Supreme Court Upholds Travelers Asbestos Lawsuit Settlements

Travelers Companies Inc. can settle lawsuits filed over injuries caused by exposure to asbestos for $500 million and stipulate that the settlements protect the insurance company from future asbestos litigation, the U.S. Supreme Court has ruled.

Travelers was sued by plaintiffs who accused the insurance giant of trying to hide the dangerous effects of asbestos, a naturally occurring mineral that was used in fire proofing, insulation and other products well into the 1970s until it was largely banned.

Exposure to asbestos is a leading cause of mesothelioma, a deadly form of cancer targeting the linings of the lungs, heart, abdomen, and other internal organs. Asbestos also is a cause of the chronic lung disease called asbestosis, which often advances to become mesothelioma.

Workers in the manufacturing, shipbuilding, construction, and asbestos mining fields are at the highest risk of developing mesothelioma and asbestosis.

Settlement Trust Creation Questioned

Travelers argued that asbestos claims against the insurer must be paid out of a trust created in 1986 by Johns Manville Corporation, a leading producer of asbestos.

In settling those lawsuits with plaintiffs in 2004, Travelers also included a clause stating that federal courts make clear the company would not have to face similar asbestos-related lawsuits in the future. A federal appeals court overruled a lower-court ruling approving the settlements with the immunity clause included on the grounds that the bankruptcy judge who approved the deal acted too broadly.

On Thursday, the U.S. Supreme Court overruled and ordered the Travelers settlements returned to the appeals court for reconsideration in keeping with the high court’s opinion.

“So long as respondents or those in privity with them were parties to the … bankruptcy proceedings, and were given a fair chance to challenge the bankruptcy court’s subject matter jurisdiction, they cannot challenge it now by resisting enforcement of the 1986 orders,” said Justice David Souter, writing the court’s 7-2 opinion.

Dissenting Opinion

Justices John Paul Stevens and Ruth Bader Ginsburg dissented, according to the Associated Press.

Stevens said in his opinion, the bankruptcy judge’s 1986 order “bars only those claims against Manville’s insurers seeking to recover from the bankruptcy estate for Manville’s misconduct, not those claims seeking to recover against the insurers for their own misconduct.”

The Supreme Court expressly stated that its ruling applies only to the Travelers case and the court did not decide the issue of whether all of the people who want to challenge the Travelers settlement are bound by the Manville Trust agreement. The court said the appeals court can answer that question if it chooses.

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