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S.B. 172 Enrolled

             1     

SUCCESSOR CORPORATION ASBESTOS-RELATED

             2     
LIABILITY ACT

             3     
2012 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Curtis S. Bramble

             6     
House Sponsor: Gregory H. Hughes

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Judicial Code to address successor corporation asbestos-related
             11      liability.
             12      Highlighted Provisions:
             13          This bill:
             14          .    enacts the Successor Corporation Asbestos-Related Liability Act, including:
             15              .    defining terms;
             16              .    addressing the applicability of the limitations on liability to successors and
             17      certain claims;
             18              .    limiting liability of a successor for successor asbestos-related liability;
             19              .    providing for how to establish fair market value of total gross assets of a
             20      transferor;
             21              .    providing for adjustments to the fair market value of total gross assets; and
             22              .    addressing the scope of the part.
             23      Money Appropriated in this Bill:
             24          None
             25      Other Special Clauses:
             26          None
             27      Utah Code Sections Affected:
             28      ENACTS:
             29          78B-4-601, Utah Code Annotated 1953


             30          78B-4-602, Utah Code Annotated 1953
             31          78B-4-603, Utah Code Annotated 1953
             32          78B-4-604, Utah Code Annotated 1953
             33          78B-4-605, Utah Code Annotated 1953
             34          78B-4-606, Utah Code Annotated 1953
             35          78B-4-607, Utah Code Annotated 1953
             36     
             37      Be it enacted by the Legislature of the state of Utah:
             38          Section 1. Section 78B-4-601 is enacted to read:
             39     
Part 6. Successor Corporation Asbestos-Related Liability Act

             40          78B-4-601. Title.
             41          This part is known as the "Successor Corporation Asbestos-Related Liability Act."
             42          Section 2. Section 78B-4-602 is enacted to read:
             43          78B-4-602. Definitions.
             44          As used in this part:
             45          (1) "Asbestos claim" means a claim, wherever or whenever made, for damages, losses,
             46      indemnification, contribution, or other relief arising out of, based on, or in any way related to
             47      asbestos, including:
             48          (a) the health effects of exposure to asbestos, including a claim for:
             49          (i) personal injury or death;
             50          (ii) mental or emotional injury;
             51          (iii) risk of disease or other injury; or
             52          (iv) the costs of medical monitoring or surveillance;
             53          (b) a claim made by or on behalf of a person exposed to asbestos, or a representative,
             54      spouse, parent, child, or other relative of the person; and
             55          (c) a claim for damage or loss caused by the installation, presence, or removal of
             56      asbestos.
             57          (2) "Corporation" means a corporation for profit, including a domestic corporation


             58      organized under the laws of this state or a foreign corporation organized under laws other than
             59      this state.
             60          (3) "Successor" means a corporation that:
             61          (a) (i) assumes or incurs or has assumed or incurred successor asbestos-related liability;
             62          (ii) is the successor corporation after a merger or consolidation; and
             63          (iii) became a successor before January 1, 1972; or
             64          (b) is a successor corporation of a corporation described in Subsection (3)(a).
             65          (4) (a) "Successor asbestos-related liability" means liability:
             66          (i) whether known or unknown, asserted or unasserted, absolute or contingent, accrued
             67      or unaccrued, liquidated or unliquidated, or due or to become due;
             68          (ii) that is related in any way to an asbestos claim; and
             69          (iii) (A) is assumed or incurred by a corporation as a result of or in connection with a
             70      merger or consolidation, or the plan of merger or consolidation related to the merger or
             71      consolidation with or into another corporation; or
             72          (B) that is related in any way to an asbestos claim based on the exercise of control or
             73      the ownership of stock of the corporation before the merger or consolidation.
             74          (b) "Successor asbestos-related liability" includes liability that, after the time of the
             75      merger or consolidation for which the fair market value of total gross assets is determined
             76      under Section 78B-4-605 , was or is paid or otherwise discharged, or committed to be paid or
             77      otherwise discharged, by or on behalf of the corporation, or by a successor of the corporation,
             78      or by or on behalf of a transferor, in connection with a settlement, judgment, or other discharge
             79      in this state or another jurisdiction.
             80          (5) "Transferor" means a corporation from which successor asbestos-related liability is
             81      or was assumed or incurred.
             82          Section 3. Section 78B-4-603 is enacted to read:
             83          78B-4-603. Applicability.
             84          (1) The limitations in Section 78B-4-604 apply to a successor.
             85          (2) The limitations in Section 78B-4-604 do not apply to:


