In late June, 2008, the Supreme Court ruled in favor of Travelers Companies Inc, a U.S. property and casualty insurer, saying a lower court erred in overturning the approval of the company’s nearly $500 million settlement of asbestos-related litigation.
The settlement barred new lawsuits against Travelers as a result of insuring Johns Manville Corp, which mined and manufactured asbestos products. For almost 30 years, Travelers was the primary insurer for Manville and argued that asbestos claims should in future be paid out of an $80M trust created by Johns Manville and approved by a federal bankruptcy judge in 1986.
In return for reaching in excess of $500M in settlements with several plaintiffs for 2003 and 2004 cases, Travelers demanded that future lawsuits be barred.
A bankruptcy court judge and a federal judge in New York in 2006 approved the settlement. But a U.S. appeals court subsequently overturned the approval of the settlement on the grounds the bankruptcy judge lacked the authority to bar new lawsuits. So now the Supreme Court has spoken.
By a 7-2 vote, the Supreme Court reversed the appeals court’s ruling.
Justice David Souter wrote for the court majority that the bankruptcy judge’s orders barred state-law actions against Travelers based on allegations of its own wrongdoing while acting as Manville’s insurer or misuse of information obtained from Manville.
Souter said in the opinion that the finality of the 1986 orders generally stand in the way of challenging their enforceability.
