UPDATED! Texas Supreme Court: Crown Cork asbestos suit protection unconstitutional

Texas Supreme Court

(EDITOR'S NOTE: This version includes additional remarks from dissenting Justices Phil Johnson and Dale Wainwright that were not available on Oct. 26.)

AUSTIN - Legislators improperly granted bottle cap maker Crown Cork and Seal retroactive protection from asbestos lawsuits, the Supreme Court of Texas ruled on Oct. 22.

Six Justices reversed appeals judges who held that legislators properly exercised police power to protect about 2,000 active and retired Crown workers in Texas.

Crown never made products with asbestos but faces liability because it merged in 1966 with Mundet Cork, a company did use asbestos in its products.

Crown paid 59 times over for its mistake, having spent $7 million to buy Mundet and $413 million to resolve claims.

In 2003, Texas legislators seeking to lighten Crown's load inserted retroactive relief into a larger asbestos litigation reform law.

According to the Supreme Court, Crown's situation didn't come close to justifying an exception to a constitutional prohibition against retroactive laws.

Justice Nathan Hecht wrote that "the legislative record is fairly clear that Chapter 149 was enacted to help only Crown and no one else."

He wrote, "Crown asserts that it continues to be sued on asbestos claims in Texas, but the record is silent concerning the number of those claims or the amount of Crown's possible exposure."

The Legislature made no findings to justify Chapter 149, Hecht wrote, and that even a statement by principal legislative sponsor state Rep. Joe Nixon failed to show how it served a substantial public interest.

"No doubt Texas will benefit from reducing the liability of an employer and investor in the state, but the extent of that benefit is unclear on this record," Hecht wrote.

He wrote that courts must apply constitutional limits on retroactive legislation to achieve objectives of "protecting settled expectations and preventing abuse of legislative power."

Chief Justice Wallace Jefferson and Justice Paul Green joined Hecht's opinion. Three others joined but expressed stronger opinions.

Justice Don Willett hammered on history and constitution.

"Texans long ago and since have embraced constitutional, meaning limited, government," he wrote, with Justice Debra Lehrmann joining.

"The judiciary thus has a superseding obligation to disapprove certain encroachments on liberty, no matter the legislative vote-count," Willett wrote.

Justice David Medina faulted the majority for failing to decide whether plaintiff Barbara Robinson had a vested right to a claim against Crown.

"Although the Court is reluctant to use the term 'vested rights,' preferring instead to speak of 'settled expectations,' I believe we are talking about the same thing," Medina wrote. "Private economic interests will generally not justify intrusions into the vested private rights of others.

"Moreover, the Legislature's interest in protecting 'innocent' defendants does not justify its assumption here of the judiciary's role of adjusting private obligations incurred under existing law."

Dissenting Justices Dale Wainwright and Phil Johnson protested that the retroactivity doctrine doesn't protect an entitlement to property one does not own.

Wainwright wrote that "until a final judgment in a case, we do not know whether the lawsuit will prove or refute a claim to recover."

He wrote that the purpose of the law was "to eliminate the unfairness created when a corporation merged with a smaller corporation that had previously been engaged in the manufacture or sale of asbestos is exposed to asbestos liability exceeding the value of the acquired corporation, and to save such a corporation from bankruptcy."

Justice Eva Guzman did not participate in the decision.

Case Background

Plaintiff Barbara Robinson and her late husband John Robinson sued Crown and 20 other companies at Harris County district court in 2002, blaming them for his mesothelioma.

They alleged that when he served in the U. S. Navy, he worked with asbestos insulation that Mundet Cork manufactured.

In 2003, as the suit moved forward, Rep. Nixon offered a floor amendment to the pending asbestos reform bill.

He proposed to limit liability for a corporation that succeeded a corporation prior to May 13, 1968, when the government adopted its first asbestos safety standard.

The amendment held up through an hour of debate and four unfriendly amendments.

When the Senate's state affairs committee took it up, chairman Bill Ratliff said, "This, members, is the Crown Cork and Seal asbestos issue."

"What we have put in this bill is what I understand to be an agreed arrangement between all of the parties in this matter," Ratliff said.

Nixon wrote a statement of intent, declaring that a much larger successor could easily be bankrupted by liabilities it innocently received through a merger decades ago.

When Chapter 149 took effect, Crown moved for summary judgment and District Judge Jeffrey Brown granted it.

Days later, John Robinson died.

By then, the Robinsons had dismissed defendants, who paid $859,067 in settlements.

Barbara Robinson appealed to the 14th District in Houston, where Chief Justice Adele Hughes and Justice Wanda Fowler found that Chapter 149 was constitutional.

Justice Fowler wrote that legislators enacted a state they concluded was reasonably necessary.

She called it "a valid exercise of the police power of the Legislature to safeguard the public safety and welfare."

Crown represented that 20,000 asbestos cases were pending against it in Texas, she wrote, and the Robinsons didn't dispute it.

But dissenting Justice Kem Thompson Frost wrote that the law violated the Texas Constitution by retroactively destroying Robinson's vested right in an accrued tort claim.

Robinson appealed again, and while the Texas Supreme Court pondered her case, Third Circuit appeals judges in Austin declared the law unconstitutional.

The Supreme Court heard arguments in February 2008, and took 32 months to reach a decision.

Hecht wrote, "There must be a compelling public interest to overcome the heavy presumption against retroactive laws."

He wrote that the prohibition "prevents the abuses of legislative power that arise when individuals or groups are singled out for special reward or punishment."

Not every retroactive law is unconstitutional, he wrote.

Hecht wrote that the Court upheld the retroactive Edwards Aquifer Act, regulating water rights, and a retroactive law terminating parental rights for incarcerated persons.

He wrote that "in both cases, the Legislature acted for the general public good."

Medina wrote that "the Legislature's interest in protecting the financial well being of a favored defendant is not on par with the public interest in the avoidance of catastrophic drought or the protection of child welfare."

"An accrued cause of action is clearly property under Texas law. It has value, even if that value is not always easy to measure.

"It is the right to sue itself - the lawsuit - that is being taken away, not the final outcome."

Willett wrote that "police power is justified only by urgency, not expediency."

He wrote that desperate times permit desperate measures and added, "But we should steadfastly resist defining desperation down."

"Our Bill of Rights is not mere hortatory fluff; it is a purposeful check on government power."

"Everyday Texans, and the courts that serve them, must remain vigilant, lest we permit boundless police power, often couched in soaring prose, to abridge our Constitution's enduring principles of liberty and free government," Willett wrote.

Dissenter Wainwright wrote, "Protection of Texas's economy and jobs is certainly a rational basis for enacting legislation, and here there is a sufficient reason for the Legislature to enact the statute that it did."

He wrote that no reasonable person has a settled expectation of achieving monetary recovery once she discovers a harm inflicted on her.

"Any informed client knows that winning a lawsuit, even a seemingly 'open and shut' case, is never certain, particularly when multiple defendants and multiple products may have caused the same injury," he wrote.

"This case is a multi-defendant lawsuit where it is difficult to determine which asbestos products were the cause of Mr. Robinson's injuries.

"The Legislature acted in response to a known litigation crisis and acted with a reasonable and narrowly tailored response based on the current climate," he wrote.

Deborah Hankinson, Elana Einhorn, Jeffery Mundy and Michael Singley represented Robinson.

Frank Harmon, Kimberly Stuart, David Crump, Thomas Phillips, Joshua Klein, Rocky Rhodes and Stacy Sharp represented Crown.

Texas Supreme Court Case No. 06-0714
Harris County; 14th district (14-04-00658-CV, 251 SW3d 520, 05-04-06)

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