             86          (a) workers' compensation benefits paid by or on behalf of an employer to an employee
             87      under Title 34A, Chapter 2, Workers' Compensation Act, and Title 34A, Chapter 3, Utah
             88      Occupational Disease Act, or a comparable workers' compensation law of another jurisdiction;
             89          (b) a claim against a corporation that does not constitute a successor asbestos-related
             90      liability;
             91          (c) an obligation under the National Labor Relations Act, 29 U.S.C. Sec. 151, et seq.,
             92      as amended, or under a collective bargaining agreement; or
             93          (d) a successor that, after a merger or consolidation, continued in the business of:
             94          (i) mining asbestos;
             95          (ii) selling or distributing asbestos fibers; or
             96          (iii) manufacturing, distributing, removing, or installing asbestos-containing products
             97      that were the same or substantially the same as those products previously manufactured,
             98      distributed, removed, or installed by the transferor.
             99          Section 4. Section 78B-4-604 is enacted to read:
             100          78B-4-604. Measure of liabilities.
             101          (1) Except as further limited in Subsection (2), the cumulative successor
             102      asbestos-related liability of a successor is limited to the fair market value of the total gross
             103      assets of the transferor determined as of the time of the merger or consolidation. A successor
             104      does not have responsibility for successor asbestos-related liability in excess of this limitation.
             105          (2) If the transferor had assumed or incurred successor asbestos-related liability in
             106      connection with a prior merger or consolidation with a prior transferor, the fair market value of
             107      the total assets of the prior transferor determined as of the time of the earlier merger or
             108      consolidation shall be substituted for the limitation set forth in Subsection (1) for purposes of
             109      determining the limitation of liability of a successor.
             110          Section 5. Section 78B-4-605 is enacted to read:
             111          78B-4-605. Establishing fair market value of total gross assets.
             112          (1) A successor may establish the fair market value of total gross assets for the purpose
             113      of the limitations under Section 78B-4-604 through any method reasonable under the


             114      circumstances, including:
             115          (a) by reference to the going concern value of the assets or to the purchase price
             116      attributable to or paid for the assets in an arms-length transaction; or
             117          (b) in the absence of other readily available information from which the fair market
             118      value can be determined, by reference to the value of the assets recorded on a balance sheet.
             119          (2) Total gross assets include intangible assets.
             120          (3) (a) To the extent total gross assets include any liability insurance that was issued to
             121      the transferor whose assets are being valued for purposes of this section, the applicability,
             122      terms, conditions, and limits of the insurance may not be affected by this section, nor shall this
             123      section otherwise affect the rights and obligations of an insurer, transferor, or successor under
             124      any insurance contract or related agreement including:
             125          (i) preenactment settlements resolving coverage-related disputes; and
             126          (ii) the rights of an insurer to seek payment of applicable deductibles, restrospective
             127      premiums, or self-insured retentions or to seek contribution from a successor for uninsured or
             128      self-insured periods or periods when insurance is uncollectible or otherwise unavailable.
             129          (b) Without limiting Subsection (3)(a), to the extent total gross assets include liability
             130      insurance, a settlement, or a dispute concerning the liability insurance coverage entered into by
             131      a transferor or successor with the insurers of the transferor before May 8, 2012, shall be
             132      determinative of the total coverage of the liability insurance to be included in the calculation of
             133      the transferor's total gross assets.
             134          Section 6. Section 78B-4-606 is enacted to read:
             135          78B-4-606. Adjustment.
             136          (1) Subject to Subsections (2) through (4), the fair market value of total gross assets at
             137      the time of the merger or consolidation shall increase annually at a rate equal to the sum of:
             138          (a) the prime rate as listed in the first edition of the Wall Street Journal published for
             139      each calendar year since the merger or consolidation, unless the prime rate is not published in
             140      that edition of the Wall Street Journal, in which case any reasonable determination of the prime
             141      rate on the first day of the calendar year may be used; and


             142          (b) 1%.
             143          (2) The rate found in Subsection (1) may not be compounded.
             144          (3) The adjustment of the fair market value of total gross assets shall continue as
             145      provided in Subsection (1) until the date the adjusted value is first exceeded by the cumulative
             146      amounts of successor asbestos-related liability paid or committed to be paid by or on behalf of
             147      the successor corporation or a predecessor or by or on behalf of a transferor after the time of
             148      the merger or consolidation for which the fair market value of total gross assets is determined.
             149          (4) An adjustment of the fair market value of total gross assets may not be applied to
             150      any liability insurance that may be included in the definition of total gross assets by Subsection
             151      78B-4-605 (3).
             152          Section 7. Section 78B-4-607 is enacted to read:
             153          78B-4-607. Scope.
             154          (1) Courts of this state shall construe this part liberally with regard to successors.
             155          (2) This part shall apply to an asbestos claim filed against a successor on or after May
             156      8, 2012. This part shall apply to a pending asbestos claim against a successor in which trial has
             157      not commenced as of May 8, 2012, except that any provision of this part that would be
             158      unconstitutional if applied retroactively shall be applied prospectively.


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