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The Pennsylvania Supreme Court has struck down a statute that protected Crown Cork & Seal Co. from millions of dollars in liability for asbestos manufactured by companies that it bought. The Supreme Court in Ieropoli v. AC&S Corp. was sharply split, 4-3. The decisive vote in favor of striking down the statute as applied was provided by Justice Max Baer, who joined the high court only last month. The decision marks a major victory for asbestos plaintiffs and their lawyers and a major setback for Crown Cork & Seal, one of the largest employers in Philadelphia. The ruling effectively reinstates 376 asbestos suits naming Crown as a defendant. The actions had been dismissed in Philadelphia Common Pleas Court in June 2002. The high court struck down the limitation of successor liability statute as it applied to lawsuits in progress on the day it was enacted. But the majority stopped short of saying that such a limitation would be always and everywhere unconstitutional. “We in the majority point out that we are as concerned with the heavy toll that asbestos litigation is visiting upon certain commonwealth corporations as are our respected colleagues in the dissent,” Chief Justice Ralph J. Cappy wrote for the majority. “Nevertheless, any statutory effort aimed at reformation must not offend the Remedies Clause [of Article I, � 11 of the state Constitution], if it is to pass constitutional muster.” Cappy was joined in the majority by Baer as well as Justices Ronald D. Castille and Russell M. Nigro. Justices Sandra Schultz Newman and Thomas G. Saylor filed dissenting opinions, both of which were joined by Justice J. Michael Eakin. The statute, signed by Gov. Mark S. Schweiker in December 2001, added � 1929.1 to the Corporations Code, requiring that when a Pennsylvania company incorporated before May 2001 succeeds as a defendant to asbestos-related claims as a result of a merger or consolidation, the cumulative liabilities of that company are limited to the fair market value of the original defendant corporation at the time of the merger or consolidation. According to the opinion, Crown Cork acquired the stock of, and officially merged with, the Mundet Cork Corp. in February 1996, and was reincorporated in Pennsylvania a month later. Crown Cork has been the object of numerous asbestos-related claims as successor to Mundet and has paid $336 million on those claims. At the time of the merger, Mundet had assets of what in today’s economy would amount to roughly $55 million. In December 2000, Frank Ieropoli filed suit against Crown Cork and 24 other defendants, the opinion stated, alleging injuries from contact with the defendants’ products. Ieropoli had worked as a mechanic for General Electric for more than three decades until 1979, allegedly incurring pleural effusion and parenchymal scarring from exposure to asbestos. In February 2002, Crown Cork filed a motion with the Philadelphia Common Pleas Court for summary judgment on several hundred asbestos cases pending against it, according to the opinion. Ultimately, Judge Allan L. Tereshko granted Crown Cork’s motion as it related to some 376 asbestos cases. Ieropoli appealed to the Superior Court, the opinion stated, but the Supreme Court subsequently exercised plenary jurisdiction. According to the opinion, Article I, Section 11 of the Pennsylvania Constitution guarantees that any injured person “shall have remedy by due course of law.” The opinion noted Supreme Court decisions dating to 1859 in which the court declined to apply legislation that appeared to offend � 11. “In our view, the statute is clear and unambiguous as to the protection the General Assembly intended to give to Crown Cork,” Cappy wrote. “The words of the statute state that a qualified corporation is not responsible for any liability that is related to any claim for relief related to asbestos… . It now remains to determine whether the protection from liability on appellants’ causes of action that the statute gives to Crown Cork affects those causes of action in a way that Article I, Section 11 prohibits.” The opinion noted that the trial court overlooked “the individual nature of a cause of action” when it argued that Ieropoli’s settling with several of Crown Cork’s co-defendants proved that the statute did not offend the Remedies Clause. “The fact that the causes of action appellants brought against Crown Cork’s co-defendants are proceeding has no bearing on the statute’s unconstitutional effect on the accrued causes of action that appellants brought against it,” Cappy wrote. He added later, “It is because Crown Cork can no longer, because of the statute’s application, be held jointly and severally liable on appellants’ accrued causes of action that Article I, Section 11 is violated.” The majority reasoned that successive liability following a merger is a “general tenet of corporate law.” “[The Remedies] Clause, which binds … both the legislature and the courts,” Cappy wrote, “provides that an accrued cause of action is a vested right and as such, cannot be eliminated by subsequent legislation. This is the basic and undeniable principle that applies here. We know of no authority that supports the proposition that an accrued cause of action that is the subject of a merger does not receive the Remedies Clause’s full protection.” The case has been remanded to the trial court for further proceedings. In her dissent, Newman called into question the legal agency of Crown Cork in causing Ieropoli’s injuries. “The responsible party in the instant case is not Crown,” Newman wrote, “rather it is Mundet Cork. My point in this regard is not intended to undo a century of successor liability law, but to acknowledge the artifice of deeming a successor corporation ‘responsible for the injury’ … successor liability is an important tenet of our system of jurisprudence, but it is not one protected by Article I, Section 11.” Saylor noted in his dissent that the case law cited by the majority involved instances in which the liabilities adjusted were for companies with more direct involvement in the claimant’s injuries. “It is an issue of first impression whether the excess exposure created by the [successor liability] doctrine must share the same degree of vesting under [the] Remedies Clause as would the tortfeasor’s primary liability in the first instance,” Saylor wrote. He added, “I would not find that the statute, either facially or as applied, offends the Remedies Clause.” Ieropoli’s lawyer, Steven J. Cooperstein of Brookman Rosenberg Brown & Sandler, said that his firm had also handled more than 100 of the original 376 claims involving Crown Cork. “I’m gratified that the Supreme Court saw that it was inappropriate for the Legislature to have extinguished our client’s claims against Crown Cork & Seal after he had become ill and the lawsuit had been filed,” Cooperstein said. He said that his client, a Folcroft resident, died of non-asbestos-related ailments shortly after the trial court dismissed his suit. Crown Cork was represented by Obermayer Rebmann Maxwell & Hippel attorneys Thomas A. Leonard, Paul S. Diamond and Mathieu J. Shapiro. “I believe the decision is quite narrow,” Leonard said. “I believe the court’s ruling applies only to those cases that were pending on Dec. 17, 2001, when Section 1921.1 was enacted. In other words, we believe that Section 1929.1′s limitations on remedies involving asbestos suits remains valid with respect to cases brought after Dec. 17, 2001… . We believe the statute still has fairly broad application.”

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