Johnson v. Am. Standard

8 A.3d 318

Bruce JOHNSON, Administrator of the Estate of Thornton Johnson

v.AMERICAN STANDARD, Amchem Products, Inc., A.W. Chesterton, Inc., Benjamin Foster Co., Brand Insulations, Brown Boveri Corp., Burnham Boiler Corp., Certainteed Corporation, Crane Co., Demming Division, Crane Packing, Crouse-Hinds, Crown Cork & Seal, Inc., Dresser Industries, Inc., Eastern Gunnite Co., Inc., Georgia-Pacific Corporation, Goulds Pumps, Inc., Green Tweed & Company, Inc., Hajoca Plumbing Co., Ingersoll Rand Co., J.H. Refractories Co., Metropolitan Life Insurance, Nosroc Corp., Owens-Illinois, Inc., Pecora Corporation, Riley Stoker Corporation, Union Carbide Corp., Walter B. Gallagher Co., Weil McLain Co., Viacom/Westinghouse Electric Corporation, Bondex International, Inc., Cleaver Brooks Co., Durabla, Durametallic Corporation, General Electric Company, Goodyear Tire & Rubber Co., Goodyear Canada, Inc., Hercules Chemical Co., Herman Goldner Company, IMO Industries, Inc., ITT Corporation, Melrath Gasket, Inc., Pars Manufacturing Company, Rite Hose & Packing, Inc., Rockbestos Company, McMaster Carr Supply House.

Appeal of Bruce Johnson.

Dorothy Mauger, Executrix of the Estate of Russell Mauger, and in her own right,

v.A.W. Chesterton, Inc., Certainteed Corp., Inc., Crane Co., Crane Packing, Crown Cork & Seal Co., Inc., Durabla Manufacturing Co., Foseco, Inc., Garlock, Inc., Georgia-Pacific Corp., Goodyear Tire & Rubber Co., Goodyear Canada, Inc., Goulds Pumps, Inc., Green Tweed & Co., Inc., Hercules Chemical Co., J.H. Refractories Co., Metropolitan Life Insurance, Nosroc Corp., Pecora Corp., Rapid America Corp., Union Carbide Corp., Viacom/Westinghouse Electric Corporation.

Appeal of Dorothy Mauger.

Dolores Stea, Administratrix of the Estate of Joseph Stea and in her own right,

v.A.W. Chesterton, Inc., Crane Co., Demming Division, Crown Cork & Seal Co., Inc., Foster Wheeler Corp., Inc., Garlock, Inc., General Electric Co., Goulds Pumps, Inc., Green Tweed & Co., Inc., Melrath Gasket, Inc., Metropolitan Life Insurance, Pecora Corporation, Rapid American Corp., Bevco Industries, Weil McLain Co., Viacom/Westinghouse Electric Corp.

Appeal of Dolores Stea.

Supreme Court of Pennsylvania.

Argued March 9, 2010.

Decided Nov. 18, 2010.

Steven J. Cooperstein, Brookman, Rosenberg, Brown & Sandler, Philadelphia,for Bruce Johnson, Dorothy Mauger and Dolores Stea.

Mathieu Jode Shapiro, Thomas A. Leonard, Obermayer Rebmann Maxwell & Hippel, L.L.P., Philadelphia, Michael J. Stack, Barry Corrado Grassi & Gibson, PC, for Crown Cork & Seal Co.

Vincent Francis Reilly, Reilly, Janiczek & McDevitt, P.C., Philadelphia, for J.H. France Refractories Co.

Scott Robert Kipnis, Hofheimer Gartlir & Gross, L.L.P., for Rapid American Corp.

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Justice BAER.

We granted allowance of appeal in this case to determine whether individual plaintiffs, who have suffered bodily injury or death due to exposure to asbestos, have standing to raise constitutional challenges under the Commerce and Equal Protection Clauses of the United States Constitution to a state statute, which limits the potential liability in asbestos litigation of certain Pennsylvania corporations. For the reasons that follow, we hold that the plaintiffs herein do have standing to challenge the constitutionality of the statute, and thus reverse the order of the Superior Court, and remand this appeal to that court for further proceedings.

This consolidated appeal arises out of three separate actions brought by the estates of Thornton Johnson, Russell Mauger, and Joseph Stea (collectively, Plaintiffs), against several manufacturers of asbestos, as well as entities which, while never manufacturing asbestos, became successor corporations of former manufacturers. All defendants save one, Crown Cork & Seal, Inc. (Crown Cork), have settled and have been released from the litigation; this appeal centers upon the potential liability of Crown Cork to Plaintiffs.

