On June 18, 2009, Travelers Indemnity Company, the Firm's longtime client, prevailed in the United States Supreme Court in the Johns-Manville asbestos bankruptcy proceedings. In a 7-2 opinion authored by Justice David Souter, the Court reversed a 2008 ruling by the U.S. Court of Appeals for the Second Circuit that had permitted a broad collateral challenge to the subject matter jurisdiction of the nation's bankruptcy courts. In addition to impeding the asbestos plaintiffs’ bar’s attempts to hold Travelers liable as a result of its insurance relationship with Manville, the Supreme Court’s ruling reaffirms the vitality and enforceability of scores of bankruptcy channeling injunctions modeled on the Manville proceedings. Confidence in the finality of these and future injunctions is critical for the fair and equitable resolution of asbestos-related liability.
The Firm has represented Travelers in the Johns-Manville bankruptcy since the early 1980s, when Manville became the first Fortune 500 company to seek Chapter 11 protection as a result of asbestos-related liabilities. In 1986, the U.S. Bankruptcy Court for the Southern District of New York confirmed Johns-Manville’s reorganization plan and entered orders shielding the company’s insurers, including Travelers, against claims arising out of or related to Manville. On application of the Firm in 2002, the bankruptcy court enforced this injunctive relief by halting numerous actions filed by asbestos claimants around the country, including several class actions, on the grounds that the litigants’ claims against Travelers were founded on knowledge Travelers obtained from its insurance relationship with Johns-Manville and were therefore barred by the court's prior orders. The bankruptcy court's enforcement order was affirmed by the district court in all pertinent respects, but vacated by the Second Circuit.
On behalf of Travelers, the Firm successfully petitioned for Supreme Court review, which was granted in December 2008. Barry R. Ostrager argued the case before the Justices on March 30, 2009. The Court's opinion reverses the judgment of the Second Circuit and remands the case to the Second Circuit for further proceedings. Justice Souter's majority opinion was joined by Chief Justice Roberts and Justices Scalia, Kennedy, Thomas, Breyer and Alito.
The Simpson Thacher team consisted of Barry R. Ostrager, M.O. Sigal, Jr., Andrew T. Frankel, Robert J. Pfister, Gabriel D. Miller, Nicholas B. Melzer, Alison B. Hornstein and Peter R. Jordan. Harvard Law Professor Elizabeth A. Warren provided invaluable advice and counsel in the Supreme Court proceedings.