CLM National: January 2020
News and verdicts that affect you from across the country
By Phil Gusman
Monsanto appeals Hardeman Roundup verdict, the Washington Supreme Court rules insurers are bound by agents’ representations on certificates of insurance, and, in New Jersey, the Court of Appeals rules municipal courts may enforce the state’s Spill Act.
Insurer Bound by Agent’s Representation
The Washington Supreme Court, in T-Mobile USA Inc. v. Selective Ins. Co. of Am., found that an insurance company is bound by its agent’s representations made on a certificate of insurance, despite the disclaimer language contained in the certificate, and even when those representations add new insureds to the policy or otherwise alter its terms. The matter came to court on certification from the 9th Circuit, which presented the following question: “Under Washington law, is an insurer bound by representations made by its authorized agent in a certificate of insurance with respect to a party’s status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage?” The Washington Supreme Court answered the question in the affirmative, holding that “an insurance company is bound by the representation of its agent in those circumstances.”—From CLM Member Jennifer Dinning
Monsanto Seeks Appeal in Hardeman Roundup Case
Monsanto Company, owned by Bayer AG, is asking the 9th Circuit Court of Appeals to reverse a verdict in which plaintiff Edwin Hardeman contended Monsanto’s weed killer, Roundup, caused his non-Hodgkin’s lymphoma. Hardeman’s case was the third Roundup case to go to trial in U.S. courts, according to news reports. A jury awarded Hardeman $80 million, which a trial court judge reduced to $25.3 million. In its December filing, Monsanto claims the district court upheld the verdict sanctioning it for selling glyphosate without a cancer warning despite findings from regulatory agencies that glyphosate does not cause cancer, and an EPA conclusion that such a cancer warning would be unlawful under federal law. The filing also contends the court allowed expert testimony that Monsanto says was based on “speculation and conclusory assertions” rather than “reliable scientific methodologies.” Monsanto’s filing states, “If the judgment is allowed to stand, those errors will spread to thousands of other Roundup cases.”—From Managing Editor Phil Gusman
Covenant Not to Execute Constitutes Settlement for Purposes of Exhausting Limits
The 5th Circuit Court of Appeals affirmed a lower court ruling that, under Texas law, money paid to the plaintiff in consideration for a covenant not to execute against the personal assets of the insured constitutes a settlement for purposes of exhausting the limits of insurance under a primary insurance policy. The decision in Aggreko LLC v. Chartis Specialty Insurance Co. involved a dispute between a primary insurer (Gray) and an excess insurer (Indian Harbor) over whether Gray still owed the insured a defense obligation, or whether Gray had properly exhausted its limits by paying for the covenant not to execute. The 5th Circuit’s Erie guess that the Texas Supreme Court would permit the insured and the primary insurer to enter into such an agreement at the expense of the excess insurers may result in more such settlements going forward.—From Houston Chapter Vice President Christina Culver and CLM Member Diego Garcia Jr.
Citizens Seeks to Reduce Exposures
Citizens Property Insurance Corp., Florida’s homeowners insurer of last resort, is examining ways to further reduce its policy count. Citizens’ board of governors agreed to seek an outside review to study the issue. At its peak in 2011, Citizens says it covered 23 percent of the market, or 1.5 million policies. After depopulation efforts, Citizens’ policy count stood at 444,000 as of Dec. 6, 2019. “We still believe it is appropriate to examine what might be necessary to get Citizens’ exposure to an even lower level,” said Barry Gilway, Citizens president/CEO and executive director, in a statement. The board discussed the issue in a September 2019 meeting and agreed with Citizens’ staff on Dec. 11 to move forward.—From Managing Editor Phil Gusman
Tyson Liable for Claim Filed on Independent Farm
Where a landowner exercises minimal control over an employee, while a separate entity maintains substantial control over the day-to-day functions of that employee, that entity may be considered a co-employer, a recent ruling held. In Uninsured Employers’ Fund v. Tyson Farms Inc., et. al., Mauro Jimenez Garcia suffered an “occupational disease disablement” to his lungs, arising out of his work raising chickens on a farm owned by Dai K. Nguyen, who did not have workers compensation insurance. Garcia and the Uninsured Employers’ Fund (UEF) impleaded Tyson Farms into the claim, contending Garcia was co-employed by Tyson, since the chickens on Nguyen’s farm were raised for and owned by Tyson. The Circuit Court for Worcester County, after a two-day jury trial, found Tyson was not a co-employer at the time of Garcia’s injuries. The Court of Special Appeals of Maryland reversed, stating, “Tyson exercised extensive control over Mr. Garcia’s work at the farm, such that Mr. Garcia was an employee of Tyson for workers compensation purposes.”—From Managing Editor Phil Gusman
Municipal Courts May Enforce Spill Act
The New Jersey Court of Appeals provided greater flexibility to the state’s Department of Environmental Protection (DEP) in enforcing the New Jersey Spill Act. A DEP employee filed a complaint against Alsol Corporation in municipal court in Milltown, N.J., alleging Alsol failed to remediate certain property in violation of the Spill Act. Alsol moved to dismiss, arguing municipal courts do not have the authority to adjudicate the merits of a DEP enforcement action under the act, and can only enforce penalties already imposed. The Superior Court disagreed, and Alsol appealed. The appellate court concluded that the Spill Act allows the DEP to choose whether to enforce monetary penalties in Superior Court or the relevant municipal court. The possibility of facing substantial penalties based on summary municipal court proceedings may induce parties to work with the DEP earlier in the process of Spill Act compliance, so as to avoid possibly haphazard enforcement.—From CLM Member Brandon D. Zeller