An Act To Require That Corporations Be Operated in a Manner That Does Not Adversely Affect the Public Interest
Maine Legislature, Session 122, LD 1474
Committee: Judiciary
Sponsors: EDER, STRIMLING, TWOMEY
Amends: 5 MRSA §4552, 13-C MRSA §831, 13-C MRSA §843

Legislative Document 
No. 1474 
H.P.1037 
House of Representatives, March 24, 2005 
An Act To Require That Corporations Be Operated in a Manner 
That Does Not Adversely Affect the Public Interest 
Reference to the Committee on Judiciary suggested and ordered printed. 
Presented by Representative EDER of Portland. 
Cosponsored by Senator STRIMLING of Cumberland and 
Representative: TWOMEY of Biddeford. 
Printed on recycled paper 
'77/~ /J7. 7lldC~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 5 MRSA §4552. as amended by PL 1993, c. 327, §l, is 
further amended to read: 
§4552. Policy 
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: 
and 
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 MRS A c. 337. sub-c. 5-C is enacted to read: 
SUBCHAPTER 5-C 
RIGllT~_DE PR~CU:P 
__ fRQM_CQRPQRATE 
DAMAGE ro THE PUBLIC INTEREST 
§4606. 
Damage to public interest; liability 
1. 
Civil 
liabiliJ~y actiops for damage caused to public 
interest. 
If a corporation formed under Title 13-( is alleged to 
have caused damage to the public interest, any person injured by 
such action may, either in law or in e~uity, sue either: 
A. 
The corporation; or 
B. 
Any person who was a director of the corporation either 
at the time that: 
(1) 
The damage occurred; or 
(2) 
The 
board of directors 
approved 
the corporate 
action that led directly to such damage. 
For purposes of this section, 
"damage to the public interest" 
means 
damage to the environment, 
violations of 
human rights, 
adverse effects on the public health or safety, damage to the 
welfare of the communities in which the corporation operates or 
violations of the dignity of a corporation's employees. 
This subsection provides the exclusive remedy for any failure by 
a director or officer to carry out the reguirements of Title 
l3 C, 
section 831, 
subsection 1 
and Title l3 C, 
section 843, 
subsection 1, paragraph C. 
• 
Amount of dam~q~s~. 
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may 
be to 
recover 
damages 
in an 
amount that represents 
the 
greater of: 
A. 
The actual damage caused to the plaintiff; or 
B. 
Three times the savings that accrued to the corporation 
as the result of failing to carry out the reguirements of 
Title 
C, 
section 
831, 
subsection 
and Title 
l3-C, 
section 843, subsection 1, paragraph C. 
3. 
PUIJ,~i_ve 
ctaQ!ag~1i. 
A trier of fact may award punitive 
damages against a defendant in any suit brought under subsection 
if the plaintiff establishes by clear and convincing evidence 
that: 
A. 
The 
defendant 
knowingly, 
intentionally or 
recklessly 
caused 
damage 
to 
the 
public 
interest 
as 
defined 
in 
subsection 1; and 
B. 
An award is necessary to punish the defendant for the 
conduct or to deter the defendant from similar conduct in 
like circumstances. 
4. 
Conditions. 
A lawsuit under subsection 1 may not be 
brought: 
A. 
To recover any damages that accrue prior to the date 
that at least 25 additional states have enacted legislation 
that provides that a director's duty to act in the best 
interests of the corporation no longer comes at the expense 
of the environment, human rights, public health or safety, 
the welfare of 
the 
communities in which the corporation 
operates o~he dignity of its employees; and 
B. 
Unless the consolidated annual revenues, calculated in 
accordance with generally accepted accounting principles, of 
the corporation that is alleged to have caused the damage 
for the fiscal year immediQtely preceding the filing of the 
complaint were more than $15 million. 
5. 
Exemption. 
A director is not liable under subsection 1 
if that director sustains the burden of proof that: 
A. 
The damage complained of was the direct result of an 
action approved by the corporation's board of directors but 
against which the director had voted; or 
B. 
The damage complained of was the direct result of an 
action that was approved by the corporation prior to that 
director's becoming a member of the board. 
6. 
Contribution. 
