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Asbestos litigation has stressed our court system like no other mass tort. Despite earlier predictions, claims keep coming. Defendants face waves and waves of new lawsuits. The sheer volume of claims exhausts even the most extensive insurance coverage, and then often leads to bankruptcy. Of the many candidates nominated to be “the next asbestos,” silica is the most recent contender. It has a tracer disease, silicosis, has a rising number of claims, and presents insurance issues similar to asbestos. Although estimates of 30,000 silica cases nationally hardly compares to the 700,000 asbestos claims, the number of claims is rising rapidly. One leading industrial sand company, U.S. Silica, reported 1,400 claims in 2001, 5,200 claims in 2002, and 15,300 new claims in the first half of 2003. One insurer has reported a ten-fold increase of 25,000 plaintiffs in less than two years. The New Jersey Supreme Court is now considering a request to designate silica litigation as a mass tort and consolidate all cases in Middlesex County. Silicosis is an allegedly incurable lung disease caused by inhalation of dust containing free crystalline silica. It is irreversible and, moreover, the disease progresses even when exposure stops. WHO Fact Sheet No. 238 (May 2000). Silicosis is a tracer disease for silica exposure, just as asbestosis is a tracer disease for asbestos exposure. Workers in a large variety of industries and occupations may be exposed to crystalline silica because of its widespread natural occurrence and the wide uses of the materials and products containing it. NIOSH [1991] estimates that at least 1.7 million U.S. workers are potentially exposed to respirable crystalline silica. Sandblasting has been a litigation focus, but claimants also arise from glass making, mining and stone cutting. In 1998, a silica wrongful death claim brought in Camden County by the widow of a tombstone engraver settled for $329,000. In addition to industrial sand companies, defendants also typically include cement and concrete companies, manufacturers of sandblasters and safety equipment. There are important differences between asbestos and silica. Silica is not per se unreasonably dangerous. See Diamond v. Avondale Industries, Inc., 718 So.2d 551, 552 (La. App. 1998). Rather, it is a natural substance that has many safe uses. It becomes a hazard only when disturbed and made airborne into silica dust, as allegedly happens in sandblasting. Left undisturbed it is not an inhalation risk, like asbestos that might become friable. Unlike asbestos-related illnesses, silicosis cannot arise from a single exposure, but only through exposure over time. While many are potentially exposed to silica, few die from the exposure. NIOSH reports that during 1992-1995, less than 300 silicosis deaths per year were reported. At the same time, the dangers of inhaling silica dust were generally well known long before the dangers of asbestos. Crystalline silica is often referred to as the oldest known occupational lung disease. Merck Manual (2nd Edition). The United States Supreme Court found the dangers associated with inhaling silica dust common knowledge in 1949. Urie v. Tompkins, 337 U.S. 163, 180 (1949) (“It is a matter of common knowledge that it is injurious to the lungs and dangerous to the health to work in silica dust … .”). And, in 1978, NIOSH and OSHA jointly issued an Occupational Health Guideline for Crystaline Silica to provide information about silica dust exposure to employees, employers, and industrial health professionals. The widespread knowledge of the dangers of silica dust exposure allows silica defendants to assert several potential defenses to avoid liability, including: learned intermediary, sophisticated user, and sophisticated intermediary. In addition, because silica itself is not inherently dangerous and can be distributed in bulk or used as a component part, silica defendants may also have defenses such as the raw materials/component product supplier defense, see section 5 of the Restatement (Third) of Torts: Products Liability (1998), or the bulk product supplier defense. See the Restatement (Second) of Torts, Section 388. Silica litigation will raise many of the same controversies as asbestos. Industrial sand companies have used warnings since the 1970s, and point to advances made in safety technology. The number of silica deaths is small in comparison with asbestos, and has fallen substantially in recent years. Silica defendants argue that as the plaintiffs’ bar encounters obstacles to asbestos litigation — such as new legislation and bankrupt defendants — it will instead argue for silica exposure with little medical evidence. Indeed, the biggest factor influencing the growth of silica litigation may be whether new legislation curtails asbestos litigation. Insurance coverage for silicosis claims raises many of the same issues as insurance coverage for other ‘long-tail’ claims such as environmental cleanup and asbestosis. ALLOCATION The proper interpretation of the allocation framework set forth by the New Jersey Supreme Court in Owens-Illinois, Inc. v. United Insurance Company, 138 N.J. 437 (1994) and Carter-Wallace, Inc. v. Admiral Insurance Company, 154 N.J. 312 (1998), remains of critical importance. Those cases set aside traditional rules of insurance policy construction in favor of an analysis based upon the public policy underpinnings of insurance. The Supreme Court wanted to incentivize companies to purchase insurance coverage on an annual basis. As a result, the court allocated damages based upon the amount of insurance coverage purchased each year. In Owens-Illinois, the court emphasized that its framework was flexible and subject to review based upon the equities of its application. That review is now necessary. Insurance companies have adopted a mechanical approach to allocation, allocating to the insured any years for which it cannot provide proof of insurance coverage. Moreover, pursuant to Universal-Rundle Corp. v. Commercial Union Ins. Co., 319 N.J. Super. 