A dispute between PepsiCo and M&F Worldwide Corp. over an allegedly secret asbestos settlement is now before the Texas Supreme Court.

PepsiCo is challenging the $308 million settlement reached in 2011 between M&F subsidiary Pneumo Abex LLC and Cooper Industries LLC, a manufacturer of industrial electrical equipment.

PepsiCo recently sued M&F and other defendants under the Mafco Holdings banner in Texas state court, claiming the supposedly secret asbestos settlement disables contractual liability protections held by a Pepsi unit.

The current issue before the Texas Supreme Court is over court jurisdiction. Cooper Industries says Texas courts do not have jurisdiction to hear PepsiCo’s claim against the Mafco defendants, and PepsiCo says they do.

Cooper Industries argues PepsiCo should have brought its claim not in a Texas court but in the New York court that heard the original asbestos lawsuit that produced the asbestos settlement at issue.

The company also argues that the underlying facts at issue have too little to do with Texas. PepsiCo says Texas is involved because of two meetings that happened within the state in 2009, during which representatives of the Mafco defendants came in from out of state and partially negotiated the plan to interfere with PepsiCo’s contractual indemnity rights.

The two meetings don’t connect the matter firmly enough to Texas to give that state’s courts jurisdiction, Cooper Industries argues. The company says the allegedly wrongful act took place elsewhere, if at all.

Taking the plaintiff’s allegations as true, the settlement was only partially planned within Texas, and the alleged harm happened in a different state entirely, the company argues.

Cooper Industries filed this appeal after the Texas Fourteenth Circuit Court of Appeals found that the alleged facts were sufficient to invoke the jurisdiction of Texas courts.

Asbestos Settlement Originates in New York Court

The 2011 settlement was created to resolve claims by Pneumo Abex that Cooper Industries had improperly entered into a joint venture with another company.

Pneumo Abex argued the joint venture would impair Cooper Industries’ ability to indemnify Pneumo Abex for asbestos-related tort claims, as required by a 1994 mutual indemnity agreement.

The 2011 settlement required the 1994 agreement to be cancelled. It also required ownership of Pneumo Abex to be placed in a settlement trust.

That’s the settlement term that PepsiCo takes issue with. PepsiCo says it had a separate indemnity agreement with Pneumo Abex.

According to PepsiCo , the 2011 settlement effectively strips Pneumo Abex if its ability to indemnify PepsiCo under the terms of that preexisting agreement.

PepsiCo further claims the 2011 settlement and the litigation that spawned it was all a creation of M&F in an effort to dodge liability under its own indemnity agreement, liability that had apparently reached into the hundreds of millions of dollars.

Pepsi is now asking the Texas court to amend the settlement terms to hold Cooper Industries and M&F responsible for paying any shortfalls that the settlement fund can’t cover.

The PepsiCo M&F Asbestos Settlement Lawsuit is M&F Worldwide Corp., et al. v. Pepsi-Cola Metropolitan Bottling Co., Case No. 15-0083, in the Supreme Court for the State of Texas.