Johnson v. American Standard

966 A.2d 573, 2009 Pa. Super. 22, 2009 Pa. Super. LEXIS 29, 2009 WL 281177

• Court: Superior Court of Pennsylvania
• Decided: February 6, 2009
• Docket: 2954 EDA 2006, 2955 EDA 2006, 2956 EDA 2006
• Status: Published

Opinions

OPINION BY

LALLY-GREEN, J.:

¶ 1 In these asbestos cases, Appellants Bruce Johnson, et al. appeal from the orders dated October 3, 2006, granting summary judgment to Appellee Crown Cork & Seal Co. (“Crown”). The trial court reasoned that Crown was insulated from liability by 15 Pa.C.SA. § 1929.1 (“the Statute”). Appellants agree that the Statute, on its face, protects Crown. Appellants argue, however, that the Statute: (1) violates the dormant Commerce Clause of the United States Constitution; (2) violates the Equal Protection Clause of the U.S. Constitution and the Pennsylvania Constitution; and (3) violates various enactment provisions of the Pennsylvania Constitution. We conclude that Appellants lack standing to raise these constitutional challenges. Therefore, we affirm.

¶ 2 The factual and procedural history of the case may be simply stated as follows. Appellants are executors of the estates of three individuals who died of asbestos-related mesothelioma. Appellants sued Crown and numerous other defendants. Al defendants other than Crown have settled. Crown filed motions for summary judgment in all three cases, arguing that the Statute protected Crown from liability. Appellants raised constitutional challenges to the Statute. The trial court rejected those challenges and granted summary judgment to Crown. These consolidated appeals followed.

¶ 3 Appellants raise one issue on appeal: 1. Did the lower court err in ruling that Crown Cork & Seal Company, Inc., was entitled to summary judgment?

Appellants’ Brief at 5.¹

¶4 As noted above, Appellants argue that the trial court erred in applying the Statute to Crown, because the Statute is unconstitutional. Our standard of review is as follows:

Under the applicable standard, an appellate court may reverse a trial court’s entry of summary judgment only where it finds that the trial court erred in concluding that the matter presented no genuine issue as to any material fact and that it is clear that the moving party was entitled to a judgment as a matter of law. As this inquiry involves solely questions of law, our standard of review is de novo.

Ieropoli v. AC & S Corp., 577 Pa. 138, 842 A.2d 919, 924 n. 10 (2004) (citations omitted).

Additionally, any party challenging the constitutionality of a statute must meet a heavy burden, for we presume legislation to be constitutional absent a demonstration that the statute clearly, palpably, and plainly violates the Constitution. As with any challenge to the constitutionality of a statutory amendment, our scope of review is plenary and our standard of review is de novo.

Konidaris v. Portnoff Law Assocs., 953 A.2d 1231, 1239 (Pa.2008) (citations and quotation marks omitted).

¶ 5 Before addressing Appellant’s claims, we will begin with a brief discussion of the Statute itself, and its effect on Crown and this litigation. The Statute limits the asbestos-related liability of Pennsylvania corporations when that liability arises from a merger or consolidation. In general, the Statute caps the successor corporation’s asbestos-related liability at the fair market value of the prior company as of the time of the merger or consolidation. The statute reads, in relevant part, as follows:

§ 1929.1. Limitations on asbestos-related liabilities relating to certain mergers or consolidations.—

(a) Limitation on successor asbestos-related liabilities.

(1) Except as further limited in paragraph (2) 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.SA. § 1929.1(a)(1) (effective December 17, 2001).²

¶ 6 The effect of the Statute on Crown is undisputed. Crown is a bottle-cap and can manufacturer based in Pennsylvania. In November 1963, Crown purchased Mundet Cork Corporation. Mundet Cork operated a division that manufactured asbestos products. Crown never operated this division. Within 90 days of acquiring Mundet Cork, Crown sold the asbestos-related division.

¶ 7 Despite this fleeting involvement with asbestos, in the ensuing years Crown has paid hundreds of millions of dollars in asbestos-related claims. The value of those claims far exceeds the fair market value of Mundet Cork itself.

