A federal judge said an insurance company can’t skirt its obligations to contribute to the legal defense for Sterigenics as the medical device cleaning corporation handles hundreds of lawsuits concerning claims of toxic emissions near its Willowbrook facility.
In late August 2021, Sterigenics filed suit in Chicago federal court against National Union Fire Insurance Company of Pittsburgh, saying the insurer wrongly attempted to use a pollution clause to deny coverage for the lawsuits, which assert emissions from Sterigenics’ former west suburban plant caused incidences of varying kinds of cancer in people living and working nearby.
Judge Mary Rowland issued an opinion Aug. 3 granting summary judgment to Sterigenics on its duty to defend claims. The opinion also includes Rowland’s ruling on separate but related lawsuits from Alsip-based Griffith Foods International and Griffith Foods Group, also against National Union. Rowland granted the Griffith plaintiffs summary judgment as well, but only as applies to the duty to defend. She denied motions regarding estoppel from Griffith.
As with Sterigenics, the complaints against Griffith concern exposure to ethylene oxide. Rowland explained Griffith operated a sterilization facility in a residential area from 1984 through 1999. National Union denied insurance coverage to both entities under a pollution exclusion.
After rejecting National Union’s arguments that Sterigenics wasn’t a named insured entity, which required Rowland to explain relevant corporate history, she further explained there is no dispute that the policies’ bodily injury clause would be triggered “based on allegations that they caused the underlying plaintiffs to breathe excessive and dangerous amounts of EtO, causing them serious — and sometimes fatal — diseases or conditions.”
The question turns, Rowland explained, on her determination the pollution exclusion is inapplicable. The exclusion language is ambiguous concerning emissions for which a company has a permit from the Illinois Environmental Protection Agency. Griffith had a two-year permit beginning in July 1984; Sterigenics most recently renewed its permit in 2015.
Sterigenics’ Willowbrook plant has been closed since February 2019, when Illinois state environmental regulators, under Gov. JB Pritzker, ordered the Willowbrook facility closed in response to a campaign from anti-Sterigenics activists over the company’s use of EtO.
The controversy erupted in mid-2018, following the release of a report from the federal Agency for Toxic Substances and Disease Registry, which alleged Sterigenics’ EtO emissions had created heightened cancer risk in the region around Willowbrook.
In late 2018, as public pressure built against Sterigenics, the state of Illinois became involved, bringing a state action against Sterigenics.
At no point, however, did the state accuse Sterigenics of violating clean air laws or emissions regulations, however. Sterigenics has repeatedly noted it never violated the terms of the operating permit the facility had obtained from the Illinois Environmental Protection Agency.
Rather, the state echoed the claims of activists and plaintiffs that Sterigenics created a "public nuisance" by emitting any EtO at all.
In the legal tussle over insurance coverage, Rowland noted the pollution exclusion has its own exception that essentially means Sterigenics is covered for any unexpected or unintended emissions.
That clause is important because the underlying lawsuits accused Sterigenics of negligence causing “unintended leaks, spills or emissions.” Although those allegations also include claims of consistent, daily emissions as a matter of course, that doesn’t negate their allegations of unintentional emissions as a trigger for the policy clause, the judge said.
Rowland further said the “allegations that Sterigenics and Griffith Labs have threatened the underlying plaintiffs’ enjoyment and use of land with environmental contamination state a private nuisance claim and thus fall under the definition of ‘personal injury’ under the policies.”
Ultimately, Rowland said, “National Union has not met its burden in demonstrating that any exclusions apply.”
On the matter of estoppel, Griffith sought judgment declaring National Union couldn’t assert policy defenses to coverage, while the insurer sought a ruling that process is inapplicable. Rowland said the issue is the timetable between Griffith’s Jan. 29, 2021, notice of the lawsuit and Jan. 31, 2022, when National Union officially sought a judgment it wasn’t obligated to provide defense.
Rowland said Illinois courts haven’t yet adopted a clear guideline for what constitutes a reasonable timeline for seeking such a judgment, and although in some cases a full year is seen as too long, she pointed to other instances where protracted litigation worked in favor of insurers.
“The delay here between the time the Griffith plaintiffs provided actual notice of the underlying suit and when National Union first requested a declaration of non-coverage was just about one year,” Rowland wrote. “Particularly given the complex nature of the underlying dispute (which involves hundreds of consolidated complaints) and the fact that the underlying dispute is nowhere near completion nor settlement, this court concludes that National Union sought declaratory relief within a reasonable time of receiving actual notice of the underlying suit.”
Rowland set a status hearing for Aug. 25.
Rowland’s ruling comes as Sterigenics, Griffith Foods and other related defendants are set to soon face the first of perhaps hundreds of trials brought by people claiming Sterigenics' emissions caused cancer.
The cases have been consolidated in Cook County court for the purposes of discovery. However, a Cook County judge has refused to allow the cases to proceed to trial as a mass action, saying the cases are too different to try simultaneously.
Sterigenics is represented in the action against National Union by attorneys Jill B. Berkeley, Andrew G. May and Paul Walker-Bright, of the firm of Neal Gerber Eisenberg, of Chicago, and K. James Sullivan and Matthew A. Chiricosta, of Calfee Halter & Griswold, of Cleveland.
Jonathan Bilyk contributed to this report.