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Lake Charles,  Louisiana (May 22, 2007) - A Louisiana judge has ruled that an insurance company cannot use the so-called 'absolute pollution exclusion' to deny its corporate policyholder coverage for claims alleging that bodily injury was caused by workplace exposure to a hazardous substance.

Judge Wilfred Carter of the Fourteenth Judicial District Court, Parish of Calcasieu, State of Louisiana, struck the insurance companies' pollution exclusion defense as a basis to deny coverage for ConocoPhillips's claims arising from underlying lawsuits against it in which contractors' employees alleged exposure to ethylene dichloride ("EDC") while working at and near ConocoPhillips's docks facility in Westlake, Louisiana.  In Re:  EDC Contractor Insurance Litigation, Docket No. 98-1984, April 18, 2007.

ConocoPhillips is seeking coverage as an additional insured under the insurance policies of the contractors whose workers allege to have been injured from exposure to EDC.  ConocoPhillips was represented by Anderson Kill & Olick, P.C., G. Andrew Veazey of Huval, Veazey, Felder & Aertker, and Raleigh Newman.

In its motion, ConocoPhillips argued that the so-called "absolute" and "total" pollution exclusions contained in the insurance policies at issue did not bar coverage for the underlying claims because those claims did not arise from traditional environmental pollution, but were claims alleging bodily injury arising from negligent exposure in the workplace to a purportedly hazardous substance.  The substance, EDC is, however, a useful product, and in this instance, it was in the stream of commerce as an essential ingredient to be used in the production of vinyl chloride.

In the context of a negligent workplace exposure claims alleging bodily injury from exposure to a product in the stream of commerce, the pollution exclusion should not apply.  ConocoPhillips was not seeking clean-up costs for any environmental impacts, nor was it seeking any coverage for alleged bodily injury or property damage arising from the original discharge of EDC.

In addition, under the three-part test set forth by the Louisiana in Doerr v. Mobil Oil. Corp.,  ConocoPhillips argued that (1) it was not a polluter, but a responsible corporate actor responding to a catastrophic accident, (2) EDC was not a pollutant, but a useful chemical product that was discharged while in the stream of commerce, and (3) there was no "discharge" within the meaning of the pollution exclusion, because the underlying claims were bodily injury claims arising from negligent exposure to EDC in the workplace, subsequent to the original discharge.  Thus, ConocoPhillips argued, that the pollution exclusion should not apply as a matter of law.

Ruling from the bench, Judge Carter denied ConocoPhillips's motion for summary judgment, but on his own motion struck the pollution exclusion defense.  Applying the Doerr factors, Judge Carter found that ConocoPhillips was not a "polluter," but was a policyholder responding to a negligent act that happened to involve a hazardous substance.  Judge Carter also concluded that there was no "discharge" under Doerr because ConocoPhillips was not seeking coverage for property damage or cleanup costs, but coverage for underlying claims alleging bodily injury resulting from negligent exposure to EDC in the workplace.  Having found that the Doerr factors were not satisfied, the Court struck the pollution exclusion defense.

The In Re: EDC decision is a major victory for policyholders.  John Ellison, lead counsel for ConocoPhillips, said, "Judge Carter's decision holds insurance companies to their promise as to what the intended scope of the exclusion is, and properly rejects their repeated efforts and overapply the exclusion to wrongfully deny coverage for incidents that do not involve traditional environmental pollution.  We hope that other courts will continue to be as vigilant as Judge Carter has been in this case in rejecting these overreaching efforts."

About Anderson Kill
Anderson Kill & Olick, P.C. was founded in 1969 on the principles of integrity, excellence in the practice of law, and straightforward solutions to complex legal issues. Anderson Kill practices in the areas of Bankruptcy & Restructuring, Corporate & Commercial Litigation, Corporate & Securities, Employment & Labor Law, Insurance Recovery, Intellectual Property, Product Liability, Real Estate, Tax, and Trusts & Estates. The firm has offices in New York, Chicago, Greenwich, Newark, Philadelphia and Washington, D.C.

For more information, please contact:

Carol A. Ueckerman
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cueckerman@andersonkill.com
(212) 278-1339