Bill would protect company from asbestos claims
Published 9:18 pm Thursday, February 25, 2010
A bill that would shield companies, including one with a plant in Suffolk, from asbestos-related claims made against companies they purchased or succeeded before Jan. 1, 1972, soon will be considered by a Senate committee.
HB629 squeaked by in the Virginia House of Delegates earlier this month, passing by only one vote. It now is up for consideration in the Senate’s Committee on Commerce and Labor.
The legislation would limit the asbestos-related liabilities of a successor to the fair market value of the total assets of the transferor. It would apply only to asbestos claims filed on or after July 1, 2010.
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The proposed ordinance does not mention any company by name, but applies to the Crown Cork & Seal company, which manufactures more than 10 billion beverage cans and lids per year at its plants in Suffolk and Winchester. According to the company, the proposed legislation would save more than 200 jobs in Virginia.
In 1963, Crown purchased the stock of another bottle cap manufacturing company, Mundet Cork Company, for $7 million. Though it primarily made bottle caps, Mundet had a small side business selling cork, fiberglass and asbestos insulation. The asbestos operation was shut down by the time Crown purchased Mundet, and all of the assets of that portion of the business were sold off within three months of the purchase.
In 1972, the Occupational Safety and Health Administration issued its first asbestos warnings and regulations. Since that time, Crown has paid more than $600 million in asbestos-related claims for products it never manufactured.
“It just exploded in the late ‘90s,” said Bill Gallagher, an attorney for Crown. “Almost a hundred companies were driven into bankruptcy. We were just deluged with cases.”
“Our stock went from $60 to 80-some cents,” Gallagher added. “Our debt rating got reduced to junk bond status.”
As a result of the lower bond rating and the claims, Gallagher says the company has lost more than $1.5 billion — all for a $7 million purchase 47 years ago. Crown had to close a plant in Sandston and sell some portions of its business.
“It’s really a jobs killer,” Gallagher said.
Opponents of the bill say it sets a bad precedent for tort law, but Gallagher says legislatures increase companies’ liabilities all the time.
“How come it has to be a one-way street?” Gallagher said.
Other critics have pointed to the company’s support of many Virginia lawmakers’ campaigns. Since 2008, the company donated $101,033 to parties and individual legislators in the Virginia General Assembly.
In the same time period, though, the Virginia Trial Lawyers Association — one of the most outspoken critics to the bill — gave $390,750 to parties and lawmakers, Gallagher noted.