BILL REQ. #:  H-2946.1 

Prefiled 01/04/10. Read first time 01/11/10.   Referred to Committee on Judiciary.

     AN ACT Relating to limitations on asbestos-related liabilities relating to certain mergers or consolidations occurring before 1972; and adding a new chapter to Title 23 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Asbestos" means any type of asbestos including, without limitation, chrysotile, amosite, crocidolite, tremolite asbestos, anthophyllite asbestos, actinolite asbestos, and any of these minerals that have been chemically treated or altered.
     (2) "Asbestos claim" means any claim, wherever or whenever made, for damages, losses, indemnification, contribution, or other relief arising out of, based on, or in any way related to asbestos, including:
     (a) The health effects of exposure to asbestos, including any claim for:
     (i) Personal injury or death;
     (ii) Mental or emotional injury;
     (iii) Risk of disease or other injury; or
     (iv) The costs of medical monitoring or surveillance, to the extent such claims are recognized under state law;
     (b) Any claim made by or on behalf of any person exposed to asbestos, or a representative, spouse, parent, child, or other relative of the person; and
     (c) Any claim for damage or loss caused by the installation, presence, or removal of asbestos.
     (3) "Corporation" means a corporation for profit, including a domestic corporation organized under the laws of this state or a foreign corporation organized under laws other than the laws of this state.
     (4) "Successor" means a corporation that assumes or incurs, or has assumed or incurred, successor asbestos-related liabilities before January 1, 1972, or a successor of that successor.
     (5) "Successor asbestos-related liabilities" means any liabilities, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due, that are related in any way to asbestos claims, and that were assumed or incurred by a corporation as a result of or in connection with a merger or consolidation, or the plan of merger or consolidation related to the merger or consolidation, with or into another corporation or that are related in any way to asbestos claims based on the exercise of control or the ownership of stock of the corporation before the merger or consolidation. "Successor asbestos-related liabilities" includes liabilities that, after the time of the merger or consolidation for which the fair market value of total gross assets is determined under section 3 of this act, are or were paid or otherwise discharged, or committed to be paid or otherwise discharged, by or on behalf of the corporation, by a successor of the corporation, or by or on behalf of a transferor, in connection with settlements, judgments, or other discharges in this state or another jurisdiction.
     (6) "Transferor" means a corporation from which successor asbestos-related liabilities are or were assumed or incurred.

NEW SECTION.  Sec. 2    (1) Except as further limited in subsection (2) of this section, the cumulative successor asbestos-related liabilities of a corporation are limited to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation. The corporation does not have any responsibility for successor asbestos-related liabilities in excess of this limitation.
     (2) If the transferor had assumed or incurred successor asbestos-related liabilities in connection with a prior merger or consolidation with a prior transferor, the fair market value of the total assets of the prior transferor, determined as of the time of the earlier merger or consolidation, must be substituted for the limitation set forth in subsection (1) of this section for the purposes of determining the limitation of liability of a corporation.
     (3) The limitations in this section apply to a domestic corporation or a foreign corporation that is a successor.
     (4) The limitations in this section do not apply to:
     (a) Workers' compensation benefits paid by or on behalf of an employer to an employee under this state's workers' compensation act or a comparable workers' compensation law of another jurisdiction;
     (b) Any claim against a corporation that does not constitute a successor asbestos-related liability;
     (c) An insurer, as defined in RCW 48.01.050;
     (d) Any obligations under the national labor relations act (29 U.S.C. Sec. 151 et seq.), as amended, or under any collective bargaining agreement;
     (e) A successor that, after a merger or consolidation, continued in the business of mining asbestos, selling or distributing asbestos fibers, or manufacturing, distributing, removing, or installing asbestos-containing products that were the same or substantially the same as those products previously manufactured, distributed, removed, or installed by the transferor;
     (f) A contractual obligation existing as of the effective date of this section that was entered into with claimants or potential claimants or their counsel and that resolves asbestos claims or potential asbestos claims;
     (g) Any claim made against the estate of a debtor in a bankruptcy proceeding commenced prior to April 1, 2003, under the United States bankruptcy code (11 U.S.C. Sec. 101 et seq.) by or against the debtor, or against a bankruptcy trust established under 11 U.S.C. Sec. 524(g) or similar provisions of the United States code in such a bankruptcy proceeding commenced prior to April 1, 2003;
     (h) A successor asbestos-related liability arising from a common law claim for premises liability, but only if the successor owned or controlled the premise or premises at issue after the merger or consolidation; or
     (i) Any government claims brought under chapter 70.105D RCW, or under the federal superfund law, 42 U.S.C. Sec. 9601 et seq.

NEW SECTION.  Sec. 3   (1) A corporation may establish the fair market value of total gross assets for the purpose of the limitations under section 2 of this act through any method reasonable under the circumstances, including: (a) By reference to the going-concern value of the assets or to the purchase price attributable to or paid for the assets in an arm's-length transaction; or (b) in the absence of other readily available information from which fair market value can be determined, by reference to the value of the assets recorded on a balance sheet.
     (2) Total gross assets include (a) intangible assets and (b) the aggregate coverage under any applicable liability insurance that was issued to the transferor whose assets are being valued for purposes of this section and which insurance has been collected or is collectable to cover successor asbestos-related liabilities, except compensation for liabilities arising from workers' exposure to asbestos solely during the course of their employment by the transferor. A settlement of a dispute concerning the liability insurance coverage entered into by a transferor or successor with the insurers of the transferor before the effective date of this section determines the aggregate coverage of the liability insurance to be included in the calculation of the transferor's total gross assets.
     (3) The fair market value of total gross assets must reflect no deduction for any liabilities arising from any asbestos claim.

NEW SECTION.  Sec. 4   (1) Except as provided in this section, the fair market value of total gross assets at the time of a merger or consolidation increases annually at a rate equal to the sum of: (a) The prime rate as listed in the first edition of the Wall Street Journal published for each calendar year since the merger or consolidation, unless the prime rate is not published in that edition of the Wall Street Journal, in which case any reasonable determination of the prime rate on the first day of the year may be used; and (b) one percent.
     (2) The rate in subsection (1) of this section is not compounded.
     (3) The adjustment of fair market value of total gross assets continues as provided under subsection (1) of this section until the date the adjusted value is first exceeded by the cumulative amounts of successor asbestos-related liabilities paid or committed to be paid by or on behalf of the corporation or a predecessor, or by or on behalf of a transferor, after the time of the merger or consolidation for which the fair market value of total gross assets is determined.
     (4) An adjustment of the fair market value of total gross assets may not be applied to any liability insurance otherwise included in the definition of total gross assets under section 3(2) of this act.

NEW SECTION.  Sec. 5   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 6   Sections 1 through 5 of this act constitute a new chapter in Title 23 RCW.