Court Holds Employees' Multiple Claims Alleging Toxic Exposure on the Job Are Separate Occurrences
Sedgwick News Flash
A New York appellate court has held that numerous personal injury claims arising from exposure to a toxic substance at a manufacturing plant constitute separate occurrences and that each claim is subject to a separate deductible.
In International Flavors & Fragrances, Inc. v. Royal Ins. Co. of America, 2007 WL 3146945, 2007 N.Y. Slip Op. 08122 (1st Dep't, Oct 30, 2007), the court found that when a microwave popcorn manufacturer's employees filed multiple claims for injuries stemming from exposure to a toxic substance, each claim constituted a separate occurrence. The ruling by the New York Appellate Division, First Department, is the first significant appellate decision to analyze and further clarify the definition of "occurrence," as applied to claims by multiple plaintiffs arising out of exposure to an allegedly defective or hazardous product, since the New York Court of Appeals' decision earlier this year in Appalachian Ins. Co. v. General Electric Co., 8 N.Y.3d 162 (2007).
International Flavors & Fragrances, Inc. (IFF) manufactured and sold butter flavoring for microwave popcorn to the owner and operator of a Missouri packaging plant. Approximately 30 plant employees filed a class action lawsuit against IFF alleging that the butter flavoring contained diacetyl and other substances that caused them respiratory injuries. IFF filed an action against its insurers seeking a declaration of coverage for the claims. The insurers filed a motion for summary judgment arguing that each claim constituted a separate occurrence subject to a separate deductible. The lower court granted the motion, and the New York Appellate Division affirmed.
The policies at issue defined occurrence to mean "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The appellate court held that the policies' definition of "occurrence" did not "reflect the parties' intent to aggregate the individual claims for the purpose of subjecting them to a single policy deductible." In this case, the plaintiffs sustained injuries as a result of "repeated deliveries of IFF's flavoring compound to their workplace over a period of several years, causing them to be exposed to the hazardous chemicals at different times and for periods of unequal duration." Accordingly, the court held that the "exposure of numerous persons to a hazardous condition cannot be deemed a single 'occurrence' in the absence of any identifiable precipitating event or 'accident.'"
The court rejected IFF's argument that its continuous sale of butter flavoring over the course of several years should be treated as a single occurrence, as the plaintiffs' tort claims did not accrue until they suffered actual injury and damages. The court reasoned that the shipment of butter flavoring by IFF "presented only the potential for injury; it was the exposure to diacetyl and other volatile compounds … that precipitated the actual harm, comprising the 'occasion giving rise to liability in this factual context.'"
The court also rejected IFF's argument that all plaintiffs exposed to a toxic substance were victims of the same accident. The court explained that "it is now clear that, under New York law, the injury imposing liability on the insured does not result until exposure occurs." In the instant matter, 30 plaintiffs were continuously and repeatedly exposed to diacetyl. The court noted that "[i]n the absence of policy language making it clear that any and all personal injury resulting from such exposure is to be regarded as a single occurrence, … the exposure of the individual claimants to diacetyl on different occasions, extending over different periods of time, supports the finding that these are 30 discrete occurrences."
In concluding that each claim was a separate occurrence, the court relied on the New York Court of Appeals' decision in Appalachian, in which the court reaffirmed that, in the absence of language indicating the applicability of another standard, New York courts must apply the "unfortunate event" test when determining the number of occurrences. The Appalachian decision also held that determining whether a series of losses or injuries resulted from a single or multiple occurrences depends on "whether there is a close temporal and spatial relationship between the incidents giving rise to injury or loss, and whether the incidents can be viewed as part of the same causal continuum, without intervening agents or factors."