Wisconsin Supreme Court Rules Insurer Must Pay Additional Asbestos Lawsuit Claims

MADISON, WI - On January 29, 2009, the Wisconsin Supreme Court ruled that Liberty Mutual Group must pay approximately $63 million in additional asbestos-related lawsuit claims against the Sheboygan-based Plastics Engineering Company, a family-owned business that also trades under the name Plenco. The high court's ruling is expected to impact on hundreds of worker lawsuits that are currently pending against Plenco, as well as to significantly influence environmental law in the state of Wisconsin for many years to come.

Plenco's and Liberty Mutual's litigation problems stem from employee and non-personnel allegations that Plenco knowingly and willfully exposed workers and other individuals to asbestos-a known carcinogen-at its Sheboygan manufacturing facility. From 1950 until 1983, Plenco manufactured molding compounds that contained hazardous levels of asbestos, which resulted in widespread human exposures to the material.

Asbestos is a naturally occurring mineral that can be found in countries around the world. Asbestos exists in a variety of colors and types, and because of its superior resistance to heat, chemical degradation, and electricity, asbestos became popular with a broad spectrum of manufacturers in the late 19th century. Up until the 1970s, white or chrysotile asbestos was used in the manufacture of a multitude of products-from brake pads for automobiles to a wide variety of building products, asbestos had become ubiquitous in the environment.

Asbestos lost its vast commercial appeal in the ‘70s when it was discovered that exposures to airborne asbestos fibers could lead to serious respiratory disease. Once inhaled into the lungs, microscopic asbestos fibers can remain there for up to 50 years before finally resulting in illnesses such as asbestosis-a severe scarring that significantly impairs lung function-as well as malignant pleural mesothelioma (MPM). MPM is a highly aggressive and incurable form of cancer that only occurs in individuals who were exposed to asbestos-the disease has killed hundreds of thousands of individuals around the world and more continue to die every day.

Litigants against Plenco allege that the plastics manufacturer knew full-well the health risks associated with asbestos, yet the company knowingly and willfully disregarded those risks and continued to expose individuals to the deadly carcinogen. Liberty Mutual's involvement in all of this stems from the insurance giant's claim that it could greatly limit its asbestos lawsuit liability obligation to Plenco.

Liberty Mutual has been Plenco's insurer since the 1960s, and through the year 2005, the insurance company paid $14.3 million in asbestos-based litigation awards against the plastics manufacturer. Liberty Mutual lawyers argued that the Boston-based company was only liable for a "single occurrence" or one "industrial mistake", i.e., the manufacture and distribution of asbestos containing products. Liberty Mutual attorneys further contended that the company should not be responsible for health problems that occurred while it no longer served as Plenco's insurer.

According to Liberty Mutual's claim, Plenco would only be eligible to receive approximately $10 million more from the insurance company, but the state Supreme Court judges didn't agree. A majority of the court ruled that each injury to health must be treated as a "separate incident", and the company must pay "the full cost of compensating victims up to the policy limits". The ruling raised Liberty Mutual's liability to Plenco to approximately $73 million-funds the plastics manufacturer will desperately need as it defends against its pending lawsuits.

"It's a great result for Plastics Engineering and all Wisconsin insureds," said Jeff Davis, a Plenco lawyer who was involved in the case. "It's an issue that has come up around the country in litigation, and Wisconsin had not yet weighed in on it."

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