CHARLESTON, S.C. (Legal Newsline) - Facing more than thousands of PFAS lawsuits, a maker of firefighting foam will get to continue trying to prove its insurers should have to pay their fair share.
South Carolina federal judge Richard Mark Gergel on Oct. 17 ruled against the motions to dismiss brought by insurance companies with policies with Tyco Fire Products - one of several defendants in a multidistrict litigation over chemicals known as PFAS that are found in consumer products and firefighting foam.
Tyco has pledged to stop selling fluorinated fighting foam by June 2024, but that's little relief for insurers. Other defendants in the MDL have reached huge settlements that could net plaintiff lawyers more than $1 billion in fees.
PFAS are dubbed "forever chemicals" because they persist in groundwater and human tissue for years. The federal government is attempting to set a maximum contaminant level for PFAS, even as groups call the move premature. Much of the research regarding their effect on the human body is disputed.
There are more than 17,000 claims in the MDL, with Tyco a defendant in 4,000. It led the company to sue its liability insurance carriers in 2023 to pay to defend and indemnify it.
The defendants raised five arguments in their motions to dismiss: That Tyco's insurance dispute shouldn't have been filed in the MDL, that the South Carolina court lacks jurisdiction over them, that Tyco's claims are barred by South Carolina's "door closing" statute; that South Carolina is an inconvenient forum; and that the court should abstain from exercising jurisdiction.
Gergel rejected all these defenses in his order.
"Each of the Defendants sold liability insurance policies to Plaintiff and were on notice that Plaintiff distributed its products in every state, including South Carolina," the decision says.
"The insurance policies Defendants sold to Plaintiff provided coverage to Plaintiff in every state, and Defendants, as well-established insurance carriers, were aware that claims against Plaintiff, their insured, could result in lawsuits subject to their coverage in any and all states.
"Defendants purposely contracted to provide nationwide coverage to Plaintiff and Defendant received significant premium payments from Tyco as a result. Defendants could have limited the territorial reach of their policies but elected to provide broad, nationwide coverage."
The "door closing" statute cited by the insurers requires actions against foreign corporations to be brought in South Carolina court only if the plaintiff is a resident of the state or the cause of action ocurred there.
Gergel said it has been held inapplicable in insurance coverage declaratory judgment cases and refused to enforce it in Tyco's lawsuit.
"(T)here is a strong countervailing federal policy in consolidating actions in multi-district litigation, and this coverage dispute relates to and advances the potential reslution of that litigation," Gergel wrote, adding there are at least 80 pending claims from South Carolina.
A Wisconsin lawsuit brought by Century Indemnity Company against Tyco has overlapping issues, causing the defendants to ask Gergel to abstain so they can be sorted there. But Gergel said that court proceeding would take too long because Tyco faces a bellwether trial in August 2024 - more than a month before dispositive briefing would be completed in the Wisconsin case.
"Plaintiff faces an August 2024 bellwether trial in the AFFF MDL that could potentially produce a devastating financial verdict against it," Gergel wrote. "A timely resolution of those coverage issues, either by finding coverage or the absence of coverage, could provide the negotiating parties in the MDL critical information needed to reach a negotiated settlement."