The Building Tradesman Newspaper

Friday, November 04, 2011

New limits proposed for asbestos liability

By Marty Mulcahy, Editor

LANSING – Asbestos-related disease victims and their families would continue to be victimized by the Michigan Legislature with the potential passage of a proposed law that would limit the liability of certain “successor companies” involved in the sale or use of asbestos-related products.

A state House analysis of the bill says that under current law, a successor corporation (one that acquires or merges with another) can be held liable for any civil actions filed against the business acquired, up to the total value of the successor corporation.

However, House Bill 4601, sponsored by Rep. Joe Haverman (R-Holland), would “limit the liability of a successor corporation that acquired or merged…with a predecessor corporation that had engaged in asbestos-related activities,” according to the analysis. HB 4601 would limit the asbestos-related liability of a corporation “to the fair market value of the total gross assets of the transferor” at the time of the merger or consolidation, as opposed to their assets at the time litigation is brought.

“The disingenuous argument by this bill’s supporters is that passage of this bill will help prevent job loss which is a right and just thing to do,” wrote attorney Thomas Smith, working on behalf of the law firm of Michael Serling, a major asbestos litigator in the state, in a letter to state House Judiciary Chairman John Walsh. “However, I am here to explain to you why this is just another attempt to create immunity for a special segment of the business community. This bill will not benefit Michigan and will harm its workers injured by asbestos.”

Michigan Building and Construction Trades Council President Zane Walker testified before Walsh’s committee on Oct. 19. “The continued relentless political blindsided effort at immunity/bailout legislation at the expense of Michigan workers is ludicrous. It is our fathers, uncles and grandfathers that are being forced to face financial instability in their golden years if this bill is enacted,” he said.

House Bill 4601 stems from a request for this legislation from one of those successor corporations, Pennsylvania-based Crown Cork and Seal, which acquired an asbestos company (Mundet Cork) in 1964. According to Smith, Mundet’s own employees at the time were “getting sick from its products” and filing workers’ compensation claims against the company. Crown Cork & Seal operated its Mundet holdings as an asbestos division for several months, collected profits, then sold it off.

“The phrase ‘due diligence’ when merging or acquiring another company requires looking first at what you are acquiring,” Smith noted dryly.

Smith added in his letter: “Crown Cork & Seal acquired a company they knew or should have known had caused their employees to get sick They acquired the liabilities of the company along with its assets. The question arises, why is the committee here today considering a special corporate welfare bill for their bad business decisions? Why should this be done at the expense of Michigan victims of asbestos disease?”

He said the number of asbestos cases filed in Wayne County (where most Michigan asbestos cases are filed) has been dwindling over the past decade due to the aging population. In 2005, there were 2,200 cases filed. Today, the number, he said is 850. He said the legal threat to Crown Cork and Seal is diminishing since it is not liable for exposures since 1964, when it sold Mundet Cork.

“By taking away the fair share of Crown Cork & Seal’s liability (and that of any other defendant that qualifies for this bill’s immunity), injured workers will receive that much less,” Smith wrote.

Haveman, who received the anti-union Associated Builders and Contractors’ “Legislator of the Year” award in 2011, said the bill shows Michigan is “open for business,” according to Progress Michigan.

In the same report, Progress Michigan said “adopting this legislation would be profoundly unfair – not only does it create a special exemption for one company, but it would push Michiganders suffering from asbestos poisoning into the state’s worker compensation system, Medicaid or Medicare, forcing Michigan taxpayers to assume all the risks for one out-of-state corporation failing to do sufficient research before approving a merger.

“This should come as no surprise to anyone who has been paying attention to the political circus in Lansing this year. Once again, Republicans in the legislature prove they are far more concerned with currying favor from their lobbyist buddies than actually spending time on creating jobs or adopting real reforms that would ensure Michiganders get more value for their tax dollars.”