Are Ohio employers liable for environmental violations caused by employees who consciously violate company policies?  The Ohio Supreme Court answered this question “No,” but apparently one Ohio Court of Appeals now sees fit to ignore the mandate of the Ohio Supreme Court.

In State of Ohio ex rel. Attorney General v. State Line Agri, Inc., 2011 WL 1753327, 2011 -Ohio- 2191  (Ohio App. 2 Dist., May 2, 2011), the court of appeals affirmed the trial court’s holding that an employer was liable under Ohio’s environmental laws when its employee spread manure in direct violation of company policies.   In a civil action brought by the Ohio Attorney General seeking to impose civil liability on the employer for the acts of its employee, the court of appeals elected to ignore the seminal and controlling Ohio Supreme Court case on the subject, State ex rel. Celebrezze v. Environmental Enterprises, Inc. (EEI), 53 Ohio St.3d 147 (1990), reh. denied, 54 Ohio St.3d 716.  In EEI, the Ohio Supreme Court affirmed the decision of the First District Court of Appeals (1989 WL 50775, Ohio App. 1 Dist.) holding that an employee who acts in direct contravention of company policy, and where the employer did not ratify the employee’s acts, may not have his acts or omissions imputed to his employer under Ohio’s solid and hazardous waste laws and regulations.  The employee in State Line Agri was fired for violating company policy, just like the employee who was fired in EEI.  2011 WL 1753327, at *4.  

The Second District Court of Appeals in State Line Agri “disagreed with the First District’s analysis in EEI” (2007 WL 1753327, at *5) and elected to ignore the Ohio Supreme Court’s affirmance of the First District’s holding in EEI.  The Second District Court of Appeals in State Line Agri held that the actions of an employee who chose to disobey company directives would result in the strict liability of his employer under Ohio’s environmental laws. 

The Second District erred in two significant respects: (i) Ohio courts of appeal are bound to follow the holdings of the Ohio Supreme Court even if they disagree with the reasoning.  The prior decision by the Ohio Supreme Court affirming the First District’s holding in EEI was not merely a “suggestion,”¹  and (ii) the doctrine of respondeat superior has never been held under Ohio law to impose strict liability on employers for the acts of their employees simply because the employer derives a benefit.

The court of appeals in State Line Agri based its decision to hold the employer liable on the fact that the First District’s opinion in EEI “did not discuss whether the actions facilitated EEI’s business.”   2011 WL 1753327, at *5.  A benefit inuring to the employer has never been an essential element under Ohio law for determining whether respondeat superior imposes strict liability on the employer for employee acts prohibited by employer policy.  In EEI, the Attorney General made the same argument: that the employer benefited from the employee’s acts that violated environmental law.²   See, Reply Brief of State of Ohio, Ohio v. EEI, Ohio Supreme Court, No. 89-1226, at pp. 29-30 (“These very same cases go to suggest that an employee is deemed to be acting within the scope of his employment if he is acting on behalf of his employer and, at least in part, for the benefit of his employer….his actions were obviously intended to benefit EEI…”).  The Ohio Supreme Court held that EEI, the employer, was not liable under these same facts.  The Second District Court of Appeals in State Line Agri was not free to disregard the prior decision of the Ohio Supreme Court.³

The hierarchy of American jurisprudence is based on the requirement that inferior state courts follow the decisions of their state supreme courts.   The State Line Agri court took a different path. 

For more information concerning this subject, please contact Kim Burke of Taft’s Environmental Practice, who was trial and appellate counsel for the employer in the EEI case. 

¹ The Ohio Supreme Court in EEI not only affirmed the judgment in favor of the employer after trial, but also reversed the State’s judgment against the employer on the two counts for which  violations were found.  The trial court’s imposition of a fine of $1000 against the employer was reversed by the First District Court of Appeals, and the Supreme Court agreed.  Put simply, the Ohio Supreme Court in EEI affirmed a finding of judgment in favor of the defendant employer on all 17 counts of the Attorney General’s enforcement complaint tried to the court, and rehearing requested by the Attorney General was denied by the Supreme Court.  The EEI decision has never been modified or reversed by the Ohio Supreme Court and remains the law of Ohio.

²  “The court of appeals reversed the trial court, holding that EEI was not vicariously liable for [the employee’s] acts. As this case was tried to the court, and not a jury, we conclude that the court of appeals was clearly within its authority to reverse the trial court and enter judgment for EEI under App.R. 12(C) and, therefore, we affirm this portion of the appellate court’s judgment.”  EEI, 53 Ohio St.3d at 149.

³ Manion v. Sandel, (2001) 91 Ohio St.3d 318, 322, 2001 –Ohio– 47 (“However, courts of appeals are required to follow the law as it interpreted by this court.”)