Crown Cork, a Pennsylvania corporation, has been in existence for over 100 years, dealing primarily in the manufacture of bottle-caps and aluminum cans. In 1963, Crown Cork paid $7 million to purchase a majority of stock in rival bottle-cap manufacturer, Mundet Cork Corporation. Prior to Crown Cork's purchase of Mundet, a small division of Mundet had manufactured products containing asbestos. While the division had ceased manufacturing asbestos products prior to Crown Cork gaining majority control of Mundet, the division still existed at the time of purchase. Ninety days after Crown Cork's acquisition of Mundet, the prior asbestos producing division was sold. Subsequently, and for reasons immaterial to this appeal, Crown Cork merged Mundet into itself, thus creating a single corporate entity. As a result of the merger, and in accord with Pennsylvania's rules of successor liability of corporations, Crown Cork became named as a defendant in several asbestos cases, and has since spent hundreds of millions of dollars on asbestos-related defenses.¹

On December 17, 2001, the General Assembly enacted Act 101 of 2001, entitled "Limitations on asbestos-related liabilities relating to certain mergers or consolidations." The Act, now codified at 15 Pa.C.S. § 1929.1, generally caps a successor corporation's asbestos-related liability at the fair market value of the succeeded company at the time of the merger or consolidation (here, $7 million). Section 1929.1 provides, in relevant part,

the cumulative successor asbestos-related liabilities of a domestic business corporation that was incorporated in this Commonwealth prior to May 1, 2001, shall be limited to the fair market value of the total assets of the transferor determined as of the time of the merger or consolidation, and such corporation shall have no responsibility for successor asbestos-related liabilities in excess of such limitation.

15 Pa.C.S. § 1929.1(a)(1). At the time the statute was enacted, Crown Cork was embroiled in several asbestos-related cases before the Philadelphia Court of Common Pleas Complex Litigation Center (CLC). Upon passage of Act 101, which became effective immediately, Crown Cork filed a global summary judgment motion before the supervising judge of the CLC, in an effort to dismiss all pending cases.² The supervising judge granted the global motion, finding that Crown Cork had already paid proceeds to asbestos-related plaintiffs in excess of the fair market value of the now-sold Mundet asbestos division; multiple plaintiffs aggrieved by that decision appealed to the Superior Court. Upon application by Crown Cork, this Court invoked its extraordinary jurisdiction pursuant to 42 Pa.C.S. § 726, and ultimately reversed the grant of summary judgment, finding Section 1929.1 unconstitutional as applied, as violative of the remedies clause of Article I, Section 11 of the Pennsylvania Constitution. Ieropoli v. AC & S Corp., 577 Pa. 138, 842 A.2d 919 (2004).³ Specifically, we held that the statute was unconstitutional as applied to complaints filed before its effective date because the statute extinguished already existing causes of action.

In direct response to Ieropoli, the General Assembly immediately enacted a second statute, intended to remedy this fatal flaw. The new act, Act 152 of 2004 and now codified at 42 Pa.C.S. § 5524.1, provided that the limitations on successor liability contained in Section 1929.1, supra p. 323, were only applicable to asbestos-related claims for which the two-year statute of limitations began to run after December 17, 2001, the effective date of Section 1929.1.⁴ The causes of action related tothe cases at bar all had statutes of limitations that began to run after December 17, 2001. Accordingly, and Ieropoli notwithstanding, Section 1929.1, is applicable to the instant cases.

At the time of passage of Act 152 of 2004, the actions filed by Plaintiffs Mauger and Stea against Crown Cork (and other corporations) were proceeding before the supervising judge of the CLC. Upon enactment of Act 152, Crown Cork subsequently filed a second global summary judgment motion, averring that the causes of action stated by Plaintiffs Mauger and Stea were barred by Section 1929.1, because of the imposed statutory cap on (Crown Cork's) liability.

In response to the global summary judgment motion, Plaintiffs Mauger and Stea did not dispute that Crown Cork had already exceeded the statutory cap on liability. Rather, they averred that Section 1929.1, generally, was unconstitutional under the dormant Commerce and Equal Protection Clauses of the United States Constitution.⁵ Specifically, they alleged that Section 1929.1 created an unlawful economic protectionism in favor of in-state corporations over similarly situated out-of-state corporations, by limiting in-state successor corporations' asbestos-related liability without affording the same protection to out-of-state corporations doing business in Pennsylvania, thus rendering Section 1929.1 per se invalid. See Response to Global Summary Judgment Motion at 6 (found in Reproduced Record (R.R.) at 229a) (citing City of Philadelphia v. New Jersey, 437 U.S. 617, 623-24, 98 S.Ct. 2531, 57 L.Ed.2d 475 (1978) ("The opinions of the Court through the years have reflected an alertness to the evils of 'economic isolation' and protectionism, while at the same time recognizing that incidental burdens on interstate commerce may be unavoidable when a State legislates to safeguard the health and safety of its people. Thus, where simple economic protectionism is effected by state legislation, a virtually per se rule of invalidity has been erected.")). For similar reasons, Plaintiffs Mauger and Stea contended that Section 1929.1 violated the Equal ProtectionClause. See Response to Global Summary Judgment Motion at 12-13 (found in R.R. at 235a-36a). Crown Cork countered that Plaintiffs Mauger and Stea did not possess standing to aver such claims because they were not out-of-state...