Mike Jones had been living at the same address in Springfield, California, for more than 30 years when he discovered that his water was emitting a strong odor. When he brought this observation to the attention of many of his neighbors, they complained of a similar odor. After some investigating, Mike discovered that a large corporation, the hypothetical Springfield Gas & Electric, had been dumping chromium 6, a possible carcinogen, into the water supply for decades. Mike then went to a lawyer with this discovery. The lawyer then filed suit against Springfield Gas & Electric in the name of the nearly 1,000 residents in Springfield with contaminated water.

If the plaintiffs were successful in suing Springfield G&E, how would liability for corporations work?

Multiple Choice

Shareholders have full personal liability.

Shareholders would be liable for their investment in the corporation.

Shareholders are not liable at all for any misdeeds of the corporation.

Corporations do not assume liability for corporate actions.

Only the employee that made a mistake is liable for any mistakes of the corporation.