Title: CODE OF CORPORATE RESPONSIBILITY AND CITIZENS RIGHTS

Be it Enacted by the People of the State of Maine as follows:

Sec. 1. 5 MRSA 4552is amended to read:

To protect the public health, safety and welfare, it is declared to be the policy of this State to keep continually in review all practices infringing on the basic human right to a life with dignity, and the causes of these practices, so that corrective measures may, where possible, be promptly recommended and implemented, and to prevent discrimination in employment, housing or access to public accommodations on account of race, color, sex, physical or mental disability, religion, ancestry or national origin; and in employment, discrimination on account of age or because of the previous assertion of a claim or right under former Title 39 or Title 39-A and in housing because of familial status; and to prevent discrimination in the extension of credit on account of age, race, color, sex, marital status, religion, ancestry or national origin; to prevent discrimination in education on account of sex or physical or mental disability; and to prevent damage to the public interest by business corporations.

Sec. 2. 5 MRSA 4554, sub-4 is enacted to read:

4. Rights; duties, obligations and responsibilities. Notwithstanding any law to the contrary, the rights granted by this Act to persons apply only to persons. Whenever the word "person" is used in any provision of this Act with regard to duties, obligations or responsibilities, those duties, obligations or responsibilities apply to both persons and entities.

Sec. 3. 5 MRSA 4553, sub-5-B is enacted to read:

5-B. Entity. "Entity" includes a domestic or foreign business corporation; a domestic or foreign nonprofit corporation; an estate; a partnership; a trust; 2 or more persons having a joint or common economic interest; a domestic or foreign unincorporated entity; a municipal corporation and all agencies of a municipal corporation; a state and all agencies of a state; the United States and all agencies of the United States; and a foreign government and all agencies of a foreign government; associations; organizations; trustees; trustees in bankruptcy; receivers; and other legal representatives.

Sec. 4. 5 MRSA 4553, sub-7 is repealed and the following enacted in its place:

7. Person. "Person" means a human being. "Person" does not include an entity.

Sec. 6. 5 MRSA, chapter 337, subchapter 5-C is enacted to read:

SUBCHAPTER 5-C: RIGHT TO BE PROTECTED FROM
CORPORATE DAMAGE TO THE PUBLIC INTEREST

4606. Civil liability actions for damage caused to the public interest Notwithstanding any law to the contrary, the following controls civil liability actions for damage caused to the public interest.

1. Civil suit. If a domestic or foreign business corporation causes damage to the public interest, and a person is damaged by that action, either such person or an organization or nonprofit corporation acting upon behalf of such person, may either in law or in equity bring suit against:
     A. The corporation; or
     B. A person who was a director of the corporation either at the time the:
         (1) Damage occurred; or
        (2) Board of directors approved the corporate action that led directly to the damage to the public interest.

For purposes of this section, "damage to the public interest" means injury to the environment, a violation of human rights, an adverse affect to the public health or safety, harm to the welfare of the community in which the corporation operates or a violation of the dignity of the corporation's employees.

2. Amount of damages. A suit brought under subsection 1 may seek to recover damages that represent the greater of:

A. The actual damage caused to the person; or

B. Three times the savings that accrued to the corporation as the result of the damage to the public interest.

3. Punitive damages. The trier of fact in a suit brought under subsection 1 may award punitive damages against the defendant corporation or director, as specified in subsection 1, paragraphs A and B if the person has established by clear and convincing evidence that:
     A. The defendant knowingly, intentionally or recklessly caused damage to the public interest; and
     B. An award is necessary to punish the defendant for the conduct or to deter the defendant from similar conduct in similar circumstances.

4. Exemption from suit and liability. The following provisions control the bringing of suits against defendant corporation. A. A suit may not be brought under subsection 1 to recover damages that accrue prior to the date that at least 25 additional states have enacted legislation substantially similar to subsection 1.

B. A suit may not be brought under subsection 1 unless the consolidated annual revenues, as calculated in accordance with generally accepted accounting principles, of the corporation that damages the public interest for the fiscal year immediately preceding the filing of the complaint were more than $15,000,000.

