Supreme Court Rules For Insurers of Asbestos Company
The U.S. Supreme Court has found that a 1986 ruling by a bankruptcy judge prevents plaintiffs from initiating new claims against insurers of Johns-Manville, once of the largest producers of asbestos in the world. The June 18 holding overturns a Second Circuit Court of Appeals decision which found that the bankruptcy judge had exceeded his jurisdiction.
The bankruptcy court’s 1986 ruling prevented future lawsuits against Manville and its insurers for asbestos-related claims, provided that the company sets up a trust to settle such claims. However, a few years later, plaintiffs began filing lawsuits against Travelers for its role as one of Manville’s main insurers, saying that the suits were allowed because they were for Travelers’ violations of consumer protection laws, not Manville’s actions. In 2004, the insurance company reached an agreement that would settle then-existing cases under this new theory for approximately $440 million. In return, the original bankruptcy judge issued a “clarifying statement” saying that such suits were enjoined by the 1986 ruling. The case before the Supreme Court challenged this agreement.
The effect of the Court’s decision is to bar future lawsuits against Travelers for any claims related to exposure to Manville asbestos. However, the majority opinion emphasized that the ruling had a very narrow application, and was not intended to address bankruptcy court jurisdiction in general. Justices Stevens and Ginsburg dissented, saying that the 1986 order should only bar asbestos-related claims for Manville’s actions, not the actions of Manville’s insurance companies. Read more about asbestos exposure.
Tags: asbestos, Supreme Court