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People v. Roscoe

December 26, 2008

THE PEOPLE, PLAINTIFF AND RESPONDENT,
v.
JOHN F. ROSCOE ET AL., DEFENDANTS AND APPELLANTS.



APPEAL from a judgment of the Superior Court of Sacramento County, Robert C. Hight, Judge. Affirmed. (Super. Ct. No. 02AS01581).

The opinion of the court was delivered by: Robie, J.

CERTIFIED FOR PUBLICATION

The responsible corporate officer doctrine was developed by the United States Supreme Court to hold corporate officers in responsible positions of authority personally liable for violating strict liability statutes protecting the public welfare. (Hustis & Gotanda, The Responsible Corporate Officer: Designated Felon or Legal Fiction? (1994) 25 Loyola U. Chi. L.J. 169, 176, citing United States v. Dotterweich (1943) 320 U.S. 277 [88 L.Ed. 48] (Dotterweich) and United States v. Park (1975) 421 U.S. 658 [44 L.Ed.2d 489] (Park).) It is a common law theory of liability separate from piercing the corporate veil or imposing personal liability for direct participation in tortious conduct. (Celentano v. Rocque (Conn. 2007) 923 A.2d 709, 721, fn. 11.)

The trial court here used the responsible corporate officer doctrine to impose $2,493,250 in monetary civil penalties on two individuals (defendants John F. Roscoe and Ned F. Roscoe; hereafter the Roscoes) who were officers, directors, and shareholders of a family company for an underground storage tank that leaked over 3,000 gallons of gasoline into the ground. The family company that "owned and operated" the tank was also held jointly and severally liable.

The majority of the monetary penalties were imposed pursuant to the laws governing underground storage of hazardous substances, which we collectively refer to as the tank laws.

(Health & Saf. Code,*fn1 § 25280 et seq.) The main statute of the tank laws at issue here is section 25299, subdivision (a)(6), which imposes on "[a]ny operator of an underground tank system" "a civil penalty of not less than five hundred dollars ($500) or more than five thousand dollars ($5,000) for each underground storage tank for each day of violation for" "[v]violation of . . . any regulation adopted by the [State Water Resources Control B]oard . . . ."

We hold that the responsible corporate officer doctrine applies to section 25299, subdivision (a)(6) of the tank laws and thus subjects to liability as an "operator" a corporate officer who has "a responsible share in the furtherance of the transaction which the statute outlaws" (Dotterweich, supra, 320 U.S. at p. 284 [88 L.Ed. at p. 53]), even where the corporation itself is also found to be the operator.

FACTUAL AND PROCEDURAL BACKGROUND

In 1994 an underground storage tank owned and operated by The Customer Company leaked over 3,000 gallons of gasoline into the ground in the City of Galt. The Customer Company was a family company in which the Roscoes were officers, directors, and shareholders. After the leak occurred, employee John Johnson notified the Sacramento County Environmental Management Department (the department) about the leak, and consultant Parker Environmental Services was eventually hired to oversee the remediation.

Cleanup of the leak did not proceed timely and adequately, however, and the department sent multiple notices to The Customer Company that it was violating federal and state statutes and regulations. These notices were opened by John Roscoe, who considered them to be "form letters," which he passed on to employee Johnson. When Johnson received the notices, he referred them to Jim Parker "to find out how to resolve the matter." Johnson did nothing further, and nobody else from The Customer Company attempted to make sure the problems were addressed.

In 2002, the Sacramento County District Attorney filed a civil lawsuit against The Customer Company and the Roscoes (among others) for violating the tank laws. The lawsuit alleged, among other things, that The Customer Company and the Roscoes failed to submit mandatory work plans for source removal of an existing unauthorized fuel release, failed to take or contract for mandatory interim remedial actions to abate or correct the effects of the unauthorized fuel release, failed to submit appropriate work plans, and failed to timely submit mandatory quarterly reports.

After a 12-day bench trial, the trial court issued a 44-page statement of decision holding The Customer Company and the Roscoes jointly and severally liable for $2,493,250 in penalties.*fn2 The court based its holding of the corporation's liability on a finding that The Customer Company "was in fact the owner and operator of the tank at the time the leak occurred . . . ." The court based its holding of the Roscoes' personal liability on the responsible corporate officer doctrine. The court found that "overall authority for company affairs was retained by John and Ned Roscoe." They could have prevented or remedied promptly the noticed violations of the regulations, but they did not "exercise their responsibilities and power to use all objectively possible means to discover, prevent, and remedy any and all violations." Had a timely cleanup operation occurred, the cost likely would have been approximately $400,000 instead of the $1.5 million already paid by the State of California Underground Storage Cleanup Fund.

The Roscoes appeal the judgment. Providing only a clerk's transcript, they contend generally: (1) the court erred in applying the responsible corporate officer doctrine to hold them personally ...


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