Governor Snyder Signed Bill Limiting Asbestos-Related Liability

HB 4601 Would “Limit The Liability Of A Successor Corporation That Acquired ... A Predecessor Corporation That Had Engaged In Asbestos-Related Activities.” A legislative analysis by the Michigan House Fiscal Agency found that Michigan House Bill 4601 “would limit the liability of a successor corporation that acquired or merged -- before 1972 -- with a predecessor corporation that had engaged in asbestos-related activities.” The bill was introduced on May 3, 2011, passed in Michigan's State House in February 2012, the State Senate in March 2012 and was approved by Governor Rick Snyder (R) on April 10, 2012. [Legislative Analysis Of HB 4601, Michigan House Fiscal Agency, 2/15/12] [Legislature.MI.gov, accessed 4/17/12]

Michigan's Asbestos Bill Was An ALEC Bill Pushed To Benefit Crown Holdings, Inc.

Crown Holdings General Counsel: Enactment Of The ALEC Model “Is Essential.” From the testimony of William Gallagher, general counsel to Crown Holdings, Inc., before the Michigan House Judiciary Committee:

The current rule of successor liability provides that when a predecessor merges with another corporation, the successor can be held liable without limit for the torts of the dissolved predecessor, even if the successor did nothing wrong and the activity of the predecessor that created the liability was terminated before the merger. In some circumstances, the rule can cause a tremendous injustice, as in the case of Crown Cork & Seal, a company founded in 1982 by the inventor of the bottle cap and now one of the nation's leading can manufacturers.

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To remedy such instances of grossly disproportionate liability caused by application of outdated successor liability law, fifteen states - Pennsylvania (2001), Texas (2003), Mississippi (2004), Ohio (2004), Florida (2005), South Carolina (2006), Georgia (2007), North Dakota (2009), Indiana (2009), Oklahoma (2009), Wisconsin (2009), Nebraska (2010), South Dakota (2010), Wyoming (2011) and Alabama (2011) - have enacted laws to more fairly balance the scales. These laws fairly limit payments that a company as a successor by merger must pay as a result of asbestos claims, reducing the jeopardy to innocent successor companies by fairly narrowing remedies available to asbestos plaintiffs. The laws are based on a model Successor Asbestos-Related Liability Fairness Act developed by ALEC.

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Enactment of the ALEC/CSG [Council of State Governments] model is essential as a matter of fundamental business fairness in Michigan and would protect Crown Cork & Seal's employees and retirees living in Michigan who rely on Crown for paychecks, pensions and health care benefits as well as the employees and retirees of other companies similarly affected. [William Gallagher testimony, Michigan House Judiciary Committee, 10/20/11]

Michigan House Fiscal Agency: “The Bill In Particular Will Relieve Crown Cork & Seal From Further Liability.” From legislative analysis done by the Michigan House Fiscal Agency, which cites ALEC's claim that most “recent asbestos claimants are not even sick”:

The bill in particular will relieve Crown Cork & Seal from further liability. The company has already spent over $700 million in claims and other asbestos-related expenses - an amount 10 times the cost to acquire Mundet Cork. Without such relief, money that could go into expansion and job creation would instead go to pay claims for people who may not even be sick. According to ALEC, up to 90 percent of recent asbestos claimants are not even sick. It is one thing if a company was truly responsible for exposing their workers or customers to asbestos, but some successor companies, like Crown, never actually engaged in the asbestos business. Thus, House Bill 4601 would provide just and fair relief to Crown and other companies that would fit within the bill's parameters. [Legislative Analysis Of HB 4601, Michigan House Fiscal Agency, 2/15/12]

ProgressMichigan: HB 4601 Is A “Copy And Paste Job” From ALEC's Model Asbestos Legislation. Joshua Pugh at Progress Michigan showed that the HB 4601 contained nearly identical language to the ALEC model legislation:

This wouldn't be the first time this year they considered legislation widely regarded as unnecessary - a knee-jerk response brought on by special interest lobbying. This time, the special interest is a single corporation lobbying for a specific exemption to directly benefit them.

That corporation is Pennsylvania-based Crown Cork and Seal, who acquired a small company in 1963 without doing enough research to discover that this company had installed asbestos and was liable to pay out worker's compensation for workers made sick by asbestos exposure - unless they convinced state lawmakers around the country to pick up the tab. The only people to speak in favor of this bill in the House Judiciary Committee were the company's General Counsel and Rep. Joe Haveman (R-Holland), who sponsored the bill and said it shows that Michigan is “open for business.”

Open for business, or an open invitation for corporate lobby groups to have their “model legislation” copied, pasted, and passed by the Michigan Legislature?

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[W]e've included Rep. Haveman's bill and the “ALEC Model Legislation” side by side below so you can see his copy and paste job for yourself. [ProgressMichigan.org, 10/24/11]

Michigan's Largest Newspapers Have Not Covered Asbestos Bill At All

The Detroit Press Has Not Covered ALEC/Crown's Connection To HB 4601. Michigan's largest newspaper has not mentioned ALEC or Crown Holdings in connection with HB 4601. In fact, the Detroit Press has not mentioned the legislation a single time since its introduction on May 3, 2011, according to a Nexis search for “American Legislative Exchange Council”; “Haveman” AND “4601”; “Crown Holdings” OR “Crown Cork”; and “asbestos”. Wire service reports appearing in a newspaper are not always included in the Nexis database. [LexisNexis, 5/3/11-4/17/12]

The Grand Rapids Press Has Not Covered ALEC/Crown's Connection To HB 4601. Michigan's second-largest newspaper has not mentioned ALEC or Crown Holdings in connection with HB 4601. In fact, the Grand Rapids has not mentioned the legislation a single time since its introduction on May 3, 2011, according to a Nexis search for “American Legislative Exchange Council”; “Haveman” AND “4601”;“Crown Holdings” OR “Crown Cork”; and “asbestos”. Wire service reports appearing in a newspaper are not always included in the Nexis database. [LexisNexis, 5/3/11-4/17/12]