The Building Tradesman Newspaper

Friday, March 30, 2012

Senate panel OKs ‘corporate bailout’ for asbestos firms

By Marty Mulcahy, Editor

LANSING – A bill that would impose new limits on legal claims by victims of asbestos exposure took another step forward in the Michigan Senate this month.

On March 14, House Bill 4601 was voted out of the Senate Reforms Committee and will be taken up soon by the full Senate. The bill would limit the liability of certain “successor companies” in the sale or use of asbestos-related products.

“This is a corporate bail-out bill that allows corporations who acquired former asbestos companies before 1972 to never be sued again,” said attorney Tom Smith, working on behalf of the law firm of Michael Serling, a major asbestos litigator in the state. “This corporate welfare bill is bad for asbestos victims, bad for their families, and bad for Michigan taxpayers who pay for Medicaid bills that asbestos victims will run up without sufficient money from their asbestos lawsuit.”

The vote to move the bill into the full Senate was approved in the Reforms Committee along party lines, 5-2, with Republicans in the majority. The House adopted HB 4601 on Feb. 12.

 We reported on this case when it came up last fall. 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.

Republican supporters of the bill say it will help prevent job loss. Smith argued that the bill is an attempt to provide legal immunity for a specific segment of business community.

In fact, HB 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.

Smith said in a letter to state House Judiciary Chairman John Walsh: “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?”  Crown, Cork & Seal has no plants nor jobs in Michigan.

The Michigan Association of Justice, an attorney advocacy group that promotes “safety for all Michigan citizens by standing up for accountability and responsibility,” said HB 4066 bill originates from the American Legislative Exchange Counsel, a corporate- sponsored group that writes legislation for lawmakers that benefits specific corporate interests, then pressures lawmakers to pass it.

The association called HB 4601 a “get out of jail free” card for corporations responsible for asbestos injuries and death.

Michigan Building and Construction Trades Council President Zane Walker testified in a House committee last fall. “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.”

Smith said that “while it is true that the Crown Cork and Seal Company's liability for asbestos damages stems from a poor business decision made nearly 50 years ago, if the Legislature allows them, and other corporations, to escape responsibility for that decision, they are merely shifting the burden of medical costs onto victims (and future victims) of asbestos-related illnesses that relate back to this company.”

Members of the Michigan Senate need to hear from their constituents about this bill. Go to and click on the link under “Organized labor under assault in Lansing.” There you will find a link to identify and contact your state senator.