Tag: CGL coverage

States Continue to Adopt the “Continuous-Trigger” Theory of “Occurrence” Under Commercial General Liability Insurance Policies

A growing number of states, including Ohio, Pennsylvania, and Virginia, and most recently, West Virginia, now follow the “continuous-trigger” theory when examining coverage under an occurrence-based Commercial General Liability (CGL) insurance policy.
The West Virginia Supreme Court of Appeals recently confirmed in Westfield Ins. Co. v. Sistersville Tank Works, Inc., No. 22-848 (Nov. 8, 2023), that West Virginia law recognizes the “continuous trigger” theory to determine when insurance coverage is activated under a CGL policy that is ambiguous as to when coverage is triggered.
In 2016 and 2017, former employees of Sistersville Tank Works, Inc. (STW), filed three separate civil lawsuits West Virginia state court alleging personal injuries as the result of exposure to various cancer-causing chemicals while working around tanks that STW supposedly installed, manufactured, inspected, repaired or maintained between 1960 and 2006. STW purchased CGL policies from Westfield each year for the period 1985 to 2010. Typical of virtually all CGL policies, the Westfield CGL policies issued to STW were occurrence-based and provided coverage for bodily injury and property damage “which occurs during the policy period.”  Under the Westfield CGL policies, the bodily injury or property damage must be caused by an “occurrence,” defined under the policy as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
Westfield denied coverage for the three underlying lawsuits and filed a declaratory judgment complaint in the United States District Court for the Northern District of West Virginia seeking a declaration that it owed no duty to provide a defense or indemnification to STW because the former employees were diagnosed after the expiration of the last CGL policy, and, therefore, STW could not establish that an “occurrence” happened within the policy period.
The District Court granted summary judgment to STW and found that Westfield owed a duty to defend and indemnify under all the Westfield CGL policies in effect between 1985 and 2010. Specifically, the District Court concluded that Westfield’s obligation to cover a bodily injury that “occurs during the policy period” was ambiguous because the language in Westfield’s CGL policies did not clearly identify when coverage was “triggered” when a claimant alleged repeated chemical exposures and the gradual development of a disease over numerous policy periods. The District Court predicted that the West Virginia Supreme Court of Appeals would apply the continuous-trigger theory to clarify the ambiguous language in the policies at issue, which resulted in each occurrence-based CGL policy insuring the risk from the initial exposure through the date of manifestation being triggered.
Westfield appealed to the United Stated Court of Appeals for the Fourth Circuit and argued that a “manifestation trigger” of coverage should apply to determine coverage, under which only the CGL policy in effect when an injury is diagnosed, discovered, or manifested provides coverage for the claim. The Fourth Circuit, recognizing that West Virginia had not address the issue, then certified the following question to the West Virginia Supreme Court of Appeals:

At what point in time does bodily injury occur to trigger insurance coverage for claims stemming from chemical exposure or other analogous harm that contributed to development of a latent illness?

The West Virginia Supreme Court began its analysis of the certified question by observing that “in the context of latent or progressive diseases,” the definition of “occurrence” was ambiguous and subject to interpretation by the Court. The Court then examined the history of the insurance industry’s adoption of “occurrence” language in CGL policies in the 1960s including the specific intent of drafters of the “occurrence” language to include “cases involving progressive or repeated injury” in which “multiple policies could be called into play.”
The Court also observed that most courts that have examined the “continuous-trigger” theory have expressly adopted it, including Ohio (Owens-Corning Fiberglas Corp. v. Am. Centennial Ins. Co., 660 N.E.2d 770, 791 (Ohio Com. Pl. 1995); Pennsylvania (J.H. France Refractories Co. v. Allstate Ins. Co., 626 A.2d 502, 506 (Pa. 1993); and Virginia (C.E. Thurston & Sons, Inc. v. Chi. Ins. Co., No. 2:97 CV 1034 (E.D. Va., Oct. 2, 1998)). Conversely, the Court noted that no jurisdiction has adopted the “manifestation” trigger advocated by Westfield.
The Court concluded by expressly adopting the “continuous-trigger” theory of coverage to determine when coverage is activated under the insuring agreement of an occurrence-based CGL policy “if the policy is ambiguous as to when coverage is triggered.”  In doing so, the Court observed that the continuous trigger theory of coverage “has the effect of spreading the risk of loss widely to all of the occurrence-based insurance policies in effect during the entire process of injury or damage[,]” which includes the time of “the initial exposure, through the latency and development period, and up to the manifestation of the bodily injury, sickness, or disease[.]”
The Westfield decision ensures that West Virginia law concerning the activation of coverage under occurrence-based CGL policies aligns with the law in other states around the country. It also should be a reminder to businesses that purchase occurrence-based CGL policies to establish and maintain a repository of insurance policies for as long as possible, and especially for businesses that may be subject to personal injury claims that involve long latency periods between exposure and manifestation. Having copies of those policies will increase the chance of finding at least one insurer (and potentially more) that owes a defense and indemnification for such claims.
© Copyright Babst, Calland, Clements and Zomnir, P.C.
For more news on Commercial General Liability (CGL) insurance policies, visit the NLR Insurance Reinsurance & Surety section.

