2 ms·

Limited Liability refers to the suppliers of capital, which often differ from the employees and directors that are responsible for the issues like in the articl

by voisin 6y ago

Limited Liability refers to the suppliers of capital, which often differ from the employees and directors that are responsible for the issues like in the article. I am fine with this since there is no moral hazard, but the parties involved / responsible should not be able to take their bonuses, click bankrupt and restart elsewhere under a new name. Society needs more protection, clearly.

owl_troupe 6y ago
This is an accurate description of limited liability. It does not blanketly shield corporations from liability, only shareholders (and there are exceptions to this as well). In fact, in Florida--as well as many other jurisdictions in the US--there is a special category of torts that cover liability for ultrahazarous activities and apply strict liability. There are cases that have specifically dealt with the impoundment of large quantities of water. Bunyak v. Clyde J. Yancey & Sons Dairy, Inc., 438 So.2d 891 (Fla. App. 2 Dist. 1983). Cities Service Co. v. State, 312 So.2d 799 (Fla. App. 2 Dist. 1975).[1] Note the facts the latter case, Cities, dealt with: >The appellant, Cities Service Company (Cities Service), operates a phosphate rock mine in Polk County. On December 3, 1971, a dam break occurred in one of Cities Service's settling ponds. As a result, approximately one billion gallons of phosphate slimes contained therein escaped into Whidden Creek and thence into the Peace River, thereby killing countless numbers of fish and inflicting other damage. >Appellee, The State of Florida (State), filed suit against Cities Service seeking injunctive relief as well as compensatory and punitive damages arising out of the dam break. It is absolutely true that the way that corporations have escaped liability for these activities is to "socialize losses" as an OP has aptly stated. In this situation, the prior owner went bankrupt and handed this major liablity to the state to maintain for years and when it breaks, the state (possibly federal) taxpayers and the environment will bear the loss. [1] https://www.courtlistener.com/opinion/1849457/cities-service-company-v-state/ https://www.courtlistener.com/opinion/1849457/cities-service...
zdragnar 6y ago
The insurance company paid out the fines; they went bankrupt because they couldn't possibly continue to operate without massive hikes to their insurance (if they even could get more). If they move on and start something again that is potentially dangerous, it is on the new insurance company to do some diligence in rating the risk of bad behavior.
roenxi 6y ago
You pointed at > When state officials hit the company with a multimillion-dollar fine for the damage done, it declared bankruptcy and shut down. That isn't employees and directors being shielded from a criminal charge. That is shareholders being shielded from costs beyond what they risked in the company. Nobody accused the employees or directors of doing anything wrong. If the directors or employees had broken the law, they should have been prosecuted directly. The fact they weren't is evidence that people with access to the details didn't think they've done anything illegal. The state of environmental law isn't related to matters of profit and loss, or capitalism for that matter.
tjs8rj 6y ago
With Limited Liability, your private assets as an agent are shielded, but only if you don't pierce the veil. Criminal acts pierce the veil, and the government is usually pretty happy to scoop up money when possible. I suspect there's more to the story than just "oopsie, private company did evil thing and got rich but nobody was held responsible". More likely is that they did what they were supposed to do at least to the black letter of the law, but failed otherwise. The directors, managers, etc likely didn't break any laws.

by voisin 6y ago

owl_troupe 6y ago

This is an accurate description of limited liability. It does not blanketly shield corporations from liability, only shareholders (and there are exceptions to this as well). In fact, in Florida--as well as many other jurisdictions in the US--there is a special category of torts that cover liability for ultrahazarous activities and apply strict liability. There are cases that have specifically dealt with the impoundment of large quantities of water. Bunyak v. Clyde J. Yancey & Sons Dairy, Inc., 438 So.2d 891 (Fla. App. 2 Dist. 1983). Cities Service Co. v. State, 312 So.2d 799 (Fla. App. 2 Dist. 1975).[1] Note the facts the latter case, Cities, dealt with: >The appellant, Cities Service Company (Cities Service), operates a phosphate rock mine in Polk County. On December 3, 1971, a dam break occurred in one of Cities Service's settling ponds. As a result, approximately one billion gallons of phosphate slimes contained therein escaped into Whidden Creek and thence into the Peace River, thereby killing countless numbers of fish and inflicting other damage. >Appellee, The State of Florida (State), filed suit against Cities Service seeking injunctive relief as well as compensatory and punitive damages arising out of the dam break. It is absolutely true that the way that corporations have escaped liability for these activities is to "socialize losses" as an OP has aptly stated. In this situation, the prior owner went bankrupt and handed this major liablity to the state to maintain for years and when it breaks, the state (possibly federal) taxpayers and the environment will bear the loss. [1] https://www.courtlistener.com/opinion/1849457/cities-service-company-v-state/ https://www.courtlistener.com/opinion/1849457/cities-service...

zdragnar 6y ago

The insurance company paid out the fines; they went bankrupt because they couldn't possibly continue to operate without massive hikes to their insurance (if they even could get more). If they move on and start something again that is potentially dangerous, it is on the new insurance company to do some diligence in rating the risk of bad behavior.

roenxi 6y ago

You pointed at > When state officials hit the company with a multimillion-dollar fine for the damage done, it declared bankruptcy and shut down. That isn't employees and directors being shielded from a criminal charge. That is shareholders being shielded from costs beyond what they risked in the company. Nobody accused the employees or directors of doing anything wrong. If the directors or employees had broken the law, they should have been prosecuted directly. The fact they weren't is evidence that people with access to the details didn't think they've done anything illegal. The state of environmental law isn't related to matters of profit and loss, or capitalism for that matter.

tjs8rj 6y ago

With Limited Liability, your private assets as an agent are shielded, but only if you don't pierce the veil. Criminal acts pierce the veil, and the government is usually pretty happy to scoop up money when possible. I suspect there's more to the story than just "oopsie, private company did evil thing and got rich but nobody was held responsible". More likely is that they did what they were supposed to do at least to the black letter of the law, but failed otherwise. The directors, managers, etc likely didn't break any laws.