¶ 8 Under the plain language of the Statute, Crown is not liable for Appellants’ claims because Crown has already paid out asbestos liabilities exceeding the fair market value of Mundet Cork. Because the last remaining defendant, Crown, has been granted summary judgment, the appeal is properly before us.

¶ 9 With that background in mind, we turn to Appellants’ claims. First, Appellants argue that the Statute violates the dormant Commerce Clause of the United States Constitution, Art. 1 § 8 cl. 3. “The dormant Commerce Clause prohibits economic protectionism — that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” Office of Disciplinary Counsel v. Marcone, 579 Pa. 1, 855 (2004), cert. denied, 543 U.S. 1151, 125 S.Ct. 1332, 161 L.Ed.2d 114 (2005), quoting New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 273, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988). Appellants claim that the Statute is a prohibited form of economic protectionism, because it benefits Pennsylvania corporations at the expense of out-of-state corporations.

¶ 10 Before addressing this claim, we must address the threshold question of whether Appellants lack standing to raise a dormant Commerce Clause challenge. Crown notes that Appellants are individual plaintiffs, not out-of-state corporations; thus, Appellants are not aggrieved by any protectionistic effect that the Statute may have. Appellants counter that they are aggrieved by the Statute as a whole, because it extinguishes their claims against Crown. Appellants argue that as a result, they are entitled to raise any constitutional challenge to the Statute.

¶ 11 In Commonwealth v. Rose, 2008 PA Super 249, 960 A.2d 149, this Court recently addressed a party’s standing to raise a dormant Commerce Clause claim. In that case, a criminal defendant raised a dormant Commerce Clause challenge to a criminal statute prohibiting unauthorized sexual communication with a minor. The defendant argued that the statute penalized an out-of-state resident who may have no knowledge that the minor is located in Pennsylvania, where such contact is prohibited.

¶ 12 We began with general concepts of standing:

“The core concept in any standing analysis is that a person who is not adversely affected in any way by the matter he seeks to challenge is not ‘aggrieved’ thereby and has no standing to obtain a judicial resolution of his challenge.” Soc’y Hill Civic Ass’n v. Pa. Gaming Control Bd., 593 Pa. 1, 928 A.2d 175, 184 (2007). Generally, in order to have standing a person must have a “substantial, direct, and immediate interest” in the outcome of the litigation. Id. A person does not have a direct interest if he has not been harmed by the specific constitutional concern at issue. Id.; see also Commonwealth v. Bell, 512 Pa. 334, 516 A.2d 1172, 1177 (1986); Commonwealth v. Haldeman, 288 Pa. 81, 135 A. 651, 652 (1927).

Id. at ¶ 9. We then held that the defendant lacked standing to raise a dormant Commerce Clause challenge, because he was not an out-of-state resident and thus not aggrieved by the specific constitutional concern at issue. Id. at ¶ 10. We came to this conclusion even though the defendant was obviously “aggrieved” by the statute as a whole, because he was convicted thereunder.

¶ 13 By insisting on a direct link between harm and “the specific constitutional concern at issue,” Pennsylvania Courts have echoed the concept of “prudential standing” found in federal decisions. See, e.g., Oxford Assocs. v. Waste Sys. Auth., 271 F.3d 140 (3rd Cir.Pa.2001); Individuals for Responsible Gov’t, v. Washoe County, 110 F.3d 699 (9th Cir.Nev.1997). Indeed, our Supreme Court has noted that “[t]he requirement of standing under Pennsylvania law is prudential in nature, and stems from the principle that judicial intervention is appropriate only where the underlying controversy is real and concrete, rather than abstract.” City of Philadelphia v. Commonwealth, 575 Pa. 542, 838 A.2d 566, 569 (2003).

