We recently posted about the risks associated with veil-piercing claims and the ways in which fund managers can protect themselves from exposure to these claims. Our first post on veil-piercing focused on Delaware standards, while this post discusses California law.
California law differs in several important respects from Delaware law on this topic. If a company is subject to suit in California, there are increased risks even if the company is incorporated elsewhere. Courts may assert that California law should apply when the plaintiff is a California resident or when the company operates in California.
And where California law applies, courts may aggressively set aside corporate distinctions, leading to unanticipated results.