Grace asks judge to shield railway from asbestos suits

May 22, 2007|By Bloomberg News

WILMINGTON, Del. -- W.R. Grace & Co. asked the judge overseeing its bankruptcy case to bar asbestos-related lawsuits against Burlington Northern Santa Fe Railway Co. over the railroad's objections to the legal protection.

Grace's effort to resolve more than 100,000 asbestos claims it faces would be more difficult if Burlington, known as BNSF, starts defending itself against 113 lawsuits involving the railroad's transportation of vermiculite ore in Libby, Mont., Grace attorney David M. Bernick contended yesterday in court.

"We're trying to protect ourselves," Bernick told U.S. Bankruptcy Judge Judith K. Fitzgerald.

W.R. Grace, a chemical maker based in Columbia, Md., faces federal criminal charges and civil lawsuits related to its former vermiculite ore mine outside Libby, where town residents claim the company is responsible for exposing them to asbestos. BNSF transported vermiculite from Grace's mine until 1990, when the mine was shut down, according to court documents.

While Grace is in bankruptcy protection, none of the civil asbestos cases against the company can go forward. The criminal case is on hold pending legal appeals.

Grace has proposed settling all the lawsuits as part of its plan to exit bankruptcy.

About 600 town residents and former railroad workers sued BNSF, claiming the railroad's transportation of vermiculite ore exposed them to asbestos, which is linked to lung diseases, including cancer.

BNSF wants to be able to defend itself in these cases before memories fade and witnesses die, the company said in court records.

Grace argued that the plaintiffs in the BNSF case will eventually sue Grace. The BNSF cases would give plaintiffs' attorneys the chance to collect evidence that would later be used as leverage against Grace in negotiations, Bernick told the judge.

Fitzgerald agreed to sign an order allowing BNSF to pursue legal claims against its insurers, but he didn't immediately rule on Grace's motion to extend the ban on lawsuits to BNSF.

Grace has battled with lawyers for asbestos victims over how to put together a trust fund to cover legal liabilities for products sold from 1963 to 1973.

Under a plan it proposed last year, the fund would be no larger than $1.48 billion, according to court papers filed by asbestos lawyers. W.R. Grace used asbestos, a flame-retardant mineral, in construction materials.

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