223 (App. Div. 1999), the Supreme Court’s weighted, several allocation system applies to defense as well as indemnity. This results in a system of such complexity that insurers are allowed, if not encouraged, to deprive their policyholders of their right and expectation of a defense to silica complaints. For example, let us assume that in 2004, an insured receives a silica complaint that states the plaintiff was first exposed to silica in 1950. Presumptively, all insurance policies from 1950 to 2004 must severally respond. If the policyholder is extremely fortunate, it can locate its insurance policies back to 1980. From 1981 to 1985, the insurer who provided coverage is in liquidation. Beginning in 1985, its policies contain an absolute pollution exclusion. See, infra. Beginning in 1996, its policies have silica exclusions. Most companies are unaware of issues such as the continuous trigger and several liability. The insured receives a complaint and sends it to its current insurer to defend. That insurer denies coverage because of the silica exclusion. The insured has to retain an attorney, who must look through the insured’s files and contact its former brokers to obtain evidence of old insurance policies. Finally, after located policies back to 1980, the insured places each insurer on notice. As to the insurer in liquidation, the insured receives a claim form to file with the liquidator. The insurance companies from 1985 to 1996 disclaim coverage because of the absolute pollution exclusion clause. The insurance companies after 1996 disclaim coverage because of the silica exclusion. The insurer in 1980 offers to pay 1/54 of defense costs. The promise of the general liability policy is that if the insured is sued for a potentially covered claim, the insurer will defend — the insured believes that it has purchased peace of mind. The mechanical application of Owens-Illinois to defense costs constitutes a betrayal of that promise. THE ABSOLUTE POLLUTION EXCLUSION The scope of the so-called “absolute pollution exclusion” is a second issue of concern for silica defendants. The original, or qualified, pollution exclusion foreclosed coverage for pollution, unless it was “sudden and accidental.” Courts nationwide differed on the construction of the term ‘sudden,’ with many courts holding that ‘sudden’ only meant “unintended and unexpected.” Beginning in 1985, the insurance industry then introduced a variety of “absolute” or “total” pollution exclusions, designed to eliminate the “sudden and accidental” exception. It was never disputed in New Jersey that the original “sudden and accidental” exclusion only applied to traditional environmental pollution. When the insurance industry changed to the absolute exclusion, the stated purpose was to remove the “sudden and accidental” exception. The other terms of the exclusion remained basically unchanged. However, insurers now argue that the absolute pollution exclusion applies to a very broad range of substances and circumstances that have nothing to do with traditional pollution. Some courts have also held that the absolute pollution exclusion forecloses coverage for silica claims. New Jersey courts have not specifically addressed the application of the absolute pollution exclusion to silica claims. However, the Appellate Division panels that have addressed the absolute pollution exclusion are divided in their interpretation. See S.N. Golden Estates v. Continental Casualty Co., 293 N.J. Super. 395, 403 (App. Div. 1996) (holding that the “pollution exclusion” operates to exclude insurance coverage only for “traditional environmental type damage, i.e., containment and remediation of pollutants which have permeated the land, water, or air”); see also Byrd v. Blumenreich, 317 N.J. Super. 496, 504-505 (App. Div. 1999) (the Appellate Division held that lead dust and chips inside an apartment could not considered pollution within the meaning of the absolute exclusion). In two cases, the Appellate Division has construed the exclusion broadly to apply to both carbon monoxide fumes, see Leo Haus, Inc. v. Selective Insurance Company, 353 N.J. Super. 67 (App. Div. 2002), and paint fumes, see Nav-Its, Inc. v. Selective Ins. Co. of America, 2003 WL 23208273, Docket No. A-1566-02T2 (N.J. App. Div. December 23, 2003). In these cases, the argument for the expansive view of the exclusion — endorsed by the insurance industry — is that both paint and carbon monoxide fumes fall within the definition of the term “pollutant”; the fact that the exposure is not the result of pollution is of no consequence. This position is countered by policyholders asserting both the doctrine of “reasonable expectations” and the overbroad definition of the term “pollutant.” Policyholders argue that the point of the exclusion — as understood by the purchaser of insurance — is to exclude liability resulting from pollution, not from virtually any substance that can be deemed a “pollutant, contaminant or irritant.” In the typical silica case, a sandblaster sprays sand at high pressure against a wall, pulverizing the sand into silica dust that the worker allegedly inhales. This does not constitute “pollution” as normally understood. Silica litigation will pose the same social issues as asbestos. How should society fairly and cost effectively compensate those workers injured on their jobs by long-term exposure to industrial substances, while weeding out those with bogus or minor injuries? How does society compensate those attorneys who take these cases on contingency because their clients cannot pay them, while making sure that transaction costs do not devour the recovery? What is the proper role of insurance coverage in spreading this liability to society at large? Unfortunately, thirty years of asbestos litigation have not answered these questions, and there is no reason to think that silica litigation can avoid them. Chesler is chair and Gibson is an associate of the Insurance Law Practice Group, and Stewart is a member of the Environmental Law & Litigation Practice Group at Lowenstein Sandler of Roseland.

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