Tuesday, December 30, 2008
C.A.: Company Officers Personally Liable for Tank Leak
By a MetNews Staff Writer
The individual officers of a family business which owned a leaky gasoline storage tank may be liable for almost $2.5 million in civil penalties under the responsible corporate officer doctrine, the Third District Court of Appeal has ruled.
The panel on Friday affirmed Sacramento Superior Court Judge Robert C. Hight’s finding that John and Ned Roscoe were jointly and severally liable, along with the company, as “operators” of the storage tank which leaked over 3,000 gallons of gasoline into the ground.
The Roscoes were the officers, directors, and shareholders in The Customer Company, which owned and operated the underground storage tank, located in the city of Galt.
After the Sacramento County Environmental Management Department sent multiple notices to the company informing it that its failure to engage in remediation of the storage tank’s leakage was a violation of federal and state laws, the Sacramento County District Attorney filed a civil lawsuit against the company and the two men for violating Health and Safety Code Sec. 25299(a)(6), which imposes a per-day civil penalty for each offending underground storage tank against “[a]ny operator of an underground tank system.”
The code defines an “operator” as “any person in control of, or having daily responsibility for, the daily operation of an underground storage tank system,” and the term “person” as including individuals, trusts, firms, joint stock companies, corporations, partnerships, limited liability companies, and associations.
After a bench trial, the trial court held the company and the Roscoes jointly and severally liable for $2,493,250 in penalties, specifically finding that the “overall authority for company affairs was retained by John and Ned Roscoe,” that the men could have prevented or remedied promptly the noticed violations of the regulations, and that they failed to use all objectively possible means to discover, prevent, and remedy the violations.
The Roscoes appealed, contending that the trial court had erred in applying the responsible corporate officer doctrine to hold them personally liable, but Justice Ronald B. Robie explained that the responsible corporate officer doctrine holds corporate officers in responsible positions of authority personally liable for violating strict liability statutes protecting the public welfare.
He reasoned that Sec. 25299(a)(6) is a strict liability statute because it imposes liability on any operator of an underground tank system for any regulatory violation without any mens rea.
Although the statute does not limit liability to any one operator, Robie noted, it also does not define the operator as a single person, and so could be read as supporting imposition of liability on the corporate officer and the corporation, or as a limitation on a corporate officer’s liability.
Referring to the legislative history of the statute, which indicated several Legislative expansions to the definitions of person and operator, Robie concluded that Sec. 25299(a)(6) subjected corporate officers to liability as an “operator.”
Assuming that the trial court’s findings of fact and conclusions of law were supported by substantial evidence, Robie concluded that the trial court did not err in holding the Roscoes personally liable for violating Sec. 25299(a)(6).
Referring to the legislative history of the statute, which indicated several Legislative expansions to the definitions of person and operator, and assuming that the trial court’s findings of fact and conclusions of law were supported by substantial evidence, Robie concluded that Sec. 25299(a)(6) subjected corporate officers to liability as an “operator,” and opined that Hight did not err in holding the Roscoes personally liable for violating the statute.
Justices Harry Hull and M. Kathleen Butz joined Robie in his opinion.
The case is People v. Roscoe, 08 S.O.S. 6952.
Copyright 2008, Metropolitan News Company