2002-08-14                     House Journal                      Page 4059
HB 499                                                                                            
The following letter, dated June 27, 2002, was received:                                            
                                                                                                    
"Dear Speaker Porter:                                                                               
                                                                                                    
Under the authority vested in me by art. II, sec. 15, of the Alaska                                 
Constitution, I have vetoed the following bill:                                                     
                                                                                                    

2002-08-14                     House Journal                      Page 4060
      CS FOR HOUSE BILL NO. 499(JUD)                                                                
      "An Act declaring legislative intent to reject the continuity of                              
      enterprise exception to the doctrine of successor liability adopted                           
      in Savage Arms, Inc. v. Western Auto Supply, 18 P.3d 49 (Alaska                               
      2001) as it relates to products liability; providing that a successor                         
      corporation or other business entity that acquires assets of a                                
      predecessor corporation or other business entity is subject to                                
      liability for harm to persons or property caused by a defective                               
      product sold or otherwise distributed commercially by the                                     
      predecessor only if the acquisition is accompanied by an                                      
      agreement for the successor to assume the liability, results from a                           
      fraudulent conveyance to escape liability for the debts or liabilities                        
      of the predecessor, constitutes a consolidation or merger with the                            
      predecessor, or results in the successor's becoming a continuation                            
      of the predecessor; defining 'business entity' that acquires assets to                        
      include a sole proprietorship; and applying this Act to the sale,                             
      lease, exchange, or other disposition of assets by a corporation, a                           
      limited liability company, a partnership, a limited liability                                 
      partnership, a limited partnership, a sole proprietorship, or other                           
      business entity that occurs before, on, or after the effective date of                        
      this Act."                                                                                    
                                                                                                    
                                                                                                    
This legislation takes the unusual and unwise approach of being                                     
retroactive, a tactic the Legislature rarely employs.  In passing the Tort                          
Reform act of 1997, for example, it was clear the changes in that bill                              
would be applied prospectively and not affect cases already in process.                             
Through its retrospective application, this bill is designed to                                     
inappropriately affect the outcome of pending litigation in the Savage                              
Arms case which the Alaska Supreme Court ruled on unanimously and                                   
remanded for further factual development of the record.                                             
                                                                                                    
                                                                                                    
The Legislature's decision to codify the strict Products Liability                                  
Restatement in Alaska law and reject the Alaska Supreme Court's                                     
decision to apply a broader interpretation of product liability is based                            
on no evidence that the stricter standard hurts business.  Rather, the                              
bill is designed to simply protect one company fighting one serious                                 
liability case.  The potential outcome of this poor legislative choice,                             
however, is to deny Alaska families the opportunity to pursue                                       

2002-08-14                     House Journal                      Page 4061
legitimate claims against product manufacturers who offer defective                                 
goods that cause serious injury.                                                                    
                                                                                                    
                                             Sincerely,                                            
                                             /s/                                                    
                                             Tony Knowles                                           
                                              Governor"