On Sept 19, 2011, an Allegheny County jury found an $80 million global settlement of more than 500 claims relating to the release of radiation at two Pennsylvania nuclear plants was fair and reasonable. As a result, it is likely that American Nuclear Insurers will need to cover the settlement paid out by the two companies (Arco and B&W) that ran the plants.
The insurance company had argued the defendants never should have settled, particularly without the insurer's consent, because the plaintiffs' claims were based on "junk science" and the defendants would have won at trial. The underlying case involved in Babcock & Wilcox v. American Nuclear Insurers has a long and complicated history that resulted last month in a three-week trial consisting mainly of litigators testifying as to why settlements are made and why this one in particular was or was not fair and reasonable.
A bellwether case of eight plaintiffs was tried in the U.S. District Court for the Eastern District of Pennsylvania in 1998. During pretrial proceedings, the plaintiffs offered to settle the case for $100 million for all claimants, but, according to B&W's court papers, ANI would not entertain the possibility of a settlement. Arco and B&W decided to settle the claims on their own and out of their own pockets. In 2008, B&W paid $52.5 million and Arco paid $27.5 million and the two companies settled any claims against one another. The settlement was approved in the Western District in April 2009. The two companies then looked to be reimbursed by American Nuclear Insurers.
Although the case is not over yet, the verdict puts B&W and Arco in a better position to prevail. B&W and Arco filed post-trial motions seeking more than $11 million in prejudgment interest and will also be seeking attorneys' fees and costs.
