EagleTribune.com, North Andover, MA

Merrimack Valley

October 12, 2011

Local company seeks law limiting liability for asbestos suits

BOSTON — A seemingly innocuous merger between two bottle cap manufacturers in 1963 cost thousands of jobs around the country over the years and now, without a change in state law, could threaten 125 jobs in Lawrence, company officials told lawmakers yesterday.

Officials from Crown Cork and Seal, a bottle manufacturing company founded in 1892 by the inventor of the bottle cap, urged members of the Legislature's Economic Development Committee to back legislation they said would limit the company's liability in asbestos-related lawsuits it inherited as a result of a 48-year-old, $7 million merger with Mundet Cork Company.

Crown officials say they acquired Mundet, a competitor, in 1963 to merge their bottle cap operations. But Mundet also included a "side business" in which it manufactured asbestos insulation. Mundet had already closed down that operation at the time of the merger, but the company still owned the "idle machinery."

In 1972, federal officials determined that asbestos presented a danger to human health and the U.S. Occupational Safety and Health Administration adopted regulations to limit exposure in facilities across the country, according to Crown officials. That change, they said, opened up companies with asbestos-producing operations to lawsuits.

Although Crown never produced any asbestos and the Mundet operation had long been defunct, the company has still been forced to pay $700 million in legal claims and its bond rating has been reduced to junk status, costing another $1 billion in higher interest costs over the years, according to Patrick Szmyt, Crown's chief financial officer. The company, which employed 12,000 people across the U.S. in 1998, now has 4,000 workers, including a 125-person operation in Lawrence, where bottles for Pepsi and Ocean Spray are produced.

"It's criminal, what has happened to us," said Robert LeLacheur, vice president of North American sales for Crown.

Under the legislation, according to proponents, any company that merged with another prior to the 1972 regulations and as a result became mired in legal liability over asbestos production would be able to treat the acquired company as a separate subsidiary. Lawsuits would be capped at the total value of the subsidiary company, rather than the value of the parent company. In the case of the Mundet merger, claims would be capped at $60 million, according to Szmyt, when the $7 million merger is adjusted for inflation.

Text Only | Photo Reprints
Merrimack Valley

Eagle-Tribune News Videos
Photos of the Week