuous efforts by plaintiff during that period to execute on the judgment.

With the widespread adoption of single purpose entities, the corporate form has become increasingly complex. These entities operate as individual components in an overall gestalt that is engaged in commercial activity. This cabining complexity is principally designed to prevent liability. To allow such unchecked sequestration could frustrate the central goal of tort law, making plaintiffs whole. Due to the complex use of the corporate form to shield from corporate liability, attempts to pierce the corporate veil are as popular as ever.

A plaintiff’s decision about when to bring its piercing action involves both economic and strategic considerations. In many cases, it is economically efficient for such matters to be litigated simultaneously with the underlying suit, as similar discovery may be relevant for both issues. Comprehensive discovery can also provide the accurate picture as to whether veil piercing is even warranted. Strategically, plaintiffs should consider bringing the piercing the corporate veil claim in the underlying action when the liability of the owner of the defendant entity is clear—e.g., the owner forms an entity in a jurisdiction to carry out activities that are legal in that jurisdiction but knowingly conducts those activities in another jurisdiction where such conduct is illegal. This is not to say that piercing actions should always be brought simultaneously, as it is possible for post-judgment piercing to be more efficient in some instances.

If the evidence required to prevail on a veil-piercing claim is sufficiently different from the evidence required to prevail in the underlying suit, then it makes economic sense for plaintiffs to wait until a judgment has been rendered before filing a veil piercing action. In such cases, plaintiffs could save the additional cost of litigating the veil piercing issues in the underlying case. Waiting until first obtaining a judgement makes economic sense, especially in a case where obtaining a judgement is far from highly probable. Strategically, plaintiff should consider placing the defendant of notice of its intent to bring a veil piercing action post-judgment against the defendant in a case where the probability of success for veil piercing is high, which should encourage the defendant (and its owner) to settle the case early.

Mortimer’s adoption of the enterprise theory of liability significantly broadens Pennsylvania’s piercing doctrine. In adopting this remedy, yet refusing to apply a rigid standard for when it is available, the Supreme Court has signaled that it favors a broad piercing power where equity requires. This preference for breadth should also be applied to plaintiffs’ decision about when to bring a veil piercing action, as this will further efficiency, strategy, and, most importantly, equity. Practitioners should keep in mind that veil piercing is still a rare exception to the norm.  Courts are reluctant in allowing veil piercing in most cases, as they should be. Plaintiffs should avoid bringing a veil piercing claim solely based on the inability to collect from the defendant entity without more facts. With the adoption of the enterprise theory, however, plaintiffs have another tool that can be used to remedy abuses of the corporate form.

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.

Kang Haggerty associate Ryan Kirk served as co-author of this article.

Reprinted with permission from the September 9, 2021 edition of “The Legal Intelligencer” © 2021 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

Over both of counsel’s objections, the judge allowed the witness to continue with his testimony, in accordance with Pennsylvania Rules of Evidence 702 and 703 and the general acceptance test. This scenario raises the question: what materials can an expert witness rely on in Pennsylvania courts, which follows the Frye standard? And has this changed in recent years?

In the May 20, 2021 edition of The Legal Intelligencer Edward T. Kang, managing member of Kang Haggerty wrote “Expert Witnesses in Pa.—What Materials Matter in Forming an Opinion?“

In a recent hearing, opposing counsel objected to the testimony of my expert witness (after he had already been qualified as an expert in forensic accounting) because his testimony involved a specific area of industry for which he was not admitted as an expert. It seemed counsel believed (or pretended to believe) an expert in forensic accounting could only testify about forensic accounting. I pointed out to the judge that the witness had explained that, as a forensic accountant, he had to learn about the different industry practices he was hired to assess, and therefore had requisite knowledge to form an opinion on the matter. That is, forensic accountants learn the standards and practices of a particular industry in which they were hired to provide their services, which is no different from litigators learning the industry of their clients. Opposing counsel also objected because some of the documents that the expert witness used to form his opinion had not yet been authenticated or admitted into evidence. My witness explained that his method and the sources he used when conducting research for his expert report, which summarized his opinion, were commonly used by other forensic accountants.

Over both of counsel’s objections, the judge allowed the witness to continue with his testimony, in accordance with Pennsylvania Rules of Evidence 702 and 703 and the general acceptance test. This scenario raises the question: what materials can an expert witness rely on in Pennsylvania courts, which follows the Frye standard? And has this changed in recent years? This column explores these two questions, along with other important distinctions between federal court practice (which follows the Daubert standard) and Pennsylvania state court practice.

