Developments in Welding Rod Wars: Mixed Verdicts and Adverse News for Insurers on Total Polution Exclusion
February, 2006
by Amy R. Paulus and
Approximately 11,000 welding rod cases are currently pending in state and federal courts nationwide, and whether that number will continue to grow or begin to recede may be answered in the coming year. Plaintiffs recently scored wins in Illinois and New York, only to be followed by a defense verdict in Illinois on virtually the same evidence. New York’s appellate division affirmed a ruling linking welding rod fumes to mesothelioma and cancer claims. Yet challenges to plaintiffs’ medical experts in the federal multi-district litigation in Ohio may take a similar turn as that culminating in Judge Jack’s opinion in the silica cases. So, exactly what is the state of the science on causation? And how serious are the medical monitoring claims?
On the insurance coverage front, while the 4th Circuit had previously ruled that the pollution exclusion precluded a duty to defend claims alleging injuries caused by exposure to welding rod fumes, Maryland’s highest court recently ruled that the total pollution exclusion does not bar coverage for such claims.
This article is the first in a series reporting on important developments in the welding rod litigation and coverage arenas.
Update on MDL Activity
Multi-District Litigation (“MDL”) for welding fume products liability is venued in the United States District Court for the Northern District of Ohio. Judge Kathleen M. O’Malley, who is assigned to the MDL, issued a significant ruling in August 2005 on various pending Daubert motions challenging the sufficiency of expert testimony and causation evidence.
In sum, Judge O’Malley found that plaintiffs’ expert medical causation evidence is generally lacking, and that the court will restrict the scope of testimony of nearly all of the experts. Since this ruling, the plaintiffs in the MDL have been attempting to bolster their medical evidence and obtain stronger diagnostic testimony. Because Judge O’Malley’s decision intentionally leaves open the question of whether a particular plaintiff can meet his burden of proof, it appears that future Daubert-based challenges will focus on specific cases based on the particular constellation of symptoms and test results presented by the individual plaintiffs.
Additionally, plaintiffs’ conspiracy claims will likely be the subject of future motion practice by the defense in the MDL. It appears that the plaintiff’s bar has been unable to generate significant evidence to support a conspiracy theory, other than that allegedly contained in American Welding Society documents. As such, the defense bar may soon target these claims for dismissal or summary judgment. Four cases in the MDL are currently scheduled for trial in 2006.
Recent Adverse Decision: Elam v. Lincoln Electric Co.
In Elam v. Lincoln Electric Co., et al., 841 N.E.2d 1037 (Ill. App. 5th Dist. Dec. 20, 2005), the appellate court affirmed a Madison County jury verdict of nearly $1,000,000 for plaintiff.
On appeal, the welding rod defendants challenged the medical causation evidence. The defendants also argued that plaintiff did not meet his burden of proof to show inadequacy in the warning labels provided by the defendants. The evidence at trial showed that warnings were placed on cartons in which the welding rods were distributed, and that the welders, such as plaintiff, tended not to see the cartons. Plaintiff’s expert in industrial hygiene testified that welders would often not see warnings on containers; that the defendants intentionally placed the warnings in a place where the plaintiff would be unlikely to read them; and that the warnings were inadequate to alert persons other than welders who would be within the plume of the welding fumes. The appellate court affirmed that sufficient testimony was presented to submit this issue to the jury.
Further, the appellate court found that there was significant evidence in the record showing a link between Parkinson’s disease and manganese and welding fumes, and that there was significant evidence presented by plaintiff to show that the defendants breached their duty to investigate the health hazards associated with welding. In this regard, plaintiff introduced at trial numerous scientific articles regarding industrial manganese poisoning, as well as articles, scientific papers and testimony showing a correlation between welding and Parkinsonism. Plaintiff also presented evidence that the American Welding Society was aware of the hazards associated with manganese and welding fumes but ignored the dangers and ignored advice to perform an epidemiological study. Based on the trial court record, the Elam court found that plaintiff did in fact allege legal theories under which liability could attach.
Finally, Elam found sufficient evidence in the trial court record that plaintiff suffered from a central nervous system injury. Plaintiff’s experts testified there was a causal link between the manganese and defendants’ welding rods and plaintiff’s condition. Because it was within the province of the jury to decide the central issue of causation, the court found the evidence was sufficient to support the jury’s finding.
