876
Breyer, J., dissenting
that led to the valuation was not necessarily a fair one. The majority says it cannot make the necessary "arms-length bargaining" assumption because "[c]lass counsel" had a "great incentive to reach any agreement" in light of the fact that "some of the same lawyers . . . had also negotiated the separate settlement of 45,000" pending cases, which was partially contingent upon a global settlement or other favorable resolution of the insurance dispute. Ibid. (emphasis added).
The District Court and Court of Appeals, however, did accept the relevant "arms-length" assumption, with good reason. The relevant bargaining (i. e., the bargaining that led to the Trilateral Agreement that set the policies' value) was not between the plaintiffs' class counsel and the insurance companies; it was between Fibreboard and the insurance companies. And there is no reason to believe that that bargaining, engaged in to settle the California coverage dispute, was not "arms length." That bargaining did not lead to a settlement that would release Fibreboard from potential tort liability. Rather, it led to a potential backup settlement that did not release Fibreboard from anything. It created a fund of insurance money, which, once exhausted, would have left Fibreboard totally exposed to tort claims. Consequently, Fibreboard had every incentive to squeeze as much money as possible out of the insurance companies, thereby creating as large a fund as possible in order to diminish the likelihood that it would eventually have to rely upon its own net worth to satisfy future asbestos plaintiffs.
Nor are petitioners correct when they argue that the insurance companies' participation in setting the value of the insurance policies created a fund that is limited "only in the sense that . . . every settlement is limited." Brief for Petitioners 28. As the District Court found, the fund was limited by the value of the insurance policies (along with Fibreboard's own limited net worth), and that limitation arose out of the independent likelihood that the California courts
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