A Corporate Poisoner Two-Steps Out Of Its Toxic Liability

The United States Supreme Court just handed the oil and gas conglomerate Koch Industries — and its subsidiary, Georgia-Pacific, a paper and building material manufacturer — a major victory when it allowed the company to avoid paying damages to people who claim they were poisoned by the company’s products.

Georgia-Pacific has faced tens of thousands of legal claims from people who unknowingly suffered asbestos exposure from building materials the company sold in the 1960s and 1970s and have since faced serious health issues. And for the last seven years, the company has used a novel legal maneuver to evade those claims, leaving victims and their families in limbo.

In 2017, Georgia-Pacific invented the so-called Texas two-step, a legal scheme to skirt liability for consumer harms like widespread asbestos exposures or the opioid crisis. That year the company quietly reincorporated itself in Texas and used a Texas law to split itself into two entities. One, the new Georgia-Pacific, received almost all of the company’s assets and carried on business as usual as a multibillion-dollar company.

The other company — Bestwall, LLC — was saddled with all of Georgia-Pacific’s asbestos liabilities, which included tens of thousands of legal claims from people who lost loved ones to deadly asbestos-related cancers like mesothelioma, and people who were sick themselves. Bestwall then promptly filed for bankruptcy, trapping these legal claims in bankruptcy court.

In the time since, victims have seen little movement on their claims. Earlier this month, the Supreme Court declined to take up the Georgia-Pacific case, letting a lower-court ruling in Georgia-Pacific’s favor stand. The decision will give the company more time to avoid paying up for its asbestos poisoning, attorneys working with asbestos victims say.


By Katya Schwenk

In The Lever, May 28, 2024