PRINTER'S NO.  1928

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

SENATE BILL

 

No.

1399

Session of

2012

  

  

INTRODUCED BY TOMLINSON, FOLMER, PIPPY, RAFFERTY AND EICHELBERGER, JANUARY 26, 2012

  

  

REFERRED TO JUDICIARY, JANUARY 26, 2012  

  

  

  

AN ACT

  

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Providing for successor business entity liability.

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The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

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Section 1.  Short title.

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This act shall be known and may be cited as the Successor

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Business Entity Liability Act.

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Section 2.  Legislative intent.

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(a)  Findings.--The General Assembly finds that:

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(1)  Asbestos-related claims threaten the continued

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viability of successor business entities which are formed or

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organized under the laws of this Commonwealth or another

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jurisdiction that have never manufactured, sold or

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distributed asbestos or asbestos-containing products.

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(2)  It is in the best interest of this Commonwealth to

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ensure the economic viability of the entities under paragraph

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(1).

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(3)  The viability of the domestic and foreign business

 


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entities under paragraph (1) is threatened due solely to

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their status as successor business entities by merger or

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consolidation based on actions taken prior to the 1972

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adoption of asbestos regulations by the Federal Occupational

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Safety and Health Administration.

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(4)  The cumulative recovery by all asbestos claimants

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from innocent successor business entities should be limited.

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(b)  Intent.--It is the intent of the General Assembly to

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expand the protections granted in 15 Pa.C.S § 1929.1 (relating

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to limitations on asbestos-related liabilities relating to

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certain mergers or consolidations) to successor business

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entities which are formed or organized under the laws of this

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Commonwealth or another jurisdiction.

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Section 3.  Definitions.

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The following words and phrases when used in this act shall

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have the following meanings:

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"Asbestos claim."  A claim, wherever or whenever made, for

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damages, losses, indemnification, contribution or other relief

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arising out of, based on or in any way related to asbestos,

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including property damage caused by the installation, presence

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or removal of asbestos, the health effects of exposure to

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asbestos, including a claim for personal injury, death, mental

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or emotional injury, risk of disease or other injury or the

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costs of medical monitoring or surveillance. The term includes a

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claim made by or on behalf of any person exposed to asbestos or

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a representative, spouse, parent, child or other relative of

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that individual.

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"Asbestos-related liability."  Any liability, whether known

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or unknown, asserted or unasserted, absolute or contingent,

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accrued or unaccrued, liquidated or unliquidated or due or to

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become due, related in any way to an asbestos claim.

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"Business entity."  A for-profit corporation, limited

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liability company, partnership, limited liability partnership or

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Subchapter S corporation formed or organized under the laws of

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this Commonwealth or another jurisdiction.

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"Successor asbestos-related liability."  Any asbestos-related

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liability that was assumed or incurred by a business entity as a

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result or in connection with a merger or consolidation, or a

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plan of merger or consolidation related thereto, with or into

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another business entity formed or organized under the laws of

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this Commonwealth or another jurisdiction or which are related

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in any way to asbestos claims based on the exercise of control

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or the ownership of stock of the business entity prior to the

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merger or consolidation. The term shall include liabilities

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which, after the time of the merger or consolidation with a

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transferor for which the fair market value of the total gross

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assets of the successor business entity are determined under

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section 5, was paid, committed to be paid or discharged by or on

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behalf of the business entity, successor business entity or

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transferor in connection with a settlement, judgment or

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discharge in this Commonwealth or another jurisdiction.

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"Successor business entity." Any of the following:

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(1)  A business entity that has merged or consolidated

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with a transferor prior to January 1, 1972, and that has

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assumed or incurred successor asbestos-related liabilities.

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(2)  A business entity that is a successor of a business

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entity that has merged or consolidated with a transferor

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prior to January 1, 1972, and that has assumed or incurred

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successor asbestos-related liabilities.

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"Transferor."  A business entity for which successor

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asbestos-related liabilities are or were assumed or incurred.

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Section 4.  Liability.

