The Illinois Supreme Court will weigh in on the question of whether insurance companies can use so-called "pollution exclusions" to sidestep possible obligations to help companies like medical device sterilizer Sterigenics pay big settlements to end floods of lawsuits related to the companies' emissions, even when those emissions never exceeded any legal limits.
On April 11, a federal appeals court in Chicago asked the Illinois state high court to take up that legal question, as state and federal courts continue to grapple with hundreds of lawsuits against Sterigenics and other companies stemming from the emission of ethylene oxide (EtO) gases from sterilization plants in Chicago's suburbs.
While potentially hundreds of millions of dollars - or more - remain at stake in just those legal fights alone, the answer to that question could have far-reaching ramifications, as trial lawyers in Illinois seek to extract potentially huge paydays from companies over alleged pollution, without the need to show the alleged pollution amounted violation any laws or rules.
The case centers on a legal action brought by Sterigenics against National Fire Insurance Company of Pittsburgh in 2021. In that lawsuit, Sterigenics asserted the insurer wrongly attempted to use a pollution clause to deny coverage for payouts Sterigenics has incurred to fight or settle hundreds of lawsuits connected to EtO emissions from Sterigenics' former plant in suburban Willowbrook.
Sterigenics is joined in that legal action against the insurer by Alsip-based Griffith Foods International, which had previously owned the Willowbrook plant for a time in the 1980s.
The lawsuits against Sterigenics and Griffith Foods claim EtO emissions from the Willowbrook plant caused incidences of cancer in people living and working near the facility.
The Willowbrook plant has been closed since 2019, when Gov. JB Pritzker's state Environmental Protection Agency ordered it shuttered in response to a campaign from activists who complained about the alleged risk from the plant's use of EtO.
The controversy began less than a year earlier, following the release of a report from the federal Agency for Toxic Substances and Disease Registry, which alleged Sterigenics' EtO emissions had heightened the cancer risk in and around Willowbrook.
The state then became involved, bringing a state action against Sterigenics in which the state asked a court to order Sterigenics closed.
The state has never accused Sterigenics of violating clean air laws or emissions regulations. Sterigenics has repeatedly noted it never violated the terms of the operating permit the Willowbrook plant had obtained from the Illinois EPA. The state had had most recently renewed that permit and its associated emissions limits in 2015.
Rather, the state, mirroring complaints leveled in personal injury lawsuits, asserted Sterigenics had caused a "public nuisance" by emitting EtO at all.
Sterigenics eventually negotiated a settlement with the state to end the EPA action, agreeing to some of the strictest emissions controls ever placed on an EtO sterilization plant. But faced with the prospect of continued hostility from state and local government officials, Sterigenics chose to keep the plant closed.
In the meantime, hundreds of personal injury lawsuits flooded into courts against Sterigenics and other associated past owners of the plant.
In 2023, Sterigenics agreed to pay $408 million to settle about 870 of those lawsuits.
Griffith Foods followed with a $48 million settlement of its own.
Other lawsuits, however, have continued. According to Cook County court records, a trial could lie ahead in coming weeks for a consolidated group of those remaining cases against Sterigenics and Griffith Foods and other companies associated with the Willowbrook plant. The Illinois Supreme Court in January denied Sterigenics' and Griffith Foods' bid to force those cases to proceed individually.
To help the companies foot the massive bill, Sterigenics and Griffith Foods sought coverage from National Fire.
The insurer, however, declined that coverage, citing the so-called "pollution exclusion" in the policies.
Sterigenics argued the pollution exclusion shouldn't apply, because the emissions never violated any state or federal laws or regulations, and thus weren't the kinds of "pollution" anticipated by the exclusion.
In federal court, a district judge sided with Sterigenics.
The insurance company appealed to the U.S. Seventh Circuit Court of Appeals.
There, a three-judge panel said Illinois law and legal precedent offers no easy way for federal courts to clear the air on the legal question.
Rather than attempting to do so themselves, the appellate judges said the question must be answered by the court tasked as the final interpreter of Illinois state law, the Illinois Supreme Court.
The Seventh Circuit panel said there is much at stake on the question, both in the cases against Sterigenics and in other possible emissions- or "pollution"-related claims against other companies, as Illinois courts have made clear that plaintiffs' lawyers don't need to prove any company broke any laws or regulations before blitzing them with potentially ruinous lawsuits.
"Because federal law requires any company that emits large amounts of pollutants to obtain a permit, and environmental regulations are constantly evolving, the situation before us is likely to recur and our decision would have substantial ramifications for insurers and insureds alike," the judges wrote. "The stakes are just as high for the parties in this litigation - how the question is answered may be the different between $150 million in defense costs and zero."
It is not yet known when the Illinois Supreme Court will take up the case.
The Seventh Circuit opinion redirecting the case to the Illinois Supreme Court was authored by Circuit Judge Michael Y. Scudder. Judges Amy J. St. Eve and Thomas L. Kirsch concurred.