New Jersey Dep't of Envtl. Protection v. Gloucester Envtl. Management Servs.
Citation: 23 ELR 20335
No. No. 84-0152 (SSB), 800 F. Supp. 1210/35 ERC 2015/(D.N.J., 08/25/1992) individual operator defendants' motion for summary judgment denied
The court holds that individuals owning less than a majority share of corporations charged with violations of the New Jersey Sanitary Landfill Facility Closure and Contingency Fund Act (Closure Act) may be held personally liable as "owners or operators" under the Closure Act if they had a high degree of personal involvement in the operation and decisionmaking of the corporation. The court also holds that because genuine issues of material fact exist regarding the role of each individual operator defendant as an active operator of a landfill, summary judgment is inappropriate. One of the claims brought by the state agency was that the corporate landfill operators violated the Closure Act by failing to operate and close the landfill as required by law, and that the corporations were sham companies used by the individual defendants to shield themselves from individual liability.
The court first holds that a shareholder may be liable under the Closure Act even though the shareholder does not possess a majority interest, if the shareholder qualifies as an "operator" within the usual meanings of the term, or if the shareholder is an owner of record of land on which a sanitary landfill facility is or has been located. The Closure Act's language refutes the individual operator defendants' assertion that they cannot be considered "owners" or "operators" because they each owned less than a majority interest in the corporations. While the Closure Act provides that majority shareholders are liable as owners or operators, it does not limit liability only to those who own a majority interest in a corporation.
The court finds that because the Closure Act imposes liability on an "owner or operator," the term "operator" must be given its usual meaning or it would be superfluous. And under its usual meaning, individual liability may be imposed where that individual shows a high degree of personal involvement in the operation and decision-making process of the business. Moreover, New Jersey courts have held principals personally liable for a corporation's violation of an environmental statute, even though they own less than a majority share of the corporation, where they have a high degree of personal involvement. New Jersey courts have also interpreted the Closure Act broadly to fulfill its policy and purpose of ensuring the proper closure of sanitary landfills, compensating those adversely affected by improper operation or closure, and protecting the public health and safety. The New Jersey legislature's intent would be circumvented if the Closure Act were interpreted to shield from liability a shareholder of a corporation who is significantly involved in the corporation's management, operation, and control. The broad policies underlying the Closure Act mandate that those persons who are in a position to know of and control the improper operation and closure of landfills be held liable as "owners or operators" for violation of the Closure Act.
The court holds that summary judgment is inappropriate because genuine issues of material fact remain as to whether the individual operator defendants had a high degree of personal involvement in the operation and decisionmaking process of the corporations so as to come within the meaning of the term "owner or operator." For example, questions remain as to whether the defendants controlled the finances of the corporations, managed employees and daily business operations, were responsible for maintaining environmental controls, and conferred or received any commercial or economic benefit from the facility. Finally, the court declines to use the doctrine of piercing the corporate veil, because genuine issues remain as to the defendants' status as "owner[s] or operator[s]." The court notes that in order to pierce the corporate veil, evidence must be presented to show that the corporation is a "sham" that exists to avoid personal liability of the officers.
Counsel for Plaintiff
Robert Del Tufo, Attorney General
Attorney General's Office
R.J. Hughes Justice Complex, 25 S. Market St., CN 081, Trenton NJ 08625
R.J. Hughes Justice Complex
Department of Law and Public Safety
Environmental Protection Unit, Division of Law
Hazardous Site Section, 7th Fl., W. Wing, CN 093 Trenton NJ 08625
Counsel for Defendants
Kenny & Kearney
Woodland Falls Corporate Park
220 Lake Dr. E., Ste. 210, P.O. Box 5034, Cherry Hill NJ 08034
Parker, McCay & Criscuolo
Three Greentree Ctr., Rte. 73 & Greentree Rd., Ste. 401, Marlton NJ 08053