When acquiring a business that has environmental issues, or title to a contaminated property, the buyer will often establish a corporation or a limited liability company (LLC). Officers, directors, members or managers operating within the corporate or LLC structure believe that such structures will insulate them from personal liability. The responsible corporate officer (RCO) doctrine, however, has eroded (if not eradicated) that liability protection. Under that doctrine, any officer, director, member or manager who is responsible for influencing company policies can be held personally liable as an RCO for environmental violations committed by anyone in the company. The liability arises simply if there is a connection between the environmental violation and the policies the RCO enacted, or failed to enact. In a corporation or LLC with only a few officers, directors, members or managers, those few people will always be responsible for setting policy. In other words, they will always be an RCO. As a result, when you are considering acquiring a business or real property that has an environmental risk component, you must consider how best to protect your personal assets from RCO liability.
John Bashaw and Mary Mintel Miller recently argued an RCO case to the Connecticut Supreme Court. Below is a link to an article they recently published in the American Bar Association’s Environmental Litigation Newsletter on the topic.
Feel free to contact either John at (860) 240-1053 or email@example.com or Mary at (860) 240-1059 or firstname.lastname@example.org if you have any questions.