For more than 20 years, both Texas intermediate courts and federal courts applying Texas law recognized the ``single business enterprise`` theory as a basis for piercing the corporate veil to impose liability on one corporation for another corporation`s debt or wrongdoing. Under this theory, courts were willing to pierce the corporate veil if the two companies had common employees, shareholders and officers; shared human resource, accounting or recordkeeping systems; or had the same telephone number. In November, the Texas Supreme Court rejected this theory in a lawsuit in which defendants were seeking indemnity from others in a products distribution chain. The court explained that disregarding the corporate form must be based on the use of that form ``as part of a basically unfair device to achieve an inequitable result.`` The court went on to say that the practices of ``sharing names, offices, accounting, employees, services, and finances`` are not per se unjust or abusive, and that imposing liability on corporations for each other`s obligations without a finding of this kind of abuse would undermine a fundamental principle of corporate law that limiting liability is a legitimate purpose for forming a corporation.

Link to SSP Partners v. Gladstrong opinion