Trying the Environmental Coverage Case in 2017
November 2, 2016
It can be easy for insurance trial lawyers to become complacent when fighting the ancient coverage wars over asbestos and pollution related-liabilities. But good trial lawyers know how to revisit their time-tested themes with renewed energy and vigor each time. They face each trial fresh, as if it is the first time the words have been spoken, because the trial lawyer knows that for the jury, that might as well be true. The evidence and the themes will be all new.
While there are potential nuances and variations that can affect the approach to a jury trial in a specific environmental coverage dispute, certain themes are staples. Regardless of venue or the particular facts of a case, most if not all of the following simple but time-honored themes should be brought home to the jury:
“This Case is About Insurance, Not Pollution”
Pollution issues have the potential of turning an insurance trial on its head. All of a sudden, a trial that should be about recalcitrant insurers can morph into a “pollution” case with the policyholder sitting as the de facto defendant. If insurers are successful in this regard, the policyholder can lose the high ground — along with most of the logical, tactical and ethical advantages of being the plaintiff.
So it is critical to keep the case on track. Do not let the jury be distracted by environmental aspects of the case to the point where they lose sight of the fact that “this is an insurance case.” Jurors need to be reminded strongly during opening statement and throughout the case that the only question to be answered is whether there is insurance for the policyholder’s liability. Not whether the site will be cleaned up, or when it will be safe for jurors to picnic there.
Remind them that insurance is purchased in case things go wrong, and coverage does not depend on their view of the policyholder or its alleged wrongdoing. In many instances, one can also point out that the case is not about pollution because the policyholder has already acknowledged responsibility under the superfund or other legislation and has already met that obligation without being taken to court. In such cases, you should be sure to tell the jurors that they will see no questions in the verdict form about whether the insured is responsible or whether it should pay for the cleanup. That issue is resolved.
“Three Little Words are Not a Giant Loophole”
Most cases will involve a verdict form that asks whether the property damage was “expected or intended” by the insured. Jurors should be told in opening and reminded whenever possible that this phrase is nothing more than three words out of the entire insurance contract. It’s a narrow loophole to deny coverage to a policyholder under specific circumstances, not a sweeping exclusion that eliminates coverage for anyone that sees the need to purchase insurance to guard against potential risks.
A possible visual could include a listing of what the insured could not have expected: new federal or state regulations, development of new technologies or new monitoring methods or changes in definitions of and public perception about pollution.
So, three words out of thousands. One line out of pages. Look at all the language that the insurers are not talking about. If the insurers had marketed the loophole as being as extensive as they now claim, they would never have been able to sell the policy in the first place.
“Title to the Garbage has Passed”
Many environmental coverage cases involve disposal at third-party sites or through arms-length vendors. There is often an intuitive appeal to the argument that once waste is passed to a site operator, the policyholder’s intent to harm the environment cannot be readily assumed. Jurors will often use their own garbage as an example to persuade fellow jurors that when waste passes into the control of an operator responsibility also passes to that operator. This is especially the case if the evidence supports the statement that the policyholder was entirely truthful about the type of waste they were delivering to the operator of the site.
Moreover, jurors give substantial weight (responsibility) to government agencies whether local, state or federal, for any role in licensing or approving historical waste site. In closing, argue “if the county and state have certified and licensed a business, you should not have to inspect it yourself. No more than you should have to inspect a restaurant that has a health department sticker on the wall.” It is fair for companies to rely on the experts in the area at the time to know more about the field than they do.
If the third-party site had any form of regulation or oversight, run with it. Again in closing, it is fair game to stress that we all rely on regulators and inspectors in virtually every minute of our lives: the milk in your coffee, the heat in your office, the electrical codes governing your house and home.
“Don’t Punish the Good Deed”
In discovery, insurers will always be looking for documents that purportedly show “what you knew, and when you knew it.” Such documents may include site inspection reports or studies prepared by the policyholder or consultants in a proactive effort to improve operations, safety, and performance. But at trial, such documents may be thrust front and center as the insurers attempt to prove that “no good deed goes unpunished.”
Fortunately, such reports can usually be used to benefit the policyholder and affirmatively rebut an alleged expected or intended defense. The theme is simple. When you know something, you do not hire consultants, or send out your own investigators to conduct repeated tests to tell you what you already know.
“Cars, Cars and Cars”
There is that apt episode of Seinfeld when Jerry is asked by a car rental agent if he wants to buy car insurance. Jerry responds, “Yeah, you better give me the insurance because I am going to beat the hell out of this car.” Evidence of expected damage or self-awareness of his own human frailty, including a proclivity for negligence? That is up to a jury.
Jurors generally have a strong affinity for automobile insurance analogies. They are clear, concrete and familiar. Thus, regardless of the complexity of the environmental case, a well-constructed auto insurance analogy can help drive your point home.
This is especially true when insurers muse that a policyholder started procuring insurance because it purportedly had knowledge or expectation as to the possibility of environmental liabilities arising out of its manufacturing activities — or as the insurers would refer to it, “pollution activities.”
Arguments that companies started buying insurance because they allegedly knew they were “going to start polluting” are tired arguments, but they are not dead yet. One might underscore to the jury that such insurers might as well be saying that if you buy insurance for your car then that means you intend to go out and drive it into a telephone pole. If buying insurance is an indicia of intent to harm insurers should not be selling insurance in the first place.
“This Case is Not About Breaking Any Law”
In most environmental coverage trials, jurors should be told clearly and often that the case is not about breaking the law and that no such allegations have ever been made against the policyholder. This is best done in opening during an explanation of the underlying liability, most likely federal or state superfund-retroactive, strict and no-fault liability. The theme needs to come out during witness testimony and be hammered home in closing.
Insurers do their best to make the case feel like a criminal case against the “polluter” and policyholder counsel needs to repeat this point to make sure that jurors neither speculate nor decide to punish the insured.
“Long, Long Ago, There Were No Microwaves”
Coverage lawyers in progressive injury cases live in the past. Intentionality — and the benchmarks of credibility by which jurors assess intent — is measured by the state of mind of the triggered policy year, not by contemporary standards or norms. Often we live in the ‘70s or ‘60s or earlier.
Jurors have a great deal of difficulty applying contemporaneous, rather than current standards in many cases, particularly very young jurors. It is important that jurors understand that those decades are “prehistoric” in terms of environmental awareness — before the superfund statute, before the U.S. Environmental Protection Agency existed.
In closing, consider the great photos of Babe Ruth in a Red Sox uniform, or doctors raving about the freshness of menthol cigarettes. Possibly construct a demonstrative listing scientific milestones — highlight that the policyholder’s waste disposal occurred before the space program, computers, VCRs, color televisions and microwave ovens — alas, before the Beatles.
Finally, remind the jurors in closing that the insurance company defendants are not the EPA, no matter how much they pretend to talk like it. They are private parties to insurance contracts and they are trying to avoid paying the claim decades after collecting premiums from the policyholder.