California Joins 21 States in Supreme Court Amicus Brief Challenging 'Texas Two-Step' Bankruptcy Tactic in Herlihy Case
California Attorney General Rob Bonta announced on October 23 that California has joined the attorneys general of 21 other states in filing an amicus brief urging the U.S. Supreme Court to take up Herlihy v. DBMP and reject the bankruptcy maneuver known as the "Texas Two-Step."
The case stems from building-products maker CertainTeed's 2019 use of a Texas divisional merger to shift its asbestos liabilities into a newly created subsidiary, DBMP Solutions. When DBMP filed for bankruptcy in North Carolina in 2020, asbestos lawsuits against CertainTeed were frozen — a stay that has now lasted more than five years — while CertainTeed itself never filed for bankruptcy.
The U.S. Court of Appeals for the Fourth Circuit upheld the stay in February 2026. Asbestos claimants petitioned the Supreme Court for review in September 2026. The case presents a split with the Third Circuit's earlier rulings against a similar maneuver by Johnson & Johnson.
In the brief, Bonta and the states argue that the Texas Two-Step lets companies halt victims' claims and delay compensation without filing for bankruptcy themselves, depriving asbestos victims of timely relief, and should not be permitted.
Published by GSM · USA (original Chinese edition)
Photo: 加州总检察长 Rob Bonta（左）与州长纽森（右）（资料图）（图：Wikimedia Commons，公共领域）
