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78R9076 T
By: Duncan S.B. No. 1723
A BILL TO BE ENTITLED
AN ACT
relating to successor liability in asbestos claims.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
Section 1. Limitations in civil actions of liabilities
relating to certain mergers or consolidations (a) Limitation on
successor asbestos-related liabilities.--
(1) Except as further limited in paragraph (2), the
cumulative successor asbestos-related liabilities of a corporation
shall be limited to the fair market value of the total assets of the
transferor determined as of the time of the merger or
consolidation, and such corporation shall have no responsibility
for successor asbestos-related liabilities in excess of such
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 paragraph (1)
for purposes of determining the limitation of liability of a
corporation.
(b) Fair market value of total assets.--
(1) A corporation may establish the fair market value
of total assets through any method reasonable under the
circumstances, including by reference to the going concern value of
such assets or to the purchase price attributable to or paid for
such assets in an arm's length transaction, or, in the absence of
other readily available information from which fair market value
can be determined, by reference to the value of such assets recorded
on a balance sheet. Total assets shall include intangible assets. A
showing by the corporation of a reasonable determination of the
fair market value of total assets shall be prima facie evidence of
their fair market value.
(2) Once a reasonable determination of the fair market
value of total assets has been thus established by a corporation, a
claimant disputing that determination of value shall then have the
burden of establishing a different fair market value of such
assets.
(3) For the purpose of adjusting the limitations set
forth in subsection (a) to account for the passage of time, the fair
market value of total assets at the time of a merger or
consolidation shall be increased annually until the date on which
such adjusted fair market value is first exceeded by the cumulative
amounts paid or committed to be paid by or on behalf of the
corporation, or by or on behalf of a transferor, after the time of
the merger or consolidation as to which the fair market value of
total assets is determined for purposes of subsection (a) in
connection with settlements, judgments or other discharges of the
successor asbestos-related liabilities. The annual increase shall
be at the rate equal to the prime rate as listed in the first edition
of the Wall Street Journal published for each calendar year since
such merger or consolidation, plus 1%, not compounded.
(c) Application.--
(1) The limitations set forth in subsection (a) shall
apply to mergers or consolidations effected under the laws of this
State or another jurisdiction.
(2) The limitations set forth in subsection (a) shall
not apply to workers' compensation benefits paid by or on behalf of
an employer to an employee pursuant to the Texas Workers'
Compensation Act, Texas Labor Code Sec. 401.001 et. seq., or
comparable workers' compensation law of another jurisdiction.
(3) The limitations set forth in subsection (a) shall
not apply to any claim against a corporation that does not
constitute a successor asbestos-related liability.
(4) This section shall not apply to an insurance
corporation, as used in the Texas Insurance Code.
(5) The limitations set forth in subsection (a) shall
not apply to any obligations arising under the National Labor
Relations Act, 49 Stat. 449, 29 U.S.C. Sec. 151 et seq., or under
any collective bargaining agreement.
(6) This Act shall be applicable to all cases in the
courts of this State. To the fullest extent permissible under the
United States Constitution, courts in this State shall apply this
State's substantive law, including the limitations imposed by this
Act, to the issue of successor asbestos-related liabilities of a
corporation.
(7) The limitations set forth in subsection (a) shall
apply to all asbestos claims, including existing asbestos claims,
and all litigation, including existing litigation without regard to
whether a suit was commenced before, on or after the effective date
of this Act, and shall apply to successors of a corporation to which
this section applies.
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Asbestos claim." 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 property damage caused by the installation, presence or
removal of asbestos, the health effects of exposure to asbestos,
including any claim for personal injury, death, mental or emotional
injury, risk of disease or other injury or the costs of medical
monitoring or surveillance. The term shall also include any claim
made by or on behalf of any person exposed to asbestos or any
representative, spouse, parent, child or other relative of any such
person.
"Successor asbestos-related liabilities." Any liabilities,
whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated or due
or to become due, related in any way to asbestos claims, 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 thereto, with or into another corporation
effected under the laws of this State or another jurisdiction or
which are related in any way to asbestos claims based on the
exercise of control or the ownership of stock of such corporation
prior to such merger or consolidation. The term shall also include
liabilities which, after the time of the merger or consolidation as
to which the fair market value of total assets is determined for
purposes of subsection (a), were or are paid or otherwise
discharged, or committed to be paid or otherwise discharged, by or
on behalf 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.
"Transferor." A corporation from which successor
asbestos-related liabilities are assumed or incurred.
"Corporation." A corporation for profit, including a
domestic business corporation organized under the laws of this
State or a foreign corporation organized under laws other than the
laws of this State but that has a certificate of authority to
transact business in this State or is doing business in this State.
Section 2. This Act shall take effect immediately if it
receives a vote of two-thirds of all members elected to each house,
as provided by section 39, article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.