In 2017, Steptoe & Johnson won a major victory in U.S. District Court on behalf of client St. Paul Fire and Marine Insurance Co., now a subsidiary of Travelers, in a major asbestos-related insurance coverage dispute with Walter E. Campbell Co. (WECCO), an insulation firm based in Maryland.

At issue was the application of In Re Wallace & Gale, 385 F.3d 820, and the “completed operations hazard clause” found in various insurance policies that limits the exposure of insurance companies against claims by policyholders such as WECCO.

In this instance, the completed operations hazard clause limited the exposure of Travelers to indemnify WECCO against claims for hundreds of pending and future injury cases totaling more than $30 million.

“In Re Wallace & Gale set limits on asbestos-related claims and created winners and losers in asbestos cases,” said Harry Lee, co-chairman of Steptoe's insurance, reinsurance and professional liability practice. “So counsel for WECCO took a run at eviscerating Wallace & Gale, which would have had an industrywide effect. We were facing very good counsel, and the stakes were extremely high.”

Lee said a turning point in the case came on March 10, 2017, when Judge William Nickerson of the U.S. District Court for the District of Maryland issued his third straight partial summary judgment ruling in favor of Travelers.

“A number of insurers settled and only two hung on to the end, but once we got the district court judge to understand the issues and agree with us on our procedural arguments regarding venue and choice of law, i.e., that the case should not be subject to any other law except that of the state of Maryland, I thought the tide was turning in our favor,” Lee explained.

On March 26, 2018, the U.S. Court of Appeals for the Fourth Circuit upheld the Maryland federal court's ruling that Travelers has no further duty to cover WECCO's costs to defend and settle asbestos injury claims.

“The main questions at issue in this appeal—concerning both the scope and limit of the Insurers' duties to defend and indemnify WECCO—were answered over a decade ago by this Court in In re Wallace & Gale Co., 385 F.3d 820, 833–34 (4th Cir. 2004),” wrote Circuit Court Judge James Wynn for the majority. “Unsatisfied with our precedent and the effect it would have on its cause of action, WECCO asks us to either consider these questions anew or certify them to the Maryland Court of Appeals….we decline to do either.”

Lee said the Fourth Circuit ruling will have lasting significance. “With two wins over 15 years over the same issue in the Fourth Circuit, not only will this be Maryland law, but likely will be followed in the Fourth Circuit and in other circuits around
the country.”

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Firm Facts

Name of firm: Steptoe & Johnson
Founded: Washington
Total number of attorneys: 480
Litigators as percentage of firm: 50 percent
Litigators as percentage in D.C.: 50 percent
Litigation partners firmwide: 101
Litigation associates firmwide: 106
D.C. insurance litigation partners: 10
D.C. insurance litigation associates: 2

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Keys to Success

  • Cultivate and insist on generational succession and generational coverage; we have lawyers in their 70s and in their 20s and all ages in between.
  • Focus on clients' emerging risks, such as cyber, drones, autonomous vehicles and climate change.
  • Spend a lot of time listening to clients, and considering how you can make their jobs easier.— Harry Lee