Will the pollution exclusion eliminate coverage for COVID-19-related liability claims in Missouri?

It seems inevitable that liability lawsuits will continue to be filed in the months and years ahead in Missouri and around the country against companies and businesses alleging bodily injury or wrongful death as a result of exposure to COVID-19. Liability insurance policies may not provide coverage for many of these lawsuits under a variety of exclusions, such as the expected or intended injury or employer’s liability exclusions. Some liability policies also may have “communicable disease” exclusions that could eliminate coverage as well.?

If those exclusions do not apply or are not present, however, insurance companies and policyholders alike may look to see if a policy’s “pollution” exclusion could eliminate coverage for the liability claim. For example, a liability policy could remove coverage under such an exclusion for the the “actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants.’” The term “pollutant” is often defined in these policies to include “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste” (emphasis added). The question then becomes whether a virus like COVID-19 qualifies as an “irritant” or a “contaminant” with the meaning of the exclusion.

As legal commentators have pointed out, courts around the country largely have fallen into one of two camps in applying the pollution exclusion. One camp limits application of the exclusion to claims seeking recovery on account of “traditional” or “industrial” environmental pollution. The other camp interprets the exclusion more broadly and applies it to claims beyond those of the traditional or industrial variety. (For an excellent summary of these cases, check out this article prepared by the Kennedys law firm.)

The courts that have applied the pollution exclusion more broadly, such as Missouri, typically have employed a “plain meaning” approach of policy interpretation. Under the “plain meaning” (or “textual” or “formalist”) approach, courts try to interpret insurance provisions literally as they are written on the page by employing various canons or maxims of construction and by consulting common language reference materials such as dictionaries. The “plain meaning” approach contrasts with the “realist” or “functional” approach, which takes into account consumer and industry expectations and norms when interpreting policies. Courts applying this approach explicitly consider the practical consequences of a given interpretation. (For a further discussion of how Missouri courts apply these different approaches to policy interpretation, see our prior article in Missouri Organization of Defense Lawyers Newsletter.)

As mentioned above, Missouri most recently has applied the “plain meaning” approach in interpreting the scope of the pollution exclusion. For example, in Doe Run Resources Corporation v. American Guarantee & Liability Insurance, 531 S.W.3d 508 (Mo. 2017), the Missouri Supreme Court considered whether a pollution exclusion applied to claims alleging bodily harm caused by exposure to toxic emissions emanating from Doe Run’s lead production facilities in La Oroya, Peru. In interpreting the meaning of the words “irritant” and “contaminant” from the exclusion, the Supreme Court held that “[w]hen a policy does not define a particular term, courts use the ordinary meaning of the word as set forth in the dictionary.” In a textbook example of plain meaning policy interpretation, the court then turned to Webster’s Third New International Dictionary to define these terms: an irritant is “something that irritates or excites” or “an agent by which irritation is produced”; to “irritate” is “to cause (an organ or tissue) to be irritable” or “to produce irritation”; and to “[c]ontaminate” is “to soil, stain, corrupt, or infect by contact or association” or “to render unfit for use.”

The Supreme Court noted that the Doe Run plaintiffs “allege toxic chemicals are present in the air, water, and surrounding environment and these toxic chemicals are harmful to the individuals who breathe them.” The court held that these claims “certainly allege the existence of an irritant or contaminant under the ordinary meanings of the words; these emissions could be understood to both ‘produce irritation’ and ‘corrupt’ the breathable air, making it ‘unfit for use.’” The Supreme Court concluded that “the toxic emissions expelled from Doe Run’s facilities are unequivocally a pollutant under the plain meaning of the term.” By doing so, the Supreme Court certainly seemed to embrace the plain meaning approach with respect to the pollution exclusion. (For more discussion of the Doe Run opinion, check out our prior blog post.)

Perhaps even more factually similar to potential COVID-19 liability claims, the Eighth Circuit Court of Appeals in Williams v. Employers Mutual Casualty Company, 845 F.3d 891 (8th Cir. 2017), applied Missouri law and considered whether a pollution exclusion extended to a class action brought against a mobile home park seeking recovery, in part, for injuries allegedly sustained from consumption of drinking water. The underlying complaint alleged that the mobile home park’s water supply contained coliform bacteria. The class action representative argued that coliform bacteria were not contaminants because they occur naturally and are not necessarily harmful in every context.?

The Eighth Circuit disagreed. Similar to the Missouri Supreme Court in Doe Run, the Eighth Circuit in Williams looked to Merriam-Webster’s Collegiate Dictionary and adopted a nearly identical definition of “contaminant”: to “contaminate” is “to soil, stain, corrupt, or infect by contact or association” or “to make unfit for use by the introduction of unwholesome or undesirable elements.” The appellate court held that coliform bacteria were contaminants because they are “alleged to have posed a health risk to [the mobile home park] residents, and to have exceeded ‘contamination levels’ set by Missouri’s Department of Natural Resources.” The court explained: “Like other living organisms, coliform bacteria is made up of a combination of solid, liquid, gaseous, and thermal elements. Thus, it is a pollutant under the plain language of the policy.” By using various dictionary definitions, the Eighth Circuit clearly utilized a “plain meaning” interpretation of the pollution exclusion to apply it to these non-traditional, non-industrial claims of bacterial infection.

Because the Eighth Circuit in Williams held that coliform bacteria met the definition of “contaminant,” it did not appear to reach the question of whether such bacteria also qualified as “irritants” within the meaning of the pollution exclusion. The Eighth Circuit did apply a “plain meaning” interpretation of “irritant” in United Fire and Casualty Co. v. Titan Contractors Service, Inc., 751 F.3d 880 (8th Cir. 2014), and held that under Missouri law a pollution exclusion removed coverage for a claim alleging bodily injury arising out of the use of TIAH, an acrylic concrete sealant. (You can read more about that case in our prior blog post.)

Whether the pollution exclusion applies to liability claims alleging injuries arising out of COVID-19 undoubtedly will be decided by courts across the country in the years to come. If Missouri precedent on the pollution exclusion continues, insurers in this state may have a significant coverage defense to these liability claims.?

Michael L. Young?is a partner in the St. Louis law firm of Reichardt Noce & Young LLC with with a primary emphasis in the practice of insurance law and bad faith. He represents insurers in complex insurance coverage matters at all stages of the claims process. Mr. Young also has advised insurers in drafting policy language and developing claims best practices. He represents clients in Missouri and Illinois.