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(a)  Limitation.--Except as provided under subsection (c),

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the cumulative successor asbestos-related liability of a

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successor business entity shall be limited to the fair market

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value of the total gross assets of the transferor as of the time

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of the merger or consolidation with the successor business

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entity.

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(b)  Responsibility.--A successor business entity shall have

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no responsibility for successor asbestos-related liabilities in

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excess of the limitation under subsection (a).

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(c)  Exception.--If a transferor assumed or incurred

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successor asbestos-related liability in connection with a prior

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merger or consolidation with a prior transferor, the fair market

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value of the total assets of the prior transferor as of the time

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of the prior merger or consolidation shall be substituted for

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the limitation under subsection (a) for purposes of determining

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the liability of the successor business entity.

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Section 5.  Fair market value.

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(a)  Establishment.--A successor business entity may

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establish the fair market value of total gross assets of the

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transferor as of the time of the merger or consolidation by any

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reasonable method under the circumstances, including the

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following:

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(1)  By reference to the going concern value of the

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assets or to the purchase price of the assets in an arm's

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length transaction.

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(2)  In the absence of other readily available

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information from which fair market value can be determined,

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by reference to the value of the assets recorded on a balance

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sheet.

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(b)  Intangible assets.--Total gross assets under this

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section shall include intangible assets.

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(c)  Prima facie evidence.--A showing by the successor

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business entity of a reasonable determination of the fair market

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value of total gross assets shall be prima facie evidence of

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their fair market value.

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(d)  Burden.--Following a reasonable determination of the

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fair market value of total gross assets by the successor

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business entity, a claimant disputing that determination shall

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have the burden of establishing a different fair market value of

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the total gross assets.

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(e)  Settlement.--To the extent that total gross assets

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include liability insurance, a settlement of a dispute relating

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to liability insurance coverage entered into by the transferor

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or successor business entity with the insurer of the transferor

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prior to the effective date of this section shall be

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determinative of the total coverage of the liability insurance

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in the calculation of the transferor's total gross assets.

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Section 6.  Adjustment of fair market value.

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(a)  Annual increase.--Except as provided under subsection

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(c), the fair market value of total gross assets of a transferor

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as determined under section 5 shall increase annually until the

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earlier of:

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(1)  The date of the settlement, judgment or other

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discharge to which the limitations under section 4 are being

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applied.

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(2)  The date on which the adjusted fair market value is

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first exceeded by the cumulative amounts paid or committed to

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be paid by or on behalf of a successor business entity or a

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transferor after the time of merger or consolidation for

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which the fair market value of total assets is determined for

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purposes of section 4 in connection with a settlement,

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judgment or other discharge of successor asbestos-related

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liabilities.

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(b)  Rate.--Any adjustment under subsection (a) shall be at

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the rate equal to the prime rate listed in the first edition of

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the Wall Street Journal published for each calendar year since

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the merger or consolidation plus 1% not compounded.

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(c)  Exception.--No adjustment of the fair market value of

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total gross assets may be applied to any liability insurance as

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determined under section 5.

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Section 7.  Applicability and construction.

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(a)  Applicability.--This act shall not apply to any of the

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following:

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(1)  Workers' compensation benefits paid to an employee

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under the act of June 2, 1915 (P.L.736, No.338), known as the

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Workers' Compensation Act, or a comparable workers'

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compensation law of another jurisdiction.

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(2)  A claim against a business entity that does not

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constitute a successor asbestos-related liability.

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(3)  An insurance business entity as defined in 15

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Pa.C.S. § 3102 (relating to definitions).

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(4)  Obligations arising under the National Labor

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Relations Act (49 Stat. 449, 29 U.S.C. § 151 et seq.) or

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under a collective bargaining agreement.

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(b)  Construction.--Nothing in this act shall affect the

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scope or effect of 15 Pa.C.S. § 1929.1. Limitations under 15

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Pa.C.S. § 1929.1 shall continue to apply to all asbestos claims.

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Section 20.  Effective date.

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This act shall take effect immediately.

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