June 18, 2009 / 2:56 PM / 10 years ago

Supreme Court rules for Travelers in asbestos case

Workers remove asbestos in a file photo. REUTERS/File

WASHINGTON (Reuters) - The Supreme Court ruled on Thursday for Travelers Companies Inc, one of the largest U.S. property and casualty insurers, and said a lower court erred in overturning the approval of the company’s nearly $500 million settlement of asbestos-related litigation.

The settlement also barred new lawsuits against Travelers stemming from its relationship with Johns Manville Corp, which had been the country’s largest miner of asbestos and a major manufacturer of asbestos-containing products.

Travelers had been Manville’s primary insurer from 1947 through 1976. Exposure to asbestos has been found to increase the risk of lung cancer, mesothelioma and other illnesses.

Travelers, based in Saint Paul, Minnesota, has argued that asbestos-related claims should be paid out of a trust that had been created by Johns Manville and approved by a federal bankruptcy judge in 1986. Travelers paid about $80 million into that fund.

Travelers then agreed to settlements reached in 2003 and 2004 with several groups of plaintiffs, provided that federal courts barred any future similar lawsuits. Travelers agreed to pay almost $500 million to resolve those claims.

A bankruptcy court judge and a federal judge in New York in 2006 approved the settlement. But a U.S. appeals court last year overturned the approval of the settlement on the grounds the bankruptcy judge lacked the authority to bar new lawsuits.

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.

Reporting by James Vicini, Editing by Lisa Von Ahn, Dave Zimmerman

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