The Rules of Evidence

One of the counsel’s main objections, which he made repeatedly throughout the testimony of my expert witness, was that the expert’s opinion was no more than hearsay because the documents he based his expert report and testimony upon had not yet been authenticated. Federal Rule of Evidence 703 permits expert testimony based on “facts or data in the case that the expert has been made aware of.” In other words, an expert may base her opinion on hearsay, as long as that is not the only data her opinion is based upon. The rule also permits experts to rely on facts or methods that others in the field “would reasonably rely on…in forming an opinion on the subject.” And, if that is the case, those facts “need not be admissible for the opinion to be admitted.” Pennsylvania law follows the same. Therefore, my witness’ testimony should have most certainly been admissible, and opposing counsel’s objection overruled (as it was).

Even though the two rules of evidence are almost identical, Pa.R.E. 703 omits a key phrase included in the corresponding federal rule: “But if the facts or data would otherwise be inadmissible, the proponent of the opinion may disclose them to the jury only if their probative value in helping the jury evaluate the opinion substantially outweighs their prejudicial effect.” This “balancing test” is further explained in the 2000 amendment to the rule. Pennsylvania law, on the other hand, requires the disclosure of all facts the expert relied upon with cautionary instruction to the jury at trial, even if they are inadmissible. Despite the cautionary instruction, there is of course no guarantee that a jury will not misuse the inadmissible information in making their judgments, and jurors in Pennsylvania state courts therefore may hear more information that could prejudice a party than in federal court.

This still leaves open the question, aside from hearsay (under certain circumstances), what sources and information can an expert rely on? F.R.E. 703 states exactly what experts can rely on in forming their opinions. According to the advisory committee notes, experts can rely on their own firsthand observation, presentation at trial (whether it be through the hypothetical question or having the expert attend trial to hear testimony that establishes the facts), and “presentation of data to the expert outside of court and other than by his own perception.” For example, a physician may rely on statements from a patient, the patient’s relatives, nurses, technicians, etc. when formulating a diagnosis. This third source supports the Rule’s allowance of hearsay, so long as there has been substantial time to examine these other witnesses, or so long as their opinions and statements are not the only source the expert relies on. Pa.R.E. 703 does not have a similar explanatory section either in the rule itself or in its comments that lays out such sources.  In practice, however, Pa.R.E. 703 and F.R.E. 703 do not differ substantially.

There is one notable exception between the state and federal rules—a somewhat complex and perhaps lesser-known difference between the two court practices, which lies in a comment to Pa.R.E. 703: novelty. The comment states, “If an expert witness relies on novel scientific evidence, Pa.R.C.P. No. 207.1 sets forth the procedure for objecting, by pretrial motion, on the ground that the testimony is inadmissible under Pa.R.E. 702, or Pa.R.E. 703, or both.” Of course, parties have a similar option in federal court, as they can submit Daubert motions in limine to challenge the admission of evidence or testimony of an expert witness before, or, if necessary, during trial. It is the language of this comment, however, and specifically the use of the word, “novel” that divides the two practices.

‘Frye’ v. ‘Daubert’ Standards

The Daubert standard does not appear to take as much issue with “novel” evidence as the Frye standard, as it allows an expert to rely on such evidence so long as it is deemed “reliable.” But what is considered novel, and what is considered reliable? What would be admitted into evidence in federal court that would not be admitted in Pennsylvania state court?

A look back in the history of these two standards reveals what has been and still would be considered novel. The original Frye case did not admit information obtained from a lie detector test as it was not yet generally accepted in the scientific community and was therefore considered to be novel. Once the Federal Rules of Evidence were revised and Rule 702 expanded upon, however, as the court dictates in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993), the Frye test no longer fit the rule. It was in this case that the court reversed the decision of the trial court to exclude testimony based on animal studies, as it determined the resulting scientific theories were not generally accepted and therefore novel, and did not meet the Frye standard of admissibility. The court agreed with the plaintiff’s argument that the revision in the rules called for a new standard and that the evidence should be admitted under these conditions.