Elam is problematic in that it accepts as credible the expert testimony offered by the plaintiff on the failure to warn and medical causation issues. In the MDL, Judge O’Malley took issue with similar medical evidence. Further, the Elam decision may lend credence to the “industry knowledge” and “failure to investigate” claims, which prove difficult for individual welding rod defendants to address. However, we note that because the Elam appeal was based on a jury verdict, the appellate standard of review is high, i.e., against the manifest weight of the evidence. As such, this decision highlights the importance of defense efforts to obtain pretrial rulings on legal issues through dispositive motion practice.
Compare Dec. 2005 Defense Verdict in Boren
A recent defense jury verdict was awarded in Boren v. A. Smith Corp., No.001-L-866, (Ill. 3rd Jud. Cir. Ct. Madison City), tried October – December 2005 in Madison County, Illinois. The jury found that the plaintiff’s disease may not have been pure Parkinson’s disease, and that the medical evidence was insufficient on causation. However, the jury was satisfied that industry warnings about the dangers of manganese exposure from welding rod fumes were inadequate. Also, the jury found the plaintiff did not meet its burden of proof on industry conspiracy allegations, although counsel described some evidence to support conspiracy theories in the minutes of meetings of the American Welding Society. Despite losing the Boren case, plaintiff’s counsel stated his intention to continue to pursue trials in Madison County, which is generally regarded as an extremely favorable jurisdiction for plaintiffs.
On the Horizon--Medical Monitoring Claims
An emerging issue in welding rod litigation is that of medical monitoring claims. In such claims, the plaintiffs do not yet exhibit symptoms of bodily injury. However, due to alleged exposure to welding rod fumes, plaintiffs seek to have health exams on a periodic basis to determine if they are developing symptoms. Plaintiffs also generally seek injunctive relief to require the use of respirators or other safety equipment. To date, there have been no legal rulings on any medical monitoring claims in welding rod litigation. We expect defense efforts to dismiss such claims via pretrial motion practice in the next year.
The coverage ramifications of medical monitoring claims have likewise not yet been tested. Nevertheless, we anticipate that insurance will not likely respond to claims seeking injunctive relief, or those where there is no actual bodily injury.
Link to Cancer (But Where is the Science?)
In Wiegman v. AC&S Inc. and Gomez v. AC&S Inc., 2005 N.Y. Slip Op. 10215 (N.Y. App. Div.), New York’s intermediate appellate court affirmed two first-ever trial verdicts in favor of plaintiff welders who claimed that their lung cancer and mesothelioma were caused by their exposure to welding rod fumes. Review of this decision is currently being sought.
Turning to Coverage: Case Study - - Clendenin Brothers
On January 6, 2006, the Maryland Court of Appeals (its highest court) ruled that the total pollution exclusion does not bar liability coverage for injury suits arising from workplace exposure to manganese welding fumes (Clendenin Brothers, Inc., et al. v. U.S. Fire Ins. Co., 390 Md. 449, 889 A.2d 387). Answering a certified question on an issue of first impression in Maryland, the court ruled that U.S. Fire had a duty to defend and/or indemnify Clendenin Brothers, Inc. and Nichols Wire Inc. for claims alleging injuries caused by exposure to fumes from the use of the insureds’ welding products. The underlying lawsuits asserted that the proper use of the insureds’ products produced harmful localized fumes containing manganese, which caused bodily harm and neurological damage.
Citing the historical purpose of the pollution exclusion to apply to traditional environmental pollution, the Court of Appeals reasoned that it was not meant to apply to localized manganese welding fumes encountered during the normal course of business operations. Pursuant to principles of insurance contract interpretation, the court concluded that the exclusion was ambiguous in the context of noxious workplace fumes, and that a reasonably prudent person might not consider manganese an “irritant or contaminant” so as to qualify as a “pollutant” under the policy.
Conflicting Maryland Precedent and the Court’s Analysis
No prior Maryland precedent directly addressed whether the pollution exclusion applies to the welding rod claims at issue. But two conflicting Maryland appellate decisions addressed the exclusion under different circumstances. In Bernhardt v. Hartford Fire Ins. Co., 648 A.2d 1047 (Md. Ct. Spec. App. 1994), the Maryland Court of Special Appeals held that the clause bars coverage for injuries resulting from carbon monoxide poisoning. However, the following year, Maryland’s highest court ruled that a policy containing an absolute pollution exclusion provided coverage for suits claiming bodily injury caused by lead paint exposure in Sullins v. Allstate Ins. Co., 667 A.2d 617 (Md. 1995).