Any director against whom 
a 
claim is 
asserted under subsection 1 
and who is held liable thereon is 
entitled to contributions from each of the other directors who 
are 
likewise 
liable 
or 
any 
other 
director 
who, 
if 
sued 
separately, would have been liable to make the same payment. 
7. 
Limitation of actions. 
An action may not be maintained 
to enforce any liability under subsection 1 unless the action is 
brought by the later of: 
A. 
Two years after the discovery of the damage caused: and 
B. 
Six 
years 
after 
the 
cause 
of 
action 
against 
the 
corporation accrued. 
8. 
Liability of controlling persons. 
A person who, by or 
through stock ownership, agency or otherwise, or who, pursuant to 
or in connection with an agreement or understanding with one or 
more other persons by or 
through stock ownership, 
agency or 
otherwise, controls any person liable under subsection 1, is also 
jointly 
and 
severally 
liable 
to 
the 
same 
extent 
as 
that 
controlled person to any person to whom the controlled person is 
liable, unless the controlling person 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 is alleged 
to exist. For purposes of this subsection, "control" means the 
possession, direct or indirect, of the power to direct or cause 
the direction of the management and policies of a person, whether 
through 
the 
ownership 
of 
voting 
securities, 
by 
contract 
or 
otherwise. 
9. 
Affirmative defense. 
It is an affirmative defense to 
any proceeding 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. 
10. 
Attorney General. 
Whenever it appears to the Attorney 
General that any corporation formed under this Title is engaged 
or about to engage in any acts or practices that constitute or 
will constitute damage 
to the public interest as defined by 
subsection 1, the Attorney General may bring an action to enjoin 
those acts or practices, and upon proper showing a permanent or 
temporary injunction or restraining order may be granted without 
bond. 
The Attorney General may bring an action in court and the 
court has jurisdict!_Qn to 
impo§!~ upon a proper showing, a civil 
penalty on the person who committed the damage to the public 
intere§!t. The penalty is payable to the State. 
11. 
Injunctions. 
Persons or entities who allege that they 
will be adversely affected by any acts or practices that cause or 
will cause damage to the public interest as defined by subsection 
may bring an action to enjoin those acts or practices, and upon 
proper showing a permanent or temporary injunction or restraining 
order may be granted by a court without bond. 
12. 
Attorney's 
fees. 
Upon 
motion, 
a 
court 
may 
award 
attorney's 
fees 
to 
a 
successful 
party 
against 
one 
or 
more 
defendants in any action brought pursuant to subsection 1 against 
a corporation, a director or both if the court determines that: 
A. 
A 
significan~t~ __ =b~e.pefit, 
whether 
pecuniary 
nonpecuniary, has been conferred on the general public 
large class of persons; 
or 
or a 
B. 
The 
neces_siu 
and 
financJal 
burden 
of 
private 
enforcement are such as to make the award appropriate; and 
C. 
Such fees should not, in the interest of justice, be 
paid out of recovery, if any. 
Sec. 3. 13-C MRSA §831. sub-§l. ~B. as enacted by PL 2001, c. 
640, Pt. A, §2 and affected by Pt. B, §7, 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 environment, human rights, public health or 
safety, 
the 
welfare 
of 
the 
communities 
in 
which 
the 
corporation operates or the dignity of its employees. 
Sec. 4. 13-C MRSA §843. sub-§l. ~C. as enacted by PL 2001, c. 
640, Pt. A, §2 and affected by Pt. B, §7, 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 environment, human rights, public health or safety, the 
welfare of the communities in which the corporation operates 
or the dignity of its employees. 
SUMMARY 
This bill imposes 
a 
duty on directors and officers of a 
corporation formed under the laws of the State to act in a manner 
that is not injurious to the environment, human rights, public 
health or safety, the welfare of the communities in which the 
corporation 
operates 
or 
the 
dignity 
of 
the 
corporation 0 s 
employees. 
Under 
this 
bill, 
if 
other 
states 
enact 
similar 
legislation 
and 
if 
the 
consolidated 
annual 
revenues 
of 
a 
corporation exceed $15,000,000, 
that corporation, its officers 
and its directors may be held liable for damages resulting from 
actions that cause damage to the public interest.