HF 1418

2nd Engrossment - 87th Legislature (2011 - 2012) Posted on 04/28/2011 03:10pm

A bill for an act
relating to civil law; limiting successor corporation asbestos-related liabilities;
proposing coding for new law in Minnesota Statutes, chapter 604A.

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

Section 1.

new text begin [604A.36] LIMITATIONS OF ASBESTOS LIABILITIES RELATING
TO CERTAIN MERGERS OR CONSOLIDATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Short title. new text end

new text begin This section may be cited as the "Innocent Successor
Asbestos-Related Liability Fairness Act."
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms in paragraphs
(b) to (f) have the meanings given them.
new text end

new text begin (b) "Asbestos claim" means a 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:
new text end

new text begin (1) the health effects of exposure to asbestos, including a claim for personal injury or
death, mental or emotional injury, risk of disease or other injury, or the costs of medical
monitoring or surveillance;
new text end

new text begin (2) a claim made by or on behalf of a person exposed to asbestos, or a representative,
spouse, parent, child, or other relative of the person; and
new text end

new text begin (3) a claim for damage or loss caused by the installation, presence, or removal of
asbestos.
new text end

new text begin (c) "Corporation" means a business corporation, 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.
new text end

new text begin (d) "Innocent successor" means a corporation that assumes or incurs, or has assumed
or incurred, successor asbestos-related liabilities that is a successor and became a
successor before January 1, 1972, or is any of that successor corporation's successors.
new text end

new text begin (e) "Successor asbestos-related liabilities" means liabilities, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due, which are related to asbestos claims and 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 subdivision 5, 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.
new text end

new text begin (f) "Transferor" means a corporation from which successor asbestos-related
liabilities are or were assumed or incurred.
new text end

new text begin Subd. 3. new text end

new text begin Applicability. new text end

new text begin (a) The limitations in subdivision 4 apply to an innocent
successor corporation.
new text end

new text begin (b) The limitations of subdivision 4 do not apply to:
new text end

new text begin (1) workers' compensation benefits paid by or on behalf of an employer to an
employee under the provisions of chapter 176, or a comparable workers' compensation
law of another jurisdiction;
new text end

new text begin (2) a claim against a corporation that does not constitute a successor asbestos-related
liability;
new text end

new text begin (3) an obligation under the National Labor Relations Act, United States Code, title
29, section 151, et seq., as amended, or under a collective bargaining agreement; or
new text end

new text begin (4) a successor corporation that, after a merger or consolidation with a transferor,
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 that were previously manufactured,
distributed, removed, or installed by the transferor.
new text end

new text begin Subd. 4. new text end

new text begin Measure of liabilities. new text end

new text begin (a) Except as further limited in paragraph (b), the
cumulative successor asbestos-related liabilities of an innocent successor 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 innocent successor corporation does not have
responsibility for successor asbestos-related liabilities in excess of this limitation.
new text end

new text begin (b) 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 the
earlier merger or consolidation must be substituted for the limitation in paragraph (a) for
purposes of determining the limitation of liability of an innocent successor corporation.
new text end

new text begin Subd. 5. new text end

new text begin Establishing fair market value of total gross assets. new text end

new text begin (a) An innocent
successor corporation may establish the fair market value of total gross assets for the
purpose of the limitations under subdivision 4 through any method reasonable under the
circumstances, including:
new text end

new text begin (1) by reference to the going-concern value of the assets or to the purchase price
attributable to or paid for the assets in an arms-length transaction; or
new text end

new text begin (2) in the absence of other readily available information from which the fair market
value can be determined, by reference to the value of the assets recorded on a balance sheet.
new text end

new text begin (b) Total gross assets include intangible assets.
new text end

new text begin (c) To the extent total gross assets include liability insurance that was issued to the
transferor whose assets are being valued for purposes of this subdivision, the applicability,
terms, conditions, and limits of the insurance is not affected by this section, and this
section does not otherwise affect the rights and obligations of an insurer, transferor, or
successor under an insurance contract and/or any related agreements including, without
limitation, preenactment settlements resolving coverage-related disputes, and the rights
of an insurer to seek payment for applicable deductibles, retrospective premiums
or self-insured retentions, or to seek contribution from a successor for uninsured or
self-insured periods or periods where insurance is uncollectible or otherwise unavailable.
A settlement of a dispute concerning any such liability insurance coverage entered into by
a transferor or successor with the insurers of the transferor before the effective date of this
section is determinative of the total coverage of the liability insurance to be included in
the calculation of the transferor's total gross assets.
new text end

new text begin Subd. 6. new text end

new text begin Adjustment. new text end

new text begin (a) Except as provided in paragraphs (b) to (d), the fair
market value of total gross assets at the time of the merger or consolidation increases
annually at a rate equal to the sum of:
new text end

new text begin (1) 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
new text end

new text begin (2) one percent.
new text end

new text begin (b) The rate found in paragraph (a) must not be compounded.
new text end

new text begin (c) The adjustment of the fair market value of total gross assets continues as provided
in paragraph (a) 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 innocent successor 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.
new text end

new text begin (d) No adjustment of the fair market value of total gross assets is applied to liability
insurance that may be included in the definition of total gross assets by subdivision 5,
paragraph (c).
new text end

new text begin Subd. 7. new text end

new text begin Scope; application. new text end

new text begin (a) The courts of this state shall construe the
provisions of this section liberally with regard to innocent successors.
new text end

new text begin (b) This section applies to all asbestos claims filed against an innocent successor on
or after the day following final enactment.
new text end