Atateks Foreign Trade, Ltd. v. Private Label Sourcing, LLC, 402 F. App'x 623

Plaintiffs allege Private Label Sourcing LLC and Second Skin LLC; district court held Second Skin liable as Private Label’s alter ego for all damages.
Court pierced corporate veil under New York law based on domination, control, siphoning of funds, and lack of arm’s-length dealing.
District court found inadequate capitalization and insolvency, and linked commissions paid to Second Skin to the harm on plaintiffs.
Constructive fraudulent transfer found: more than $306,000 in commissions paid to Second Skin were transfers harming plaintiffs’ ability to collect.
All relevant warehouse transactions were found to have replaced direct letters of credit with warehouse basis by trial record.
Defendants appeal asserting insufficient evidence for veil piercing, insolvency, and transfer validity; court affirms.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court properly pierced the corporate veil	Second Skin dominated Private Label; siphoning funds and lack of independence demonstrate control	Insufficient formalities and control; no arm’s-length failure argued	Yes, on de novo review the court affirmed veil piercing
Whether the transfers to Second Skin were constructively fraudulent	Transfers injured plaintiffs by exacerbating insolvency	Participation in paying commissions precludes fraud claim	Yes, constructively fraudulent transfers affirmed
Whether contract transactions were converted from L/C to warehouse basis	Evidence showed conversion to warehouse basis applicable to liability	No meeting of the minds on other issues; evidence insufficient	Affirmed; district court’s conversion finding upheld

William Passalacqua Builders, Inc. v. Resnick Developers S., Inc., 933 F.2d 131 (2d Cir. 1991) (veil piercing factors and control considerations)
Morris v. N.Y. State Dep’t of Taxation & Fin., 82 N.Y.2d 135 (1993) (courts disregard corporate form to prevent fraud or achieve equity)
Wiliam Wrigley Jr. Co. v. Waters, 890 F.2d 594 (2d Cir. 1989) (abuse of form and commingling may justify piercing the veil)
Freeman v. Complex Computing Co., 119 F.3d 1044 (2d Cir. 1997) (requires showing control used to commit a wrong and cause injury)
In re Roblin Indus., Inc., 78 F.3d 30 (2d Cir. 1996) (insolvency evidence may support piercing and is reviewable for clear error)
Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13 (2d Cir. 1996) (considerations of related-party transactions and abuse of corporate form)
Electronic Switching Ind., Inc. v. Faradyne Elecs. Corp., 833 F.2d 418 (2d Cir. 1987) (framework for proving constructive fraud in transfers)