C. A director who proves the following is not liable under this section: (1). The damage to the public interest was the direct result of an action approved by the corporation's board of directors that the director had voted against; or (2) the damage complained of was the direct result of an action approved by the corporation and the approval occurred prior to the director becoming a member of the board.

5. Contribution. A director against whom a claim is asserted under subsection 1 and who subsequently is held liable is entitled to contribution from the other directors of the corporation who are likewise liable or any other director who, if tried separately, would have been liable to make the same payment.

6. Limitation of action. An action brought under this section must be brought within the later of:
    A. Two years after the discovery of the damage to the public interest; or
    B. Six years after the cause of action against the corporation accrued.

7. Liability of controlling persons or entities. Any person or entity that, by or through stock ownership, agency or otherwise, or that, pursuant to or in connection with an agreement or understanding with one or more other persons or entities by or through stock ownership, agency or otherwise, controls a person or entity liable under subsection 1, is also jointly and severally liable to the same extent as the controlled person or entity is liable to a person, unless the controlling person or entity had no knowledge of or reasonable grounds to believe in the existence of the facts by reason of which the liability of the controlled person or entity exists. For purposes of this subsection, "control," means the direct or indirect ability to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise.

8. Affirmative defense. It is an affirmative defense to any proceeding brought under this section that within 180 days after the service of the summons and complaint upon the defendant corporation, the defendant corporation remedied the allegations contained in the complaint.

9. Attorney General. If it appears to the Attorney General that a business corporation is engaged or about to engage in any act or practice that constitutes or will constitute damage to the public interest, the Attorney General may bring an action to enjoin that act or practice. Upon proper showing, a permanent or temporary injunction or restraining order must be granted without bond. The Attorney General may bring an action in an appropriate court and the court may impose, upon a proper showing, a civil penalty on the persons or entity who committed the violation. Any penalty recovered pursuant to this subsection must be paid to the State of Maine.

10. Injunctions. A person or entity who alleges that the person or entity will be adversely affected by an act or practice that causes or will cause damage to the public interest may bring an action to enjoin that act or practice. Upon proper showing, a permanent or temporary injunction or restraining order must be granted without bond.

11. Attorneys' fees. Upon motion, a court may award attorneys' fees to a successful party against one or more defendants in any action brought pursuant to this section if: A. A significant benefit, whether pecuniary or non-pecuniary, has been conferred on the general public or a large class of persons; B. The necessity and financial burden of private enforcement are such to make the award appropriate and C. The attorney's fees should not, in the interest of justice, be paid out of the recovery, if any.

Sec. 7. 13-C MRSA 102, sub-11 is amended to read:

11. Entity. "Entity" includes a domestic or foreign business corporation; a domestic or foreign nonprofit corporation; an estate; a partnership; a trust; 2 or more persons having a joint or common economic interest; a domestic or foreign unincorporated entity; a municipal corporation and all agencies of a municipal corporation; a state and all agencies of a state; the United States and all agencies of the United States; and a foreign government and all agencies of a foreign government; associations; organizations; trustees; trustees in bankruptcy; receivers; and other legal representatives.

Sec 8. 13-C MRSA 102, sub-28 is repealed and the following enacted in its place:

28. Person. "Person" means a human being. "Person" does not include an entity.

Sec. 9. 13-C MRSA 831, sub-1, B is amended to read:

B. In a manner that the director reasonably believes to be in the best interests of the corporation, but not at the expense of the dignity of its employees or the environment, human rights, public health or safety or welfare of the communities in which the corporation operates.

Sec. 10. 13-C MRSA 843, sub-1, C is amended to read:

C. In a manner the officer reasonably believes to be in the best interests of the corporation, but not at the expense of the dignity of its employees or the environment, human rights, public health or safety or welfare of the communities in which the corporation operates.

SUMMARY
This bill imposes a duty upon corporate directors to act in the public interest, and provides a right of action against a business corporation that causes damage to the public interest, such as injury to the environment, a violation of human rights, an adverse affect to the public health or safety, harm to the welfare of the community in which the corporation operates or a violation of the dignity of the corporation's employees.

This bill also changes the definition of "person" for both the Maine Human Rights Act and the Maine Business Corporation Act to specify that "person" means a human being and not an entity such as a corporation, a State, the United States or a foreign government.



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