This dispute arises from mass tort litigation in Illinois involving over 800 plaintiffs who alleged that Griffith Foods International and later Sterigenics U.S. caused widespread cancer and other illnesses through 35 years of ethylene oxide emissions from a sterilization plant in Willowbrook. The companies sought defense coverage under commercial general liability policies issued by National Union Fire Insurance Company. National Union denied coverage, arguing that the standard pollution exclusion barred claims for bodily injuries resulting from the discharge of toxic chemicals. The district court ruled in favor of the insureds, determining that because the emissions were authorized by a permit from the Illinois Environmental Protection Agency, they did not fall within the pollution exclusion. This decision relied on an intermediate appellate court ruling in Erie Insurance Exchange v. Imperial Marble Corp., which suggested that permitted emissions might not be considered traditional pollution. National Union appealed, challenging the district court's interpretation of the pollution exclusion and the scope of its duty to defend.
The Seventh Circuit began by addressing National Union's argument that the district court erred in defining the scope of its duty to defend without analyzing individual underlying complaints. The court held that National Union waived this argument by failing to clearly articulate it in the district court, noting that a footnote in a brief was insufficient to preserve the issue. Turning to the core legal question, the court analyzed whether the ethylene oxide emissions constituted traditional environmental pollution under the Illinois Supreme Court's decision in American States Insurance Co. v. Koloms. The court acknowledged that its own reading of Koloms suggested the exclusion should apply to the gradual, industrial discharge of hazardous substances. However, the court recognized a conflict in Illinois law. While the Seventh Circuit's own decision in Scottsdale Indemnity Co. v. Village of Crestwood held that regulated levels of contamination still constituted pollution, the Illinois intermediate appellate court in Erie Insurance Exchange v. Imperial Marble Corp. suggested that emissions authorized by a permit might not be traditional pollution. Because these conflicting authorities left the court genuinely uncertain about the correct application of Illinois law, and because the question was determinative of the case with substantial consequences for the insurance market, the court exercised its discretion to certify the question to the Illinois Supreme Court.
The district court's denial of certification is reversed, and the case is remanded with instructions to certify the specific question of whether permitted industrial emissions constitute traditional environmental pollution to the Illinois Supreme Court. This effectively pauses the federal litigation until the state's highest court provides a definitive ruling on the scope of the pollution exclusion in commercial general liability policies. The outcome will determine whether National Union owes a duty to defend the insureds against the mass tort claims, potentially affecting defense costs of approximately $150 million.
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