By the Data Security & Privacy Team

Adding publicity to the recent string of security breaches, Gemalto’s Breach Level Index released information on October 9, 2018 stating that for the first half of 2018, approximately 291 records were stolen or exposed every single second.[1]  Gemalto estimates that 945 data breaches led to the release

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On Thursday, May 5, 2016, the Consumer Financial Protection Bureau (CFPB) issued a notice of proposed rules that would fundamentally change the way certain businesses contract with consumers.  Among other actions, the proposed rule would eliminate class action waivers from pre-dispute arbitration clauses and agreements for certain businesses.  The announcement of the proposed rule was

The Medicare laws have undergone significant changes. With the relatively new reporting regulations and the focus on compliance, litigators must implement new procedures in their practice.  Many companies are establishing guidelines to obtain information needed to comply with the Medicare Secondary Payer Act (“MSP”) and the Medicare, Medicaid and SCHIP Extension Act of 2007 (“MMSEA”).

The purpose of this post is to provide insureds with general information that will assist them in recognizing important facts and issues related to insurance coverage of environmental disasters. The primary areas addressed include (1) understanding the general types of potential insurance coverage; (2) recognizing environmental disasters; (3) deciding what to do once an environmental disaster is discovered to improve the possibility of insurance coverage and finally, (4) long term plans to improve coverage of potential future environmental disaster claims.

Insurance Policies

Insurance Coverage for Environmental Disaster Coverage is a complicated subject that must consider many different issues over many different timelines and many different jurisdictions with many different types of hazards. Understanding what an environmental disaster is and recognizing that one has occurred is the first thing an insured must do. Until the insured has recognized that an environmental disaster has occurred, it cannot ask the insurer for coverage and it cannot provide notice and coverage cannot be triggered. There are many different types of environmental disasters, a brief review of the history of the pollution exclusion in general liability policies provides some prospective as to how insurers look at environmental disasters and coverage.

Early standard general liability policies issues prior to 1966 contained insuring agreements that provided coverage for injury (caused by accident). The standard insurance service organization (ISO form) which is a general liability form used by most insurers was revised in 1966 to provide coverage for an “occurrence” with neither “expected” nor “intended” by the insured and specifically included continuous or repeated exposure to substantially the same conditions in its coverage. As a result of these changes, claims related to environmental damages increase dramatically. Insurers using the standard form added a mandatory endorsement in 1970 (ISO Form 00020173 1973) that excluded coverage using the following language:

“Bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water.”

The referenced ISO form was often used in conjunction with a carve-back in of coverage which provided: “this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.”

As you might expect, and as many of you may know, the 1970’s and 1980’s were a turbulent period for insureds and insurers who were engaged in coverage disputes under CGL policies for pollution related claims. Courts in the various jurisdictions reached different conclusions and were often at odds which made predicting coverage difficult.

The insurers, through the insurance service organization, created an absolute pollution exclusion in 1985 (See ISO form CG0021207), which excluded coverage for the following:

“Bodily injury” or property damage” arising out of the actual, alleged, or threatened discharge, dispersal, release or escape of pollutants:

At or from any premises, site or location which is or was at any time owned, occupied, or rented or loaned to, an insured[.]

“Pollutants” means solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

The absolute pollution exclusion lacked an exception for coverage for sudden or accidental problems and it did not provide coverage for allegations or threats of a polluting event and it also eliminated the requirement for a discharge into a foreign land, the atmosphere or water course or a body of water.

Not surprisingly, the absolute pollution exclusion was a source of significant litigation between insureds and insurers and lead to various interpretations by courts across the country. Some courts fell into a camp which accepted the insurance industry’s broad interpretation of the exclusion. Another group affords limited exclusion to damages when an undefined claim involved harm to the broader environment. Another group of courts found that the exclusion was ambiguous or required to be interpreted based on history of the exclusion and looked at the presentations of the insurance industry to the various insurance commissioners in the various states “Doer v. Mobil Oil Corporation,” 774 So.2d 119, 2000-0947, (La. 12/19/00). Knowing which state an environmental disaster is in and more importantly, what state law is going to apply to coverage, becomes very important and can be important in planning litigation as will be discussed below in some detail.

There are many types of insurance products today providing various types of coverage for environmental disasters. A review of all of the different products available is beyond the scope of this paper. Coverage ranges from limited coverage provided via endorsements to CGL policies to stand alone policy forms. Over the years, insureds have sought an expansion of coverage to avoid the gaps created by the pollution exclusions in CGL policies. In recent years there has been a significant increase in the number of carriers providing environmental coverage products compared to the limited market of even five or six years ago. Based on work with brokers over the last year or so, it appears that there are around 30 different insurers now offering some form of environmental coverage. Coverage available for environmental claims is more readily available currently on a claims made basis; although occurrence based insurance is also sometimes available.

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In Frees, Inc. v. McMillian, 2007 WL 184889 (W.D. La. Jan. 22, 2007), the Western District of Louisiana granted the plaintiff’s motion to compel. In an unfair competition and trade secret theft action, the plaintiff claimed that the defendant, a former employee, had stolen various data files. Plaintiff had unsuccessfully requested production of defendant’s laptop and desktop. The Court granted the motion to compel the defendant to produce these two items because they were the most likely places that the data files would be located. The Court did institute protective measures so as to prevent the disclosure of any irrelevant or personal information.Continue Reading Recent Developments in E-Discovery in Louisiana