¶ 14 Under the concept of prudential standing, the challenger to a statute must demonstrate, inter alia, how he or she falls within the “zone of interests intended to be protected by the statute, rule, or constitutional provision on which the claim is based.” Oxford Assocs., 271 F.3d at 146 (citation omitted). Consumers and others not directly affected by the regulation may assert dormant Commerce Clause challenges, but only if they establish that they fall within the zone of interests. Id. For example, in Oxford Assocs., the plaintiffs were building owners who challenged the fee structure of a county waste authority. Under the fee structure, the owners were forced to pay a waste generation fee (WGF) to a local facility at a rate far exceeding the interstate market rate.³ The building owners asserted that the authority’s fee structure violated the dormant Commerce Clause. The authority countered that the owners lacked standing. The Court of Appeals for the Third Circuit held that the owners did have standing, even though they were not in direct competition with the local facility. The Court held that because the fee structure burdened interstate commerce at the direct expense of the building owners:

In paying the WGF, they are directly paying the costs of maintaining the preferred facility and they are precluded by economic factors from accessing less expensive waste processing facilities. As a result, their interests, as consumers of waste processing services, are within the zone of interests intended to be protected by the Commerce Clause.

Oxford Associates, 271 F.3d at 147.

¶ 15 In the instant case, Judge Tereshko held that Appellants lacked standing to raise a dormant Commerce Clause challenge, because Appellants were not aggrieved by any dormant Commerce Clause aspect of the Statute. Judge Tereshko noted that the Statute dismissed only one asbestos defendant from the case, and that the remaining asbestos defendants are generally considered to be joint tortfea-sors. Mauger v. A.W. Chesterton, Inc. et al., 2007 Phil. Ct. Comm. Pl. Lexis 193, *42-45. Any dormant Commerce Clause concerns in the Statute do not adversely affect Appellants, because they may recover all of their damages from the remaining defendants through settlement or otherwise. See id.4 Any preferential treatment of in-state corporations had a minimal effect, if any, on Appellants. Id. We agree with the trial court’s analysis. Appellants have failed to demonstrate how any alleged violation of the dormant Commerce Clause had a tangible effect on their interests.⁵

¶ 16 Appellants’ limited arguments to the contrary are unavailing. First, Appellants argue that they have standing because the Statute barred their claims against Crown. As noted above, this general allegation of harm is insufficient in the absence of a link to the specific constitutional violation being asserted. See City of Philadelphia, 838 A.2d at 577.

¶ 17 Next, Appellants assert that standing exists because our Supreme Court entertained the merits of a constitutional challenge to the Statute in Ieropoli. For several reasons, we disagree. First, we note that our Supreme Court heard Iero-poli through an unusual, discretionary exercise of extraordinary jurisdiction under 42 Pa.C.S.A. § 726. Ieropoli, 842 A.2d at 924. The high Court’s exercise of extraordinary jurisdiction on a specific constitutional matter does not translate into a global holding that other parties have standing to raise other constitutional challenges, particularly when standing is a prudential matter. Second, and on a related note, the Court simply made no mention of standing in Ieropoli. Finally, the plaintiffs in Ieropoli were more aggrieved by the particular constitutional violation at issue: they claimed that the Statute unconstitutionally extinguished an accrued cause of action. In short, Appellants’ reli-anee on Ieropoli is misplaced. Appellants’ first claim fails for lack of standing.

¶ 18 Next, Appellants argue that the Statute violates the Equal Protection Clause of the United States Constitution because it discriminates against out-of-state corporations. We conclude that for the same reasons set forth above, Appellants lack standing to raise this claim.⁶

¶ 19 Finally, Appellants argue that the Statute was enacted in an unconstitutional manner. Our Supreme Court has insisted that a party raising such a claim must, again, first demonstrate standing. For example, in PAGE, 877 A.2d at 398, the Court held that legislators had standing to challenge the method of enacting the Gaming Act. In City of Philadelphia, 838 A.2d at 579, the Court held that the City of Philadelphia had standing to raise an enactment challenge to a law that adversely and directly affected the city’s “government functions relative to collective bargaining, budget management, and urban renewal.” Id. The City further alleged that the statute was enacted in a way that forced lawmakers to vote on a large number of complex issues under a strict deadline, so that only a “small circle of insiders” would know the full effects of the law. Id. at 575-576.

¶ 20 Here, in contrast, Appellants have made no attempt to establish standing. Rather, they proceed directly to the merits of their claim. We conclude that Appellants lack standing because they have failed to demonstrate that they had a substantial, direct, and immediate interest in a challenge to the enactment of the Statute. Appellants’ final claim fails.

¶ 21 Orders affirmed.

¶ 22 KLEIN, J.: files a dissenting opinion in which MUSMANNO, PANELLA, and DONOHUE, JJ. join.