“Novel” scientific evidence of the past that has been admitted under the Daubert standard includes DNA match evidence obtained through the restriction fragment length polymorphism (RFLP) method. See, Taylor v. State, 889 P.2d 319 (Okla. Crim. App. 1995) (holding that the novel evidence was “relevant and reliable” and had been subject to some peer review, and choosing to follow Daubert over Frye for the first time). Even though this case falls under criminal law, the lesson here is the same: federal courts and those state courts that follow Daubert would admit novel evidence, whereas those state courts that follow the Frye standard, like Pennsylvania, would generally not.

There have been cases in the past that have admitted novel evidence under the Frye standard, however. Genetic fingerprint DNA testing, for example, had not yet been used in a U.S. criminal case in 1985, and yet passed the Frye standard of admissibility in the Fifth District Court of Appeal of Florida, for being scientifically reliable on several levels, including in its method. It had also been peer-reviewed despite not being widely used and not having a sound reputation. See, Andrews v. State, 533 So. 2d 841 (Fla. Dist. Ct. App. 1988). Further evidence was admitted at a retrial in which the court switched standards and applied the Downing relevancy test, which stems from F.R.E. 702.

Additionally, it should also be noted that the Daubert standard was broadened to include testimony that is not scientific in nature, including testimony grounded in technical or specialized knowledge, which has expanded the applicability of the standard in civil cases. See, Kumho Tire v. Carmichael, 526 U.S. 137 (1999).

Conclusion

Pennsylvania and Federal Rules of Evidence seem almost identical, with expert witnesses allowed to rely on the same three sources to form their opinion: their own firsthand observation, presentation at trial and presentation outside of court (including hearsay). However, there is one key difference between the rules that litigators must watch out for. Pennsylvania Rules of Evidence 702 and 703, and in accordance with the Frye standard, dictate that novel evidence, or, in other words, evidence that is not generally accepted, is inadmissible. Even though some evidence has been admitted if peer reviewed, it is best to think strategically when putting one’s expert witness on the stand to try to avoid her testimony being thrown out for this novelty issue.

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 May 20, 2021 edition of “The Legal Intelligencer” © 2021 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.

Piercing the veil of limited liability companies (LLCs) allows a court to disregard the separate corporate personality of the company and its member(s) to reach the assets of the members and hold them liable for all or part of the LLC’s debts under Pennsylvania law.

In the September 3, 2020 edition of The Legal Intelligencer Edward T. Kang, managing member of Kang Haggerty wrote “Piercing the Corporate Veil of LLCs Under Pennsylvania Law.”

Piercing the veil of limited liability companies (LLCs) allows a court to disregard the separate corporate personality of the company and its member(s) to reach the assets of the members and hold them liable for all or part of the LLC’s debts under Pennsylvania law. Previously, I’ve written on the general substantive and procedural requirements of piercing the corporate veil of an entity and alter ego jurisdiction over corporate groups. This column addresses the Pennsylvania law on the doctrine of piercing the corporate veil as applied to LLCs.

When nonresident members of a corporate group, usually the parent company, should expect to be subjected to the jurisdiction of Pennsylvania courts when one of the entities, usually the subsidiary, is based or does business in the state.

In the June 18, 2020 edition of The Legal Intelligencer Edward T. Kang, managing member of Kang Haggerty wrote “Piercing the Corporate Veil of Corporate Groups to Establish Alter Ego Jurisdiction.”

Last June, in this space, I authored a column about Pennsylvania law on substantive and procedural aspects of piercing the corporate veil of companies to reach the assets of their shareholders or the assets of a parent company in corporate groups. In early January 2020, I wrote a column about the development of Pennsylvania law on establishing personal jurisdiction over registered nonresident businesses since the Supreme Court’s decisions in. In this case, I address the intersection of those two related columns in cases involving corporate groups. That is, when nonresident members of a corporate group, usually the parent company, should expect to be subjected to the jurisdiction of Pennsylvania courts when one of the entities, usually the subsidiary, is based or does business in the state.

With Complaints Rapidly Increasing across the U.S., Now is the time to act

As of May 26, 2020, 2,278 complaints have been filed nationwide over the global pandemic COVID-19 according to the COVID-19 Complaint Tracker developed by lawyers at Hunton Andrews Kurth LLP. While the largest amount of these complaints deal with prison conditions and civil rights , the next highest areas of litigation involve insurance disputes, consumer disputes, labor and employment issues  and contract disputes. Claims regarding employment, contracts and force majeure provisions, or clauses contained in contracts which excuse performance due to natural destructive acts also known as “acts of God,” are on the rise. These complaints will continue to be filed as the effects of COVID-19 continue to be felt in ever-changing ways. Many of these complaints have been filed in jurisdictions where Kang Haggerty regularly practices—namely COVID-19 hot spots New York, Pennsylvania and New Jersey.

