For The Defense, November 2012 - DRI Today

Product Liability
Corporate defendants
have fought to prevent
asbestos plaintiffs and their
counsel from expanding
the exceptions to the rule
against successor liability
and have tried to limit the
application of the exceptions
that currently exist.
neys have pursued product liability claims
against successor companies in the hopes of
obtaining recoveries. A successor company
also potentially faces punitive damages for
the torts of a predecessor corporation. Oliver
v. GAF Corp., No. 83-4208, 1985 U.S. Dist.
Lexis 17822 (E.D. Pa. July 17, 1985).
In the meanwhile, corporate defendants
have fought to prevent asbestos plaintiffs
and their counsel from expanding the
exceptions to the rule against successor liability
and have tried to limit the application
of the exceptions that currently exist.
See Gennone v. A.J. Eckert Co., No. 1:09-CV-
968, 2010 U.S. Dist. Lexis 60663 (N.D.N.Y
June 18, 2010); Franklin v. USX Corp., 105
Cal. Rptr.2d. 11 (Cal. App. 2001); Catasauqua
Area School Dist. v. Raymark Indus.,
Inc., 662 F. Supp. 64 (E.D. Pa. 1987); Reed v.
Armstrong Cork Co., 577 F. Supp. 246 (E.D.
Ark. 1983). Some courts have indicated,
however, that the solution to asbestosrelated
successor liability most appropriately
belongs to the legislatures.
Current Legislative Trends
Efforts to lobby state legislatures to pass
laws on successor asbestos- related liabilities
have been undertaken in various
jurisdictions throughout the United
States. These efforts were driven by the
American Legislative Exchange Council
(ALEC), which is an organization that
worked with various companies to try to
34 ■ For The Defense ■ November 2012
limit asbestos- related liabilities resulting
from the purchase of companies previously
involved in some aspect of the asbestos
industry. See Mark A. Behrens, Successor
Asbestos- Related Liability Fairness Act,
2005 ALEC Policy Forum 19–21. ALEC
was the author and lobbying force behind
the model Successor Asbestos- Related Liability
Fairness Act (model act), a template
for existing and proposed laws regarding
successor asbestos- related liabilities.
Id. at 21–26. Some opponents refer to the
model act as a new “corporate bailout bill”
and take the position that the legislation
effectively immunizes successor companies
that acquire companies with asbestosrelated
liabilities. Sylvia Hsieh, ALEC Puts
the Screws to Asbestos Victims, Lawyer.
com Blog (May 22, 2012), http://blogs.lawyers.
com/2012/05/alec-puts-the-screws-to-asbestosvictims/
(last visited Sept. 24, 2012). However,
as ALEC and corporations such as
Crown are discovering, even though new
successor liability laws now exist in some
jurisdictions, several courts have declared
aspects of the new statutes unconstitutional,
reducing their impact.
To date, 19 states have enacted laws limiting
successor liability. All of the laws have
substantially the same language limiting
liability to the amount paid for the predecessor
company with the asbestos- related
liabilities. The states that currently have
successor asbestos- related liability legislation
include Alabama, Arizona, Florida,
Georgia, Idaho, Indiana, Michigan, Mississippi,
Nebraska, North Dakota, Ohio,
Oklahoma, Pennsylvania, South Carolina,
South Dakota, Texas, Utah, Wisconsin, and
Wyoming. See Ala. Code §6-5-682 (2011);
Ariz. Rev. Stat. Ann. §12-559, 01 (2012);
Fla. Stat. §774.004 (2005); Ga. Code Ann.
§51-15-4 (2007); Idaho Code Ann. §30-
1904 (2012); Ind. Code §34-31-8-8 (2009);
Mich. Comp. Laws §600.3001 (2012); Miss.
Code. Ann. §79-33-5 (2004); Neb. Rev. Stat.
§25-21,286 (2010); N.D. Cent. Code §32-46-
03 (2009); Ohio Rev. Code Ann. §2307.97
(2004); Okla. Stat. tit. 76, §75 (2009); 15 Pa.
Con. Stat. Ann. §1929.1 (2012); S.C. Code
Ann. §15-81-140 (2006); S.D. Codified Laws
§20-9-39 (2010); Tex. Civ. Prac. & Rem.
Code Ann. §149.003 (2003); Utah Code
Ann. §78B-4-604 (2012); Wis. Stat. §895.61
(2011); Wyo. Stat. Ann. §1-1-134 (2011). But
courts have declared the laws as applied
unconstitutional in several cases, and this
new legislation has not necessarily offered
the safe harbor that some have envisioned.
The Texas Supreme Court held that that
state successor liability law was unconstitutional
when retroactively applied because
it destroyed vested rights accrued in a cause
of action that predated the enactment of
the law. See Robinson v. Crown Cork & Seal
Co., 335 S.W.3d 126 (Tex. 2010); Satterfield
v. Crown Cork & Seal Co., 268 S.W.3d
190 (Tex. Ct. App. 2008). For similar reasons,
Pennsylvania courts have held that
the Pennsylvania statute limiting successor
asbestos- related liabilities was unconstitutional
when applied retroactively. See
Ieropoli v. AC&S Corp., 842 A.2d 919 (Pa.
2004); Johnson v. American Standard, 8
A.3d 318 (Pa. 2010).
At least eight other states have attempted,
unsuccessfully, to pass successor asbestosrelated
liability legislation. These states include
California, Illinois, Massachusetts,
Missouri, New York, Tennessee, Virginia,
and Washington. See Successor Liability:
Asbestos Exposure, S.B. 1667, 2007–2008
Regular Sess. (Cal. 2008); Successor Asbestos
Related Liability Fairness Act, S.B.
3056, 4th Gen. Assemb. (Ill. 2006); S.B. 154,
187th Gen. Assemb. (Mass. 2011); Successor
Asbestos- Related Liability Fairness Act,
H.B. 261, 94th Gen. Assemb. (Mo. 2007);
A.B. 6861, 2009 Gen. Assemb. (N.Y. 2009);
S.B. 249, 2011 Gen. Assemb. (Tenn. 2011);
H.B. 629, 2010 Gen. Assemb. (Va. 2010); H.B.
2507, 2010 Regular Sess. (Wash. 2010). In
Minnesota, the governor vetoed the legislation.
See Letter from Mark Dayton, Governor
for the State of Minnesota, to The
Honorable Michelle L. Fishbach, President
of the Senate (Apr. 9, 2012) (vetoing Senate
File 1236 on corporate successor liability as
it relates to gravely serious asbestos- related
injuries). Governor Dayton vetoed the legislation
due to fear that it would set a dangerous
precedent of allowing corporations
to escape liability, and he also believed that
the legislation “unfairly alter[ed] Minnesota’s
law regarding corporate successor
liability.” Id. He further stated that “[i]t is
contradictory to define an ‘innocent successor’
as a corporation that has done nothing
wrong and yet subsequently absolve it of
its ‘known’ liabilities.” Id. Governor Dayton’s
rationale for vetoing the law may pro-
Successor, continued on page 80