The Court of Appeals has rejected a 2004 settlement The Travelers Company made with several plaintiffs over asbestos claims.
The St. Paul, Minn.-based insurer said the U.S. Court of Appeals for the Second Circuit sitting in New York has vacated the March 2006 decision of the U.S. District Court for the Southern District of New York–that approved Travelers' 2004 settlements over claims the insurer used illegal practices to delay settling workplace asbestos injury claims.
In its decision, filed on Friday, the court said the bankruptcy court, in its desire to bring finality to Travelers' litigation, erred in jurisdiction. The nature of the claims did not involve claims settlements, but state questions over the company's misconduct.
"The bankruptcy court's desire to facilitate global finality for Travelers may not be used as a jurisdictional bootstrap when no jurisdiction otherwise exits," the court said in its decision.
The court remanded the case back to the bankruptcy court to reexamine any portions of the settlement and determine if jurisdiction applies in light of the court's order.
The $502.5 million settlement was originally agreed to in November 2003 in U.S. Bankruptcy Court in Manhattan. That decision would have ended all claims in Hawaii and barred any future claims in West Virginia, Massachusetts and other states.
For its part, Travelers said it is "currently analyzing the Second Circuit's opinion to determine whether to pursue further appellate proceedings. In addition, other parties may seek further appellate review of the ruling."
The company said it would not make an adjustment in its asbestos reserves based on the ruling, and there would not be an impact to the company's earnings.
Travelers said it would have preferred a settlement over litigation, but the asbestos litigation climate has improved over the past several years. The company said it would litigate each action vigorously because of the more favorable litigation climate.
(This story was updated on Feb. 20 at 12:57 p.m.)
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