Wash. Court: Old Bankruptcy Nixes Worker’s Asbestos Claim

August 13, 2007

Todd Shipyards Corp. can’t be sued for a deceased worker’s asbestos exposure because the man missed a filing deadline in a 20-year-old bankruptcy proceeding, the Washington Supreme Court said.

In a unanimous ruling, the court said Todd gave the late Roger Herring sufficient warning about its 1987 Chapter 11 bankruptcy filing when it published notices in several newspapers.

Calling it “a tragic case”‘ the court rejected Herring’s argument: That the prominent shipbuilding company had a duty to give Herring’s labor union specific notice of the bankruptcy.

“It certainly would have been desirable for the bankruptcy court to have required such notice, or for Todd to have taken the extra step,” Justice Tom Chambers wrote. “But, under current federal case law, it appears to us that Todd had no duty to inform Herring’s union.”

Herring worked for subcontractors at Todd’s work sites in the 1960s and early ’70s. He was a member of the Asbestos Workers Union Local 7.

Seattle-based Todd says it is the Pacific Northwest’s largest private shipyard, with clients including the Navy, state ferry system, cargo ships and cruise lines.

In 1987, Todd filed for Chapter 11 bankruptcy reorganization. The Bankruptcy Court set a 1988 deadline for filing claims, and Todd sent a written notice to its known creditors.

In 1989, Herring’s previously diagnosed lung thickening developed into asbestosis, or lung scarring. He sued several manufacturers of products that contain asbestos, but did not sue Todd, which emerged from bankruptcy that year.

Herring was diagnosed with the asbestos-linked lung cancer mesothelioma in 2002. He filed a lawsuit based on the diagnosis, and Todd was among the defendants. The company was not previously aware of Herring’s claims.

Herring died two years later. His estate carried on the lawsuit, which claimed that Herring’s union would have passed information about Todd’s bankruptcy on to its members if it had received a specific warning.

In 2004, the company won a summary judgment dismissing Herring’s lawsuit because it was discharged during bankruptcy.

On Thursday, Supreme Court justices agreed that Herring’s union was not entitled to such “actual notice” because it was not one of Todd’s creditors — even though the company likely knew it might face asbestos-related claims.

Instead, the court said Todd provided the required legal notice by publishing bankruptcy notices in Seattle’s two daily newspapers and in the national editions of The New York Times and The Wall Street Journal.

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