May, 2005

I. Insurance Issues

New Jersey Supreme Court Holds Pollution Exclusion Clause Limited to Traditional Environmental Pollution

The Supreme Court of New Jersey has held that a pollution exclusion clause in an insurance policy applies only to “traditional environmental pollution claims”, and would not bar coverage in this case, which involved exposure to construction fumes. In Nav-Its, Inc. v. Selective Insurance Co. of America, 183 N.J. 110, 896 A.2d 929, April 7, 2005, the plaintiff, Nav-Its, Inc., a construction contractor, was performing work at a shopping center in Allentown, Pa. The plaintiff obtained comprehensive general liability (CGL) insurance coverage for its activities at the shopping center from defendant, Selective Insurance. The plaintiff hired a subcontractor to perform painting, coating and floor ceiling work. While the work was being performed, a physician with office space in the shopping center was allegedly exposed to fumes that were released while the subcontractor was performing the coating and ceiling work.

The physician then filed a complaint against the plaintiff for personal injuries arising out of his exposure to fumes in his office for five days in July of 1998, and for three days in August of 1998. The plaintiff forwarded the complaint to Selective Insurance, and Selective Insurance refused to provide coverage to the plaintiff due to the pollution exclusion clause in the policy.

The pollution exclusion in the policy stated that Selective Insurance would have no obligation to provide coverage for any injuries or damage which arose out of a “pollution hazard” or for any losses, costs or expenses to test for, monitor, clean-up, or remove any “pollutant”. The policy further defined the term “pollutants” as “any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” The policy also defined “pollution hazard” to mean “an actual exposure or threat of exposure to the corrosive, toxic or other harmful properties of any ‘pollutants’ arising out of the discharge, disposal, seepage, migration, release or escape of such ‘pollutants’.”

The policy contained a limited exception to the pollution exclusion that provided that the pollution exclusion did not apply to injuries or damages arising from the release of any “pollutants” that occurs entirely inside a building or structure if the injuries or damages is the result of a release or discharge beginning and ending within a 48-hour period, and exposure occurs within the same 48-hour period within 30 days of the actual discharge or release.

In beginning its analysis as to whether the application of the pollution exclusion clause should be limited to traditional environmental pollution claims, the New Jersey Supreme Court noted the general principles used for the interpretation of insurance policies. The court focused on the reasonable expectations doctrine, which recognizes the importance of construing contracts of insurance to “reflect the reasonable expectations of the insured in the face of unambiguous language and phrasing”. The court also focused on the principle that exclusions in insurance policies should be narrowly construed; however, if the exclusion is specific, plain, clear and not contrary to public policy, it will be enforced as written.

The court reviewed the evolution of pollution exclusions in insurance policies, as well as previous court decisions, and testimony presented to the New Jersey State Insurance Department, and held that the purpose of pollution exclusion clauses was to provide a broad exclusion for traditional environmental related damages, such as remeditating hazardous waste under the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA). The court stated that based on its review, “we are confident that the history of the pollution-exclusion clause in its various forms demonstrates that its purpose was to have a broad exclusion for traditional environmentally related damages.” The court concluded that the pollution exclusion clause should be limited to “traditional” environmental pollution.

Concerning the ramifications of the 48-hour exception and whether is should be read to expand the pollution exclusion clause, the court interpreted that exception to limit the reach of the pollution clause, “i.e. if the environmental pollution occurs within a building within a single 48-hour period, and the other conditions are met, then the insured may receive coverage for that environmental pollution claim. Simply put, if the pollution exclusion is not applicable, neither is the exception to the pollution exclusion.”

II. Product Liability Issues.

Expert Reports Summarizing Studies of Other Accidents Inadmissible if Not “Substantially Similar”

In Hutchinson v. Penske Truck Leasing Co., 2005 WL 1154832 May 17, 2005, the plaintiff attempted to introduce expert reports that summarized studies of hundreds of other truck accidents as evidence of a product liability defendant’s state of mind.

In this case, the plaintiff, a truck driver, was injured while driving his tractor trailer. The plaintiff claimed that the accident was caused by a failure of the truck’s cruise control mechanism to disengage for several seconds after he applied the brakes. The plaintiff brought a strict product liability claim alleging that the cruise control system was defectively designed. Generally, in a product liability action, the plaintiff may rely on evidence of other, substantially similar accidents involving the product to prove its defectiveness. In this case, the plaintiff attempted to admit expert reports on heavy truck safety into evidence. Each of the reports provided a detailed analysis of and conclusions drawn from studies of hundreds of truck accidents, and the court found that the goals of the studies were to identify the most important factors in truck occupant fatalities.

The trial court ruled that the reports were admissible to prove the manufacturer’s “state of mind”, a relevant consideration with respect to the plaintiff’s claim for punitive damages, even though the reports were not based on facts substantially similar to the facts of the plaintiff’s lawsuit. However, the Superior Court of Pennsylvania held that the “substantial similarity” test applies whether the evidence of other accidents is offered to prove the existence of a defect, the cause of the defect, or the notice of the defect. The court stated that the “state of mind” of the manufacturer was nothing more than the manufacturer’s knowledge or notice of the alleged defect. In this case, the plaintiff presented no evidence as to the substantial similarities of the accidents contained in the reports to the truck he was driving, the accident, or the circumstances in the case, and therefore, the court held that they were inadmissible.

III. Employment Issues.

The Family and Medical Act Does Not Guarantee Employee’s Right to be “Left Alone”

In Callison v. City of Philadelphia, 2005 WL 900029, April 5, 2005, an employee of the City of Philadelphia attempted to argue that the Family and Medical Act, 29 U.S.C. § 2601 et seq. (“FMLA”) guarantees an employee’s right to be “left alone”.

In this case, the plaintiff was employed by the City of Philadelphia, and was then diagnosed with deep anxiety reaction and stress, caused by stress at home and at work. After using 26 sick days in one year, the City placed the plaintiff on its sick abuse list, which required him to obtain medical certification for all sick days. Further, the City required the plaintiff to notify the appropriate authority or designee when he was leaving from and returning to his house during regular working hours while out on sick leave. The plaintiff then went out on approved FMLA leave for approximately three months, but did not comply with the City’s call-in procedure dealing with sick leave. The City gave the plaintiff three suspensions for these violations after he returned to work from his FMLA leave.

The primary purpose of the FMLA is to “balance the demands of the workplace with the needs of families”. The FMLA gives eligible employees a total of 12 work weeks of leave during any 12-month period if the employee has a “serious health condition that makes the employee unable to perform the functions of the position of such employee”. Additionally, the FMLA provides protections against discrimination based on the exercise of these rights, often referred to as the “discrimination” or “retaliation” provisions. Employers may not “use the taking of FMLA leave as a negative factor in employment actions, such as hiring, promotions, or disciplinary actions”.

The plaintiff in this matter argued that the FMLA anti-abuse and eligibility provisions conflicted with the City’s call-in requirement in its sick leave policy, and therefore, this requirement should not have applied to him while he was on leave. The plaintiff asserted that “[o]nce an employee is pre-approved for FMLA leave, he/she should be left alone”. However, the court held that the City’s sick leave policy did not conflict with the FMLA, because the call-in procedure did not serve as a prerequisite to entitlement for FMLA leave. Rather, the court held that the procedure merely sets forth the obligations of employees who are on leave, regardless of whether the leave is pursuant to the FMLA. The court further held that there is no right in the FMLA to be “left alone”. “Nothing in the FMLA prevents employers from ensuring that employees who are on leave from work do not abuse their leave….”



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for informational purposes only and do not constitute legal advice.



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