BILL REQ. #:  S-0211.1 

Read first time 02/01/2007.   Referred to Committee on Judiciary.

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

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

NEW SECTION.  Sec. 1   The legislature finds that the number of asbestos-related claims has increased significantly in recent years and threatens the continued viability of one or more uniquely situated companies that have not ever manufactured, sold, or distributed asbestos or asbestos products, and are liable only as successor corporations. This liability has created an overpowering public necessity to provide an immediate, remedial, legislative solution. The legislature intends that the cumulative recovery by all asbestos claimants from innocent successors be limited, and intends to simply change the form of asbestos claimants' remedies without impairing their substantive rights, and finds that there are no alternative means to meet this public necessity. The legislature finds that public interest as a whole is best served by providing relief to these innocent successors, so that they may remain viable and continue to contribute to this state.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "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.
     (2) "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.
     (3) "Successor" means a corporation that assumes or incurs, or has assumed or incurred, successor asbestos-related liabilities.
     (4) "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, as defined in this section, 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. The term 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 5 of this act, were or are paid or otherwise discharged, or committed to be paid or otherwise discharged, by or on behalf of the corporation, or 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.
     (5) "Transferor" means a corporation from which successor asbestos-related liabilities are or were assumed or incurred.

NEW SECTION.  Sec. 3   (1) The limitations in section 4 of this act shall apply to a domestic corporation or a foreign corporation that is a successor, which became a successor before January 1, 1972, or which is any of that successor corporation's successors.
     (2) The limitations in section 4 of this act shall 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 insurance corporation, as that term is used in Title 48 RCW;
     (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; or
     (e) A successor that, after a merger or consolidation, continued in the business of mining asbestos or in the business of selling or distributing asbestos fibers or in the business of manufacturing, distributing, removing, or installing asbestos-containing products which were the same or substantially the same as those products previously manufactured, distributed, removed, or installed by the transferor.

NEW SECTION.  Sec. 4   (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, then the fair market value of the total assets of the prior transferor, determined as of the time of such earlier merger or consolidation, shall be substituted for the limitation set forth in subsection (1) of this section for purposes of determining the limitation of liability of a corporation.

NEW SECTION.  Sec. 5   (1) A corporation may establish the fair market value of total gross assets for the purpose of the limitations under section 4 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 intangible assets.
     (3) Total gross assets include 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 such insurance coverage entered into by a transferor or successor with the insurers of the transferor before the effective date of this act will be determinative of the aggregate coverage of such liability insurance to be included in the calculation of the transferor's total gross assets.

NEW SECTION.  Sec. 6   (1) Except as provided in subsections (2), (3), and (4) of 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) No adjustment of the fair market value of total gross assets shall be applied to any liability insurance otherwise included in the definition of total gross assets by section 5(3) of this act.

NEW SECTION.  Sec. 7   This act may be known and cited as the successor asbestos-related liability fairness act.

NEW SECTION.  Sec. 8   This act applies to all causes of action commenced on or after the effective date of this section, regardless of when the action arose. To this extent, this act applies retroactively, but in all other respects it applies prospectively.

NEW SECTION.  Sec. 9   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.

NEW SECTION.  Sec. 10   Sections 1 through 9 of this act constitute a new chapter in Title 23 RCW.