Life on the B Side: Social Media Advertising Under CGL Coverage B (Part 2)

The following is Part II in our two-part series on the intersection between social media advertising and the lesser known portion of commercial general liability (“CGL”) policies—the elusive “Coverage B.”  In Part I, we examined the prevalence of social media and social media advertising in today’s society.  We also provided a brief overview of the Coverage B provisions that are likely to be implicated by social media advertising.  In Part II, we discuss these Coverage B issues in greater detail.

POTENTIAL COVERAGE B ISSUES IMPLICATED BY SOCIAL MEDIA ADVERTISING

1.   What Constitutes Advertising?

A threshold issue that could arise in cases involving social media advertising is whether the use of social media qualifies as “advertising” under the policy.  In the typical insurance policy, “Advertising Injury or Damage” is defined as including a covered offense stemming from the insured’s “advertising” efforts.  However, the term “advertising” is often left undefined.

Social media advertising raises some unique questions, particularly with respect to whether specific content constitutes “advertising.”  On the one hand, banner ads (i.e., those typically found on the top or sides of a website) are akin to traditional forms of print advertising; therefore, it is difficult to imagine that such content would not qualify as “advertising” for Coverage B purposes.  On the other hand, social media offers access to less formal means of advertising.  For instance, a business could open a Twitter or Facebook account in order to promote itself through individual postings.  Although the use of these social media platforms as a promotional tool would appear to constitute “advertising,” judges unfamiliar with social media platforms, or at least more familiar with traditional forms of advertising, might disagree.

This issue has not yet been addressed in the Coverage B context.  However, one court recently concluded that a business’s Facebook posts did not constitute advertising under the Lanham Act.  In Buckeye International v. Schmidt Custom Floors, 2018 WL 1960115 (W.D. Wis. Apr. 26, 2018), a federal judge held that Facebook posts made by one business criticizing another business did not constitute advertising under the Lanham Act because they were “individualized person-to-person communication[s].”  This ruling fails to appreciate that a business’s posts to social media accounts, particularly where the business makes those posts public without limitation, are not “individualized person-to-person communications” because they are often intended to reach large audiences or the public-at-large.  However, judges examining similar issues in a Coverage B dispute could reach similar conclusions.  Thus, educating courts about the basics of social media platforms, including how they operate and the purposes for which businesses use them, is critical in any litigation involving these technologies.

2.   #trademarkviolation

Anyone who has ever viewed a Twitter feed has surely noticed the presence of hashtags within individual Tweets.  Hashtags were originally intended as a tool to categorically arrange materials so that other users could easily search for a topic.  However, their use has quickly expanded to other social media platforms.  Today, they are often used to express humor or as a method for brand recognition.  Indeed, certain courts to-date have found that hashtags are entitled to trademark or copyright protections, despite that they were originally intended to assist with online search capabilities.  The Wall Street Journal has reported that companies are increasingly filing trademark applications for hashtags related to their companies and products.[1]

The increased protections offered for hashtags has potential Coverage B implications.  In Part I, we discussed the fact that included among the covered offenses that constitute “personal and advertising injuries” are:  (1) the use of another’s advertising idea in your “advertisement”; and (2) infringing upon another’s copyright, trade dress, or slogan in your “advertisement.”  Thus, social media advertisements employing hashtags could trigger intellectual property litigation.  And, the related defense costs and/or indemnity arising out of such litigation would potentially be covered by standard Coverage B protections.

