Company Seeks Asbestos Liability Limit in Idaho

By JOHN MILLER | January 31, 2012

A national bottle-top maker that’s grown weary of some $700 million in asbestos claims it’s paid out to victims of lung disease has arrived in the Idaho Legislature as part of its years-long, state-by-state trudge to shield itself from forking over more cash.

Pennsylvania-based Crown Holdings, whose products include the tops of soda pop and beer containers, has gotten help from the American Legislative Exchange Council, a corporate-backed conservative nonprofit, to broaden limits on asbestos claims against it stemming from an ill-fated acquisition nearly 50 years ago.

Together, they’ve succeeded in winning legislative protections in Florida, Georgia, Indiana, Mississippi, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Wisconsin and Wyoming.

Crown’s liabilities stem from the asbestos-tainted assets of a small company it bought in 1963 for some $7 million. While Crown sold those assets just 90 days later, without ever manufacturing asbestos products, it’s since then paid out 100 times the purchase price to people who have sued claiming their health was harmed, as well as their lawyers.

“If Crown goes bankrupt because of the litigation, the current employees will lose their jobs, their health care benefits and their pensions,” said Mark Behrens, a Washington, D.C. lawyer who advises the American Legislative Exchange Council and Crown, on Friday. “Crown is working hard to try to make sure that doesn’t happen.”

Blocking Crown’s path in Idaho, however, are lawyers who represent potential victims of asbestos disease.

They are raising constitutional concerns, especially after courts in Texas and Pennsylvania struck down portions of laws as recently as 2010, for their provisions that sought to retroactively limit pending claims against Crown.

The American Legislative Exchange Council has been criticized by the national trial lawyers association, the American Association for Justice, for helping to craft model legislation designed so narrowly that it benefits just a single company, Crown.

Barbara Jorden, the Idaho Trial Lawyers Association lobbyist, said the Idaho Constitution forbids lawmakers from passing new laws that shield outfits like Crown from making good on their obligations.

And that includes health problems linked to asbestos, a naturally-occurring material that until the 1970s was used commonly in insulation but which can lead to fatal diseases such as asbestosis, lung cancer, or mesothelioma when inhaled.

“They need to honor those responsibilities,” said Jorden. “It’s not as if the claims or injury has not occurred. It has. It’s simply who is responsible for taking care of that. If it’s not Crown, then it’s going to be the state of Idaho that pays to care for the people have suffered these grave illnesses.”

Jorden also said the company, with about $8 billion in annual revenue last year, is using the unlikely specter of financial collapse to frighten lawmakers into going along.

Attempts to shield corporations from billions of dollars’ worth of asbestos damages have come and gone over the last decade, in the wake of lawsuits blamed for helping drive nearly 100 U.S. companies out of business since 1982.

For instance, a 2003 measure in Congress to set up $108 billion asbestos liability trust fund failed in the U.S. Senate.

After that, Crown adopted a strategy of going from state to state to limit its asbestos exposure, with 50,000 claims still pending that the Philadelphia-based company estimates could cost it $250 million or more in future years, according to its 2010 annual report.

According to its measure awaiting a hearing in the Idaho House, Crown’s asbestos-related liabilities would be limited to the fair market value of Mundet’s total gross assets back at the time of the merger. Even adjusted for inflation, that would all but end the possibility of big payouts.

Michael Dunleavy, a spokesman for Crown, didn’t immediately return a phone call seeking comment on Friday.

The bill’s sponsor in Idaho, Rep. Brent Crane, R-Nampa, declined to comment.

But Behrens said the company began pushing legislation in places like Pennsylvania, Texas and Mississippi as early as 2001, because that’s where the bulk of thousands of claims originated. Last year, Wyoming became the latest state to adopt protections for Crown.

And even though Crown has relatively little exposure to claims from Idaho, with only about 10 cases pending, Behrens said it’s being included in the broad push for indemnity as part of efforts to eventually satisfy lenders and investors wary of asbestos risk who as a consequence demand higher interest rates to buy the company’s bonds or loan it money.

“Crown is trying to get this legislation passed in a number states, enough to make the case to Wall Street that they should not be forced to pay higher-than-prevailing interest rates because of an unjustified asbestos risk,” Behrens said.

Was this article valuable?

Here are more articles you may enjoy.