In 2002, Texas residents John Robinson and his wife filed suit alleging that John had contracted mesothelioma from workplace exposure to asbestos products. The Robinsons sued 21 defendants, including Crown Cork & Seal Co. With respect to Crown, the Robinsons claimed that during John’s service in the United States Navy from 1956 to 1976, he worked with asbestos insulation manufactured by the Mundet Cork Corporation, and that when Crown and Mundet merged, Crown succeeded to Mundet’s liabilities. Crown has never itself engaged in the manufacture or sale of asbestos products.
In November 1963, Crown’s predecessor, a New York corporation with the same name, acquired a majority of the stock in Mundet, another New York corporation. Within 90 days, in February 1964, Mundet sold all its assets related to its insulation business. Two years later, in February 1966, the companies merged. In 1989, Crown’s predecessor was reincorporated as Crown, a Pennsylvania corporation.
Crown acknowledged that under New York and Pennsylvania law, it succeeded to Mundet’s liabilities, which, as pertaining to Mundet’s asbestos business, had been hefty. While Crown acquired Mundet for only about $7 million, by May 2003 Crown had paid over $413 million in settlements, and Crown’s parent company estimated in its 2003 Annual Report that payments could reach $239 million more.
During the pendency of the Robinsons’ trial-court action, the Texas Legislature enacted Chapter 149 of the Texas Civil Practice and Remedies Code, which limits certain corporations’ successor liability for asbestos claims. Chapter 149 applies (with exceptions not relevant here) to “a domestic corporation or a foreign corporation that has . . . done business in this state and that is a successor which became a successor prior to May 13, 1968” — a date by which, the Legislature appears to have thought, the dangers of asbestos should have been commonly known.
For a covered corporation, “the cumulative successor asbestos-related liabilities . . . are limited to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation”, including “the aggregate coverage under any applicable liability insurance that was issued to the transferor . . . collectable to cover successor asbestos related liabilities”. This cap does not apply to a successor that continued in the asbestos business after the consolidation or merger. By restricting application of the cap to a corporation that had never engaged in selling asbestos products itself and had succeeded to another’s liability for asbestos claims at a time when the extent of that liability was not fully appreciated, the supporters of Chapter 149 intended to protect only what they called the “innocent successor.”
Chapter 149 contains a choice-of-law provision, making it applicable, “to the fullest extent permissible under the United States Constitution, . . . to the issue of successor asbestos-related liabilities” in Texas courts. Furthermore, the Legislature made Chapter 149 applicable to all actions: (1) commenced on or after the effective date of this Act; or (2) pending on that effective date and in which the trial, or any new trial or retrial following motion, appeal, or otherwise, begins on or after that effective date.
Crown promptly moved for summary judgment under the new law. The trial court granted Crown’s motion. Days later, John Robinson died. Barbara Robinson amended her petition to assert statutory wrongful death and survival actions against Crown.
On appeal, Robinson contended that Chapter 149 is a retroactive law prohibited by article I, section 16 of the Texas Constitution. She asserted that the Legislature had no authority to extinguish vested rights, and that her accrued cause of action against Crown was a vested right.
The Texas Supreme Court noted that Chapter 149 did not directly restrict the Robinsons’ common-law action for personal injuries due to exposure to asbestos in the workplace. Rather, it supplanted the usual choice-of-law rules for determining what state’s successor-liability law should apply in asbestos cases in Texas by mandating Texas courts to apply Texas law, then for the first time prescribes limits on that liability, even if successor liability arose under the law of another state.
After a lengthy discussion about the constitutionality of retroactive laws, the Texas Supreme Court concluded that Chapter 149 was unconstitutional as applied to the Robinsons’ common-law claims. Its rationale, in short, was that Chapter 149 significantly impacted a substantial interest the Robinsons had in a well-recognized common-law cause of action, and that the very slight public interest served by Chapter 149 did not justify impairing that substantial interest.
Thus, asbesto litigation is a train that even legislation finds difficult to stop. Robinson seems somewhat limited to its facts in that it did not specifically address the constitutionality of Chapter 149’s applications to asbestos lawsuits filed after its enactment but based on exposure that predated the enactment. More challenges to the constitutionality of Chapter 149 are sure to follow.
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