3.   Risks Associated With Social Media Influencers

In Part I of our series, we discussed how companies were employing brand advocacy through paid social media influencers (individuals with a significant following on social media who post content about products and services in exchange for compensation (e.g., money or free products)).  Although a company’s use of social media influencers does not create any unique Coverage B issues, the use of such influencers as part of a marketing campaign is not without risks.  Social medial influencers are certainly not professional advertisers—recent studies show they are not only not aware of the rules and regulations concerning their paid posts, but may actually be consciously ignorant of those rules and regulations.[2]  Therefore, in order to minimize liability, companies seeking to utilize influencers must be dogged in (1) educating their influencers, and (2) monitoring their influencers’ content.  This is especially true given the above-referenced statistics showing social media influencers are often ignorant of advertising norms—an influencer left to his or her own devices is an influencer who could cause headaches for an insured.  However, even companies that educate influencers about advertising norms must trust these people to actually follow the rules.  By utilizing influencers, companies give up certain elements of control over the advertising that they would maintain under traditional advertising campaigns and increase the chances that an influencer could engage in acts that constitute covered offenses for Coverage B purposes.

CONCLUSION

As highlighted throughout this two-part series, the use of social media advertising raises interesting and unique issues, as well as possible liabilities to companies.  Along with these possible liabilities comes the potential for insurance coverage under policies offering coverage for “personal and advertising injuries.”  While it remains to be seen how courts will address these issues, companies should be mindful of the potential for insurance coverage.

[1] See https://www.wsj.com/articles/companies-increasingly-trademark-hashtags-1…

[2] See Jim Tobin, Ignorance, Apathy or Greed? Why Most Influencers Still Don’t Comply with FTC Guidelines, Forbes (Apr. 27, 2018 8:00 AM) https://www.forbes.com/sites/forbesagencycouncil/2018/04/27/ignorance-ap… Steven P. Mandell et al., Recent Developments in Media, Privacy, Defamation, and Advertising Law, 52 Tort Trial & Ins. Prac. L.J. 531, 560 (2017).

 

© 2019 Gilbert LLP
This post was written by Michael B. Rush and Samantha R. Miller of Gilbert LLP.
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Employment Related Lawsuits Are on the Rise. Are You Covered?

Gilbert LLP Law FirmOn September 25, 2014, the Equal Employment Opportunity Commission (“EEOC”) filed the first two suits in its history challenging transgender discrimination under the 1964 Civil Rights Act.  As discrimination litigation evolves, it is important to know whether your insurance coverage is evolving with it.

Coverage for employee-related lawsuits has always been important, but the increase in suits brought by the EEOC over the last several years (and the last several decades) has made employment practices liability (“EPL”) insurance of particular importance to protecting your company.  Last year, the EEOC recovered a record-setting $372.1 million.

Now, the scope of EEOC suits is increasing as a result of the EEOC’s ongoing efforts to implement its Strategic Enforcement Plan (“SEP”), adopted in December of 2012.  As part of its SEP, the EEOC makes “coverage of lesbian, gay, bisexual and transgender individuals under Title VII’s sex discrimination provisions, as they may apply” a “top commission enforcement priority.”

Comprehensive general liability (“CGL”) policies, are a type of commercial third-party liability insurance.  Most businesses in the United States purchase CGL policies in order to protect against the risk of suits by third parties.  If a patron sues you for a slip and fall in your mom-and-pop shop, your CGL policy probably covers the suit.  Likewise, if you distribute across the entire country a product that allegedly causes bodily harm to thousands of people, your CGL policy probably covers the suits.

As broad as CGL coverage is, however, it is only one piece to a balanced insurance portfolio.  CGL policies typically exclude coverage for suits brought by employees of the company.  EPL polices step in to fill one part of the gap in coverage.  Other parts of the gap are filled by workman’s compensation policies and directors and officers liability policies.

A typical EPL policy may list a number of categories of protected classes covered by insurance, and then add coverage for “other protected classes.”  A policy may also protect against claims for “Discrimination,” and define that discrimination broadly to mean “any actual or alleged violation of any employment discrimination law.”  However, some polices offer more limited coverage.  For example, some carriers may restrict coverage to only sexual harassment.

Just as you protect your company from fire by installing sprinklers in your warehouses and doing regular safety inspections, it is imperative that you keep your employment practices up to date.  Educate your employees on proper workplace behavior, and try to think about ways to get ahead of the curve to minimize your liability for alleged workplace discriminations.

Just as discrimination litigation is evolving, other areas of litigation continue to evolve and create new risks for your company.  In addition, coverage law continues to evolve across the United States, on a state-by-state basis.  As coverage law evolves, it has a direct effect on the value of your insurance portfolio.

ARTICLE BY

João Santa-Rita
OF
Gilbert LLP