Segal McCambridge Legal Blog

The estate of a man who died from malignant mesothelioma did not produce enough evidence to prove he was exposed to the asbestos-containing brake shoes supplied by the defendant.

By Joe Forward, Legal Writer, State Bar of Wisconsin

Jan. 24, 2012 — In a recent decision, a Wisconsin appeals court reversed a $1.5 million damages award against a brake-shoe supplier whose product contained asbestos, concluding the evidence was insufficient to prove causation.

John Pender worked as a painter and glass setter for 41 years, from 1952 to 1993. In 2006, he was diagnosed with malignant mesothelioma and died shortly thereafter.

Pender's estate sued various product manufacturers based on negligence and strict products liability, claiming the brake shoes they supplied to Pender's employer, Harnischfeger Corp., contained asbestos that created an asbestos-laden dust during the grinding process.

Pneumo Abex LLC, a brake shoe supplier, was one of the manufacturers. Abex did not dispute that its product contained asbestos. But in Estate of John Pender v. Pneumo Abex LLC, (Jan. 18, 2012), the District I Wisconsin Court of Appeals agreed with Abex that the estate did not produce sufficient evidence to prove Pender had actual exposure to Abex's product.

The record indicated that Abex supplied brake shoes to Harnishfeger Corp. while Pender worked there, but there was insufficient evidence that Abex's brake shoes were supplied to the particular plant where Pender worked.

Harnishfeger had several plants in Milwaukee, and nine different companies supplied brake shoes to the company for a 20-year period. The other suppliers that Pender's estate sued were dismissed at the summary judgment stage. At trial, Abex stood as the sole defendant.

A jury found Abex liable on theories of both negligence and strict liability, awarding damages of nearly $1.5 million. But the appeals court ruled the case was over at summary judgment.

"We would have to pile inference upon inference in order to conclude that Pender was exposed to Abex's brake shoes while working at the National Avenue plant," wrote Judge Kitty Brennan.

"The evidence fails to take Pender's alleged exposure outside the realm of speculation and conjecture." The court noted a lack of evidence that Abex's brake shoes were ever delivered to Harnishfeger's National Avenue plant specifically, or were ever present or grinded there.

"The evidence presented to the trial court created on a 'mere possibility' of causation, which is not enough to survive summary judgment," the appeals court concluded.

The original article can be found here

From Courthouse News Service

http://www.courthousenews.com/2012/01/24/43302.htm

Insurance companies can challenge a $600 million trust created to settle thousands of asbestos-related claims against a California insulation company, the 9th Circuit ruled Tuesday.
     Burdened by some 2,000 asbestos-related lawsuits and with more on the horizon, Thorpe Insulation and its subsidiary, Pacific Insulation, filed for Chapter 11 bankruptcy protection in 2007.
     A family-owned company, Thorpe installed and removed asbestos-insulation products in Southern California from the late 1940s to the early 1970s in both industrial and commercial buildings. During the last 30 years, it has faced about 12,000 lawsuits for wrongful death and personal injury; since 1978, its insurers have paid out more than $180 million defending and settling such claims, according to the ruling.
     A Los Angeles federal judge approved a reorganization plan for the companies in 2009 that established the Thorpe Insulation Settlement Trust to handle present and future asbestos-related claims. Thorpe’s settlements with 13 insurers funded the trust with more than $600 million in cash and securities, the ruling states.
     But objections came from insurance companies that had refused to settle with Thorpe – Continental Insurance Co., National Fire Insurance Co. of Hartford, Motor Vehicle Casualty Co., Central National Insurance Co. of Omaha and Century Indemnity Co. Among their various claims, the insurers said that the court approved a settlement built in bad faith by attorneys with conflicts of interest.
     U.S. District Judge Dale Fisher affirmed the plan nonetheless, finding that it pre-empted any state-law contracts among the non-settling insurance companies. At any rate, those companies did not have standing to challenge the plan in bankruptcy or federal court because it was “insurance neutral, Fisher said.
     But the federal appeals court in Pasadena reached a different conclusion. Though the three-judge panel agreed that the plan overrides state-level contracts, it reversed as to standing Tuesday
     ”Appellants argue that the plan is not insurance neutral because of possible preclusive effects of the plan, because they are responsible for claims channeled to the trust, because the trust permits direct file suits against appellants, because they are a contingent beneficiary of the trust, and because the plan and trust distribution procedure can be changed without court supervision,” Judge Ronald Gould wrote for the unanimous panel. “We conclude that the plan may economically affect appellants in substantial ways. A plan is not insurance neutral when it may have a substantial economic impact on insurers.”
     ”Because the plan had likely effects that would increase economic exposure of the insurer appellants to asbestos claimants, they had a right to be heard fully and fairly before the plan was finalized,” Gould added.
     On remand, the District Court should “return the case to the bankruptcy court to give appellants the opportunity to present their proof and argument.”
     As the plan is already in motion, Gould acknowledged that this decision throws a wrench into the proceedings.
     ”There is no entirely tidy way to resolve this case because the plan has proceeded without stay and without full input from insurer parties who will be economically affected by the plan,” he wrote. “But we have concluded that the starting place is for us to reverse the judgment of the District Court, and to remand to the District Court with instructions that it remand to the bankruptcy court to permit appellants to submit their proof on all issues they previously preserved.”
     No one with the Thorpe Insulation Settlement Trust was immediately available for comment. 

