6th Circuit Declines To Resolve PFAS Coverage Dispute

• Jurisdiction: United States,Federal,Ohio
• Law Firm: Taft Stettinius & Hollister
• Subject Matter: Environment, Insurance, Energy and Natural Resources, Chemicals, Insurance Laws and Products, Clean Air / Pollution, Water
• Author: Clayton Smith
• Published date: 24 July 2023

In June 2023, the U.S. Circuit Court for the Sixth Circuit declined to resolve a unique PFAS state-law issue in Admiral Insurance Co. v. Fire-Dex LLC when it rejected an insurer's attempt to avoid coverage for per- and polyfluoroalkyl (PFAS) lawsuits and found that the U.S. District Court properly declined to exercise subject-matter jurisdiction over the dispute.

Background

In Admiral, the insurer (Admiral) brought suit in the U.S. District Court for the Northern District of Ohio seeking declaratory judgment determining that Admiral was not required to defend its insured, Fire-Dex, in a string of actions alleging injuries and damages, primarily cancer, caused by exposure to PFAS-containing products.

Fire-Dex manufactures clothing worn by firefighters. It is also responsible for the manufacturing and production of aqueous firefighting foam (AFFF). In the string of actions, plaintiffs consisted of firefighters and spouses who claimed exposure to PFAS through the use of Fire-Dex products resulted in damages, including cancer.

In arguing that its coverage did not apply to the claims against Fire-Dex, Admiral highlighted and relied on a number of exclusions in its insurance policies: (1) Exclusions for occupational disease - no coverage for bodily injury "resulting from any occupational ... disease arising out of any insured's operations, completed operations or products"; (2) exclusions for prior existing damages; and (3) exclusions for pollution under a "total" pollution exclusion with a "hostile fire" exception. Fire-Dex filed a motion under Federal Rule of Civil Procedure 12(b)(1) challenging subject-matter jurisdiction and seeking to dismiss Admiral's complaint.

In short, Fire-Dex's motion argued that Admiral has no absolute right to seek a declaratory judgment in federal court even if the suit satisfies subject-matter jurisdiction. Instead, the claim of jurisdiction should be analyzed under the factors listed in Grand Trunk Western Railroad Co. v. Consolidated Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984): (a) whether the judgment would settle the controversy; (2) whether the declaratory judgment would be useful in clarifying the legal relations; (3) whether the case is being used merely for "procedural fencing" or as a basis for "res judicata;" (4) whether a declaration would cause friction between federal and state courts and improperly encroach on state jurisdiction; and (5) whether there is an alternative remedy that is better or more effective. No...