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A national effort by an $8 billion can manufacturer to shield itself from costly asbestos lawsuits has reached the Minnesota Legislature, triggering criticism from victims' advocates, who say the campaign puts a single corporation's interests over people who have been harmed by the deadly material.
Philadelphia-based Crown Holdings Inc., which has three manufacturing plants in southern Minnesota, is seeking to change state law to prevent more asbestos claims stemming from a 1960s merger.
The company, also known as Crown Cork and Seal, says it has been unfairly harmed by decades of asbestos legal fights that have cost it $700 million in claims and lawyer fees and $1 billion in higher borrowing costs. "We're trying to protect our company from an unfair situation," said William Gallagher, Crown's general counsel. "Blanket successor liability as posed to us is very unfair."
Victims and plaintiffs' attorneys in Minnesota say the proposal, which could get a Senate vote as early as Thursday, is the company's attempt to change the rules to skirt its legal obligations. They say it would not only harm victims in Minnesota but set a dangerous precedent for other corporations.
"Any individual such as yourself or a corporation, if they make a mistake, they ought to pay for their mistake," said Michael Sieben, a plaintiff's lawyer whose firm has handled thousands of asbestos cases.
Crown has had about 150 asbestos cases in Minnesota in the past 15 years but only a couple in the past year, according to Sen. Mike Parry, R-Waseca, lead sponsor of the bill. Crown Cork officials say a primary goal of the legislation is to help repair its reputation with Wall Street.
"To me this is common sense," Parry said. "How much do you make a company pay that had no knowledge, that was not in the asbestos business and never intended to be in the asbestos business?"
Health problems stemming from asbestos exposure can take decades to be detected. Lawsuits related to asbestos comprise the longest-running mass litigation effort in U.S. history, with legal costs for businesses and insurers of $70 billion, according to a Rand Corp. report from 2002.
Over the past decade, Crown has paid lobbyists in states across the country to help cap its liability -- in essence exempting it from future lawsuits. The company's argument, that it's an innocent successor, has gained traction in 15 states where the legislation has passed, including Wisconsin, North Dakota and South Dakota.
The company has been helped by the American Legislative Exchange Council (ALEC), a business-friendly group that helps craft model legislation for use in legislatures across the country. Minnesota is one of five states considering the proposal this year.
Crown's 1963 merger involved a rival with a separate manufacturing operation that made insulation containing asbestos. Under Minnesota law, the merger left Crown with both the assets and legal liabilities of its acquisition, even though Crown never directly manufactured asbestos. It sold the portion of the company that manufactured the material within months after the purchase.
Even though it doesn't mention Crown Cork by name, the bill narrowly targets the company's interests. Still, the legislation could apply to other successor companies in acquisitions that took place before 1972, but only if they didn't manufacture asbestos after the merger.
The bill specifies 1972 because that's the period when the federal government started regulating asbestos as a health risk, said Mark Behrens, a Washington, D.C., attorney who has advised Crown and works with ALEC on tort reform.
"A company like Crown that merged in the early 1960s had no idea that its little $7 million deal would eventually result in $700 million in litigation costs," Behrens said.
Opponents say that's not quite right. They say that the company Crown bought had asbestos-related workers' compensation claims as early as the 1950s and 1960s, and that the health concerns related to asbestos were known even back then.
Sue Vento, the widow of former U.S. Rep. Bruce Vento, who died in 2000 from an asbestos-linked disease unrelated to Crown, said she fears the bill could be tweaked later to strip all forms of corporate responsibility for asbestos exposure. "It's a bad idea because it doesn't consider the interests of people who end up with these illnesses, nor does it consider the interest of their families," Vento said.
The Senate Judiciary and Public Safety Committee approved the bill earlier this month in a party-line vote. It is expected to pass the Republican-controlled Legislature with relative ease. Both sides have already started asking Gov. Mark Dayton for his support.
Brad Schrade • 612-673-4777