The decision can be found at http://www.nycourts.gov/reporter/3dseries/2012/2012_00421.htm

From http://newsandinsight.thomsonreuters.com/Legal/

A New York appellate court affirmed a $420.4 million ruling in favor of insurer Travelers Cos, handing it a victory in one of the longest-running and most complex asbestos-related litigations in history.

The dispute has to do with the obligations of certain reinsurers to Travelers, which joined in payments of nearly $1 billion to cover asbestos claims against the company Western MacArthur. Travelers subsequently sought to recover some of its payments from its reinsurance companies.

Among those reinsurers is the U.S. unit of industry leader Munich Re and units of the insurer and reinsurer ACE Ltd. A spokeswoman for Munich Re Americas declined to comment. An ACE spokesman could not immediately be reached for a comment.

In October 2010 a lower New York court ruled that the reinsurers were obliged to help cover Travelers. That ruling was affirmed on appeal on Tuesday.

The Appellate Division, First Department, ruled 4-1 that the reinsurance companies were bound by a concept known as the “follow the fortunes doctrine,” which holds that reinsurers share the burdens taken on by the insurance companies with which they do business.

The appellate court found that the lower court “correctly determined that the follow-the-fortunes doctrine required defendants to accept the reinsurance presentation made by (Travelers unit) USF&G.”

A Travelers spokesman could not immediately comment on the ruling.

The facts behind the case date to 1948, when USF&G first wrote a liability insurance policy for Western Asbestos Co. By the late 1970s, people harmed by asbestos began to sue Western Asbestos’ successor company, Western MacArthur, which in 1993 sued USF&G and two other insurers seeking indemnification.

In 2002, the sides reached a settlement, which resulted in Western MacArthur going into bankruptcy. USF&G then sought indemnification from its reinsurers.

The one dissenter in Tuesday’s ruling was Justice Sheila Abdus-Salaam, who said there was a genuine dispute as to whether some of the settlement USF&G reached with Western MacArthur was subject to the reinsurance treaties.

Besides the length of the litigation, the case is notable because of the high-profile law firms involved. Travelers was represented on the appeal by Simpson Thacher & Bartlett, while Wachtell, Lipton, Rosen & Katz represented Munich Re and Boies, Schiller & Flexner represented ACE.

The case is United States Fidelity & Guaranty Company vs. American Re-Insurance Co, New York Supreme Court, Appellate Division, First Department, No. 604517/02.

For American Re-Insurance Company: Herbert Wachtell of Wachtell, Lipton, Rosen & Katz.

For Excess Casaulty Reinsurance Association and OneBeacon America Insurance Company: Kathleen Sullivan of Quinn Emanuel Urquhart & Sullivan.

For ACE Property & Casualty Company: George Carpinello of Boies, Schiller & Flexner.

For respondents: Mary Kay Vyskocil of Simpson Thacher & Bartlett