DENVER—A labor and activist coalition is pushing a November ballot proposal that could allow Colorado executives to be sued if they knew their company broke a law and did nothing to stop it.
A business chamber said the measure could harm the state’s business climate and unleash baseless lawsuits.
Protect Colorado’s Future, a coalition of labor and activist groups, argues that under current state law top corporate officers aren’t personally accountable for their actions.
Larry Ellingson, a retiree of Qwest Communications International Inc., who is behind the proposal, cited the case of former Qwest CEO Joe Nacchio, whose insider trading conviction was tossed out this week by a federal appeals court.
Federal prosecutors alleged Nacchio sold millions of dollars of Qwest stock when he knew the company was at financial risk but did not tell investors. Nacchio denied any wrongdoing.
“I want to know, where is the outrage?” Ellingson said.
Mark Grueskin, an attorney for Protect Colorado’s Future, said current laws allow executives to be prosecuted only if they were involved in alleged criminal actions.
The ballot initiative would allow people to sue executives who knew about a crime within their company and didn’t report it or failed to stop it. Executives wouldn’t necessarily need to be part of the crime to be sued.
The Denver Metro Chamber of Commerce said the proposal would hurt Colorado’s business climate and trigger a wave of baseless lawsuits by people who wouldn’t have to prove they were actually harmed by an executive’s actions.
“Here, all you have to do is prove you are a Colorado resident to file a lawsuit,” said Doug Friednash, an attorney for the chamber. “Really, what you have is a state-endorsed measure where we are encouraging frivolous lawsuits.”
Lawyers “would need to be on speed dial,” Friednash said.
Any money collected from lawsuits would go to state and local agencies that would have jurisdiction over alleged wrongdoing, not individual plaintiffs, Grueskin said. “In other words, it’s not to make individuals rich,” he said.
Backers have proposed three versions of the measure in hopes that one will pass muster. If state officials approve the wording, proponents would have to gather signatures from 77,000 registered voters to get the measure on the November ballot.