In Clendenin, U.S. Fire asserted that Bernhardt should be applied, given that both carbon monoxide and welding fumes are gaseous substances as opposed to the lead paint at issue in Sullins. In the only state or federal decision to address this specific issue, the Fourth Circuit Court of Appeals determined under District of Columbia law that manganese fumes caused by welding constitute a “pollutant” within an absolute pollution exclusion in National Electric Manufacturers Association(NEMA) v. Gulf Underwriters Ins. Co, 162 F.3d 821 (4th Cir. 1998). However, the Maryland court concluded that one could just as easily interpret the exclusion not to apply to manganese welding fumes because although the policy’s definition of “pollutant” includes the term “gaseous,” it also requires the material at issue to be an “irritant or contaminant.” It considered dictionary definitions of “irritant” as “excited,” “roughened, reddened, or inflamed,” and “contaminant” as “something that contaminates,” “to soil, stain, or infect by contact or association” or “make inferior or impure by mixture.”
In considering whether manganese is an irritant or contaminant, the Court recognized that in Bernhardt, while the insured conceded that carbon monoxide was a pollutant, a reasonably prudent person would not consider carbon monoxide anything but a harmful substance. In contrast, the court found that manganese, in certain concentrations and forms, has positive applications, and that manganese is a naturally occurring element necessary for human life and harmless in reasonable doses. The Court also noted that manganese is essential in the manufacturing of steel and is incorporated into steel welding rods used by welders. The fumes are created when the metal to be bound and rod fuse together.
Acknowledging that manganese is poisonous in large quantities, the Court relied on the Sullins decision, which found that some products, despite their toxic nature, are not “pollutants” or “contaminants” when used “intentionally and legally.” In Sullins, the high court concluded that “a reasonably prudent layperson may interpret the terms ‘pollution’ and ‘contamination’… as not encompassing lead paint, a product used legally and intentionally.”
The Sullins court rejected the view that any substance could conceivably be an “irritant” or “contaminant.” The court held that the terms “irritant” and “contaminant,” when viewed in isolation, are virtually boundless, for there is “virtually no substance or chemical in existence that would not irritate or damage some person or property. Without some limiting principle, the pollution exclusion would extend far beyond its intended scope.”
The Sullins court found further support for its conclusion in those cases that found that the pollution exclusion applies only to injury caused by traditional environmental pollution. It specifically explained that the terms “discharge,” “dispersal,” “release,” “escape,” “contaminant” and “pollutant” are “terms of art in environmental law and are used by Maryland courts to refer to environmental exposure.”
The Clendenin court wholly adopted the analysis of the Sullins court, and added that “the policy exclusion does not apply beyond traditional environmental pollution situations… welding fumes emitted during the normal course of business appear to be the type of harm intended to be included under coverage for routine commercial hazards.”
The court went on to say that it expected that interpretation of the scope of pollution exclusion clauses likely will continue to be ardently litigated throughout the state and federal courts. The Clendenin court conceded that other courts may arrive at divergent decisions within the specific context of manganese welding fumes. However, they stated that based upon Maryland’s rules for interpreting insurance contracts, the total pollution exclusion clause does not relieve U.S. Fire of its duties to defend and indemnify the insureds in the underlying tort action allegedly caused by localized, non-environmental workplace manganese welding fumes.
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Although the Clendenin court made it clear that its decision will most likely be distinguishable from decisions in similar cases based upon a specific court’s interpretation of the scope of pollution exclusion clauses, this decision unfortunately provides adverse precedent as to why the specific nature of manganese cannot be considered “pollution,” as that term is defined in insurance policies.
Further, by ostensibly limiting the reach of the total pollution exclusion to traditional environmental situations, the Maryland court embraced a similar narrow reading recently given the exclusion by the California Supreme Court in a case involving pesticides exposure. Thus, we anticipate that California and other states that adopt a restrictive view of the pollution exclusion may be inclined to refuse to apply it to welding rod fume exposure claims.
Learning Point:
Aware that the only case addressing this exact issue ruled that the pollution exclusion barred coverage for injuries caused by welding rod fumes, the Maryland high court nevertheless concluded otherwise. We expect that those states that narrowly construe the total pollution exclusion to apply only to traditional environmental claims may adopt a similar narrow construction in the welding rod context.
Keep watching your CM Reports for future updates as we continue to closely monitor significant developments in the welding rod litigation and coverage landscape. •
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