Texas High Court: Crown Cork Statute's Application To Pending Asbestos Cases Unconstitutional

Texas High Court: Crown Cork Statute's Application To Pending Asbestos Cases Unconstitutional

AUSTIN, Texas -- (Mealey's) The statute shielding Crown Cork & Seal Co. from successor liability in asbestos cases violates Texas Constitution Article I, Section 16's prohibition on retroactive laws when applied to pending cases, a divided Texas Supreme Court held Oct. 22 (Barbara Robinson, et al. v. Crown Cork & Seal Company Inc., No. 06-0714, Texas Sup.).

And although Crown Cork is correct that choice-of-law provisions are procedural, Texas Civil Practice and Remedies Code Section 149's intent was to completely extinguish Barbara Robinson's claim, the court said.  "An interest in maintaining an established common-law cause of action is greater than an interest in choice-of-law rules," the court concluded.

The court acknowledged that unliquidated claims have little or no value but said "claims like the Robinsons' have become a mature tort, and recovery is more predictable, especially when the injury is mesothelioma, a uniquely asbestos-related disease."  Robinson's right to assert her claim was "real and important" and firmly vested, the court held.

John and Barbara Robinson sued Crown Cork and others in the Harris County, Texas, 55th District Court, alleging that John Robinson's mesothelioma was caused by years of occupational exposure to asbestos.  After he died, Barbara Robinson continued the action, alleging that Crown Cork was liable for her husband's death because it purchased Mundet Cork Corp. in 1966.  At the time, Mundet had a dormant asbestos insulation division, which Crown Cork sold three months later.

Crown Cork conceded that either New York or Pennsylvania law applied and that it would be liable as a successor under either standard.  However, prior to the entry of judgment, the Texas Legislature enacted Section 149, limiting the liability of corporations that became successors prior to May 13, 1968.  Crown Cork was the sole company affected by the change.

The court rejected Crown Cork's argument that Robinson could not have expected Mundet to merge with a larger corporation with deeper pockets, saying that these are not the expectations that the rule against retroactive application protects.  Further, the court said it would not speculate about what additional recoveries Robinson might be entitled to under joint and several liability.  Section 149's shielding of an otherwise liable Crown Cork either reduces the recovery Robinson could expect to receive or forces other defendants to pay Crown Cork's share, the court said.  "Either way, the statute disturbs settled expectations," the court said.

Though the Texas Legislature has noted the severity of the asbestos litigation crisis, Section 149 was enacted solely to help Crown Cork, the court said.  Crown Cork has not been able to point to another company Section 149 would help shield or how many asbestos-related lawsuits or claims the company faces, the court said.  And although Texas would undoubtedly benefit from Crown Cork's reduced liability, nothing suggests that public interest rises to the level required to permit retroactive application, the court said.

Justice Nathan L. Hecht wrote for the court and was joined by Justices Wallace B. Jefferson, David Medina, Paul W. Green, Don R. Willett and Debra Lehrmann.

In dissent, Justice Dale Wainwright, joined by Justice Phil Johnson, wrote that Section 149 balanced limitations on asbestos-related liabilities against protecting the assets and employees of businesses who did not cause the asbestos-related injury.  Justice Wainwright wrote that the balancing test applied by the majority reaches the wrong result and that by holding that unliquidated claims are entitled to constitutional protection ignores important principles.  Primarily, the majority's outcome seems to suggest that protection of a claim depends in part on the apparent strength of the claim and likelihood of recovery, Justice Wainwright wrote.

[Editor's Note:  Full coverage will be in the Nov. 3 issue of Mealey's Litigation Report: Asbestos.  In the meantime, the opinion, two concurrences and the dissent are available at www.mealeysonline.com or by calling the Customer Relations Department at 1-800-MEALEYS.  Document #01-101103-006Z.  Document # 01-101103-007Z.  Document #01-101103-008Z.  Document #01-101103-009Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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