The Shaw Group Inc., an energy services firm founded by prominent Baton Rouge businessman Jim Bernhard, has agreed to pay Liberty Mutual Fire Insurance Co. $1.1 million to resolve a protracted legal dispute that stems back to alleged mercury exposure at a chlor-alkali plant in Muscle Shoals, Ala.
According to documents filed with the U.S. District Court for the Middle District of Louisiana, the dispute originated from a series of underlying lawsuits, though one lawsuit—the “Abernathy lawsuit”—is of particular note.
In April 2012, Aretha Abernathy and 46 other named plaintiffs filed a complaint against Shaw and 11 other defendants in the Circuit Court of Colbert County, Alabama. Abernathy’s deceased husband worked at the aforementioned chlor-alkali plant, a facility owned by Occidental Petroleum Corp. and decommissioned and dismantled by Shaw.
The plaintiffs in the Abernathy lawsuit alleged that they and/or their decedents were exposed to mercury during their employment at the OxyChem plant and that their exposure was caused by actions taken while Shaw was working at the facility.
Shaw submitted the Abernathy lawsuit for coverage under insurance policies issued by Liberty Mutual. Liberty Mutual denied coverage, however, on the grounds that the alleged “personal injury” occurred outside of the relevant policy periods, the last of which expired in 2005. Shaw’s work at the OxyChem plant began in 2008, post-dating the policy periods.
Despite that denial, Liberty Mutual did participate in Shaw’s defense from June 2015 to March 2020, incurring over $1.6 million in defense costs in the process. A settlement was ultimately reached between Shaw and the plaintiffs in the Abernathy lawsuit, though the exact terms of that settlement are confidential.
Liberty Mutual invoiced Shaw for deductible amounts totaling $1.25 million to cover costs incurred in Shaw’s defense—costs that Liberty Mutual claimed Shaw was contractually obligated to reimburse. Shaw paid only a small fraction of that sum, and in December 2020, Liberty Mutual sued to draw on letters of credit procured by Shaw to secure payment of the deductible amounts.
A final consent motion for entry of judgment filed June 25 reflects a mutual agreement to settle the dispute. Shaw has agreed to pay Liberty Mutual $1.1 million in two equal installments and Liberty Mutual has waived its rights to further claims or appeals.
Bernhard founded The Shaw Group in 1987 and served as its CEO for over 25 years before founding Baton Rouge-based private equity firm Bernhard Capital Partners. Shaw was acquired by CB&I in February 2013, though CB&I filed for Chapter 11 bankruptcy in January 2020 as a result of asbestos litigation.