Although the COVID-19 Complaint tracker does not capture all of the COVID-19 related cases filed, it does provide insight into how this disruptive and deadly virus has negatively impacted business and individuals across the United States. Further, these metrics only represent disputes that have escalated to the point of initiating litigation, a costly and potentially prolonged endeavor. Many disputes are not captured in the above data either because a wronged party has not retained representation to advocate for their grievance, talks between opposing parties are ongoing, or settlements have been reached. Determining your best course of action can be critical.

Filing a complaint is one of the many tools skilled litigators have in their arsenal to obtain favorable outcomes for their clients. But before filing a complaint one needs to be clear on what terms govern your agreement, the responsibilities of all parties involved, how actions taken by either party may result in a breach to the agreement, and what protections from disruption are afforded to you under the terms of your agreement, your municipality, state or, or under federal statute. By consulting a lawyer to analyze your situation promptly, you may be able to avoid costly litigation related to any disruptions in service you experience or provide as a result of COVID-19. Kang Haggerty LLC has, for instance, successfully utilized force majeure clauses to excuse nonperformance under contracts, which enabled clients facing millions of dollars in liabilities to walk away from disrupted contracts with no penalty fees assessed or for significantly less than they were facing in settlements. As the metrics make clear, COVID-19 is fertile ground for disputes among individuals and businesses that continue to grow each day as our nation attempts to achieve a new normal.

Please consult our Kang Haggerty COVID-19 Resources: Preparing for Post COVID-19 Litigation page for additional information on specific practice areas and issues to consider, along with helpful tips and advice on preparing for reopening in a COVID-19 world, reducing liability and the likelihood of being sued successfully.

Tianna K. Kalogerakis is an associate at Kang Haggerty LLC, where she concentrates her practice on commercial litigation and business disputes. Tianna is the immediate past president of Barristers’ Association of Philadelphia.

In a changing COVID-19 world filled with new regulations, adjustments, and uncertainty, Kang Haggerty provides services to help our clients avoid litigation or to obtain favorable outcomes in litigation. Some COVID-19 services offered by Kang Haggerty that will help you address COVID-19-related issues include:

• Covid-19 Whistleblower, Qui Tam and False Claims Actions regarding recoupment of misappropriates government funds
• Contracting Disputes Resulting from Non-performance due to COVID-19 and the Invocation of Force Majeure
• Business Disruption or Business Loss Claims due to COVID-19
• Insurance Litigation and Recovery
• Insurance Bad Faith Claims for Refusal to Pay for COVID-19 Losses
• Legal Issues Involving Supply Chain & Distribution
• Compliance with Pennsylvania’s Guidance for Construction Industry Businesses Permitted to Operate During the COVID-19 Disaster Emergency
• Compliance with the City of Philadelphia’s Guidance for Construction Industry Businesses Permitted to Operate During the COVID-19 Disaster Emergency
• Employer liability for Employee Exposure to COVID-19
• Compliance with HIPAA regarding Privacy Standards and Security Measures for Protected Health Information and electronically stored Protected Health Information

Kang Haggerty can provide consultations and analyses on any of the above matters and more, specific to your needs and considerations. COVID-19 presents a series of unique and circumstances in a landscape that is ever-changing. Consult one of our attorneys today to learn the most up-to-date insight on COVID-19 issues impacting you.

Additionally, our business clients can take steps today to prepare for reopening in a COVID-19 world and reducing their liability and the likelihood of being sued successfully:

1. Have a justification for the actions you take
2. Thoroughly document your actions
3. Encourage remote work be confined to company-issued devices and programs
4. Assess your document retention policies
5. Evaluate your regulatory compliance and potential exposure
6. Search for small problems that may become big problems over time
7. Be wary of wrongful conduct and avoid engaging in questionable conduct
8. Touch base with your clients and vendors to keep your rapport strong
9. Determine whether changes or concessions are needed in your contract
10. Consider the future and how your business may grow to take advantage of opportunities presented

Now is the time to take steps to insulate you and your business from liability. Contact us today to determine what steps you should take to protect yourself and your business.