Legal Storm Brewing Around Climate Change

Legal storm bewing around climate change

Climate change-related claims could be the next hot-button issue in products liability litigation

It is now widely accepted that global warming will have profound consequences, but who would have predicted it would already be stirring legal issues over Products Liability claims?

We know about the mass tort cases related to firearms, Dalcon shields, and breast implants. The litigation history surrounding environmental toxins such as asbestos, tobacco, and gasoline additives is also well documented. Today, greenhouse gases (GHG) are emerging as the next hot issue in the area of toxic tort and environment litigation.

Ultimately, it is expected that the plaintiff’s bar, and the general public, will readily support Products Liability cases related to GHG. To this point, GHG litigation has been largely unsuccessful, much like early cases involving such fungible products as tobacco, asbestos, dry cleaning chemicals, and gasoline additives. However, due to relentless attacks by the plaintiff’s bar, cases surrounding those products eventually found success.

Now, given the unique coverage problems that greenhouse gases present, many in the legal industry predict that GHG torts will follow a similar path.

In Massachusetts v. United States Environmental Protection Agency, the U.S. Supreme Court may have laid the initial framework upon which the plaintiff’s bar may pursue remedies from GHG-related claims. The court stated that “the EPA does not dispute the existence of a causal connection between man-made greenhouse gases and global warming.”

The plaintiff’s bar will undoubtedly attempt to use the statement that carbon dioxide constitutes pollution (as defined by the Clean Air Act) to its advantage. Surely, in future GHG litigation, they also will rely upon the verbiage in that case to find a causal connection between GHG emissions and damages. Along the way, issues such as market share, pro rata fault, occurrences, exposure, failure to warn theories, and design defect theories will certainly manifest themselves.

Indeed, that already may be happening. Recently, two U.S. federal court decisions have resurrected previously dismissed lawsuits for greenhouse gas emissions and climate change liability. In Connecticut v. American Electric Power, eight states, the City of New York, and several environmental groups sued AEP and four other electric utilities, claiming their GHG emissions alone constituted 2.5 percent of the world’s carbon dioxide emissions, thus creating a public nuisance. The plaintiffs sought a court ruling to first cap the defendants’ allowable emissions levels, then reduce them.

Although the trial court dismissed the initial complaint on the basis that the issue of global warming was a “political issue” outside the judiciary’s constitutional jurisdiction, the U.S. Court of Appeals for the Second Circuit subsequently reversed and reinstated the complaint, finding that the plaintiffs had standing to bring the claim because injury had already begun and was “fairly traceable,” due at least in part to the defendants’ activities.

In the second case, Comer v. Murphy Oil, the plaintiffs were property owners who brought suit against an assortment of Gulf Coast oil and gas producers, along with utilities and energy companies, charging that the defendants’ GHG emissions had contributed to the climatic buildup that caused Hurricane Katrina. They sought billions of dollars in property and punitive damages stemming from the post-Katrina floods in New Orleans. Although the trial court dismissed the complaint, the Fifth Circuit Court of Appeals reinstated the claim on the basis that the defendants did, at least in part, contribute to the strength of Katrina.

To the extent that plaintiffs succeed in bringing these kinds of actions, it is anticipated that defendants in these cases will look to their insurers under their CGL policies to cover defense and indemnity costs. Older CGL policies typically provide coverage for “occurrences” during the policy period. Under such a policy, tendering the defense of entities producing GHGs may prove very significant, since it typically provides unlimited defense costs, which do not erode policy limits. Thus, if a plaintiff brings suit with a climate change claim that attributes long-term damage to historic releases of GHGs, it is expected that businesses may turn to these old CGL policies for assistance.

Those knowledgeable in insurance claims, however, would be wise to look immediately to the “pollution exclusion” found in most policies, whereby coverage is excluded for third-party pollution damages. The typical policy has a narrow set of terms defining “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.” While carbon dioxide is certainly gaseous at ambient temperatures, it may not necessarily be either an “irritant or contaminant.” Thus it may not fit easily on that list of specific excluded pollutants.

This is clearly an emerging area of the law, not only as it pertains to the underlying claim but also to coverage for those claims. Given the recent public awareness of, and distaste for, actions and substances that contribute to global warming, there is little reason to doubt the plaintiff’s bar will keep pushing this matter to the forefront.