1 . Appellants complied with the trial court’s orders to file concise statements of matters complained of on appeal under Pa.R.A.P. 1925. In the Mauger and Stea appeals, the Honorable Allan Tereshko addressed Appellants' claims on the merits, but also suggested that the claims were waived because the concise statements were too vague. In our view, Appellants' concise statements were not im-permissibly vague. Moreover, the trial court issued a thorough opinion on the merits. Accordingly, we do not conclude that the issues are waived.

2 . In Ieropoli, 842 A.2d at 932, our Supreme Court held that the Statute was unconstitutional under the Remedies Clause (Article 1, Section 11) of the Pennsylvania Constitution, because it extinguished existing causes of action. In response to Ieropoli, the Legislature passed 42 Pa.C.S.A. § 5524.1(b) to correct the Remedies Clause violation. Specifically, § 5524.1(b) states that the Statute does not bar claims where the statute of limitations commenced on or before the Statute’s effective date. Here, it is undisputed that the statute of limitations on Appellants’ claims all began to run after the effective date of the Statute. Thus, it is undisputed that there is no Remedies Clause violation in this case.

3 . The fee was used to finance the expense of bonds used to create the local facility. The authority could impose liens on the owners’ property if the owners failed to pay the fee.

4 . We will assume arguendo that Appellants have standing to appeal the trial court’s order. Appellants are aggrieved to the extent (if any) that the Statute extinguishes an otherwise-viable cause of action. See generally Pa. R.A.P. 501; Ieropoli; Konidaris. But see Pittsburgh Palisades Park LLC v. Commonwealth, 585 Pa. 196, 888 A.2d 655 (2005) (party that is not aggrieved by the underlying statute at issue lacks standing to raise constitutional challenges thereto). This is not to say that Appellants necessarily have standing to assert the specific constitutional claims that they have asserted here.

5 .Our Supreme Court has held that the standing requirement is satisfied so long as one challenger in a multi-party appeal has standing. Pennsylvanians Against Gambling Expansion Fund Inc., et al. [PAGE] v. Commonwealth, 583 Pa. 275, 877 A.2d 383, 393 (2005). Here, none of the Appellants has demonstrated standing.

6 . Appellants cite WHYY, Inc. v. Borough of Glassboro, 393 U.S. 117, 89 S.Ct. 286, 21 L.Ed.2d 242 (1968). In that case, plaintiff WHYY was a Pennsylvania nonprofit corporation that was licensed and qualified to do business in New Jersey. WHYY had a production facility in New Jersey. WHYY would have been entitled to a tax exemption for that facility, but for the fact that it was incorporated within Pennsylvania. The Supreme Court held that this unequal treatment under New Jersey law lacked any rational basis and violated the Equal Protection Clause. WHYY is clearly distinguishable because the WHYY plaintiff was directly affected by the unequal treatment.

In the same section of their brief, Appellants cite Moyer v. Phillips, 462 Pa. 395, 341 A.2d 441 (1975). Here, Appellants raise a different type of equal protection claim. In Moyer, our Supreme Court examined a statute that provided that causes of action survive the death of the plaintiff, except for causes of action relating to libel or slander. The Court held that the statute violated equal protection principles because it was arbitrary. The Court explained equal protection principles as follows:

The Equal Protection Clause of both constitutions does not deny the State the power to treat different classes of persons in different ways, but does deny the right to legislate that different treatment be accorded to persons placed by a statute into different classes on the basis of criteria wholly unrelated to the objective of the particular statute. The classification must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation so that all persons similarly circumstanced shall be treated alike.

Id. at 443. In Moyer, the Court held that there was no rational basis for drawing a distinction between deceased plaintiffs who suffered an injury to reputation, and deceased plaintiffs who did not.

Here, Appellants allege a similar equal protection violation with a bare, one-sentence citation to Moyer. Appellants have failed to develop their claim in any meaningful fashion, other than alleging that their claim is somehow analogous to Moyer. With only this underdeveloped argument, Appellants have not carried their ‘‘heavy burden” of demonstrating that the statute "clearly, palpably, and plainly violates the Constitution.” Koni-daris. This claim fails.