Friday, March 5, 2010

Global warming litigation just getting started; costs will be significant

Robert Redfearn, Jr. in the Insurance Journal: Toward the end of 2009, it appeared that a number of issues with the possibility of creating significant political and social changes were on the verge of becoming law before stalling or imploding. One such issue with serious implications for the insurance industry in particular is global warming or climate change.

…Although global warming presents many complex issues and concerns for the insurance industry, a triumvirate of rulings are the focus of present attention and appear to set the stage for the future direction of global warming litigation.

In the 2007 case of Massachusetts v. Environmental Protection Agency, [549 U.S. 497 (2007)]. several states and private organizations sued the EPA to require it to regulate carbon dioxide and other greenhouse gas emissions under the Clean Air Act. In a narrow 5 - 4 decision the U.S. Supreme Court held that the EPA is authorized, and required, under the Clean Air Act to regulate those emissions which it determines cause or contribute to global warming or climate change, and, further, held that carbon dioxide constitutes a "pollutant" within the meaning of the Clean Air Act.

…In September 2009, the Second Circuit Court of Appeals held in State of Connecticut v. American Electric Power, Inc. [582 F. 3d 309 (2nd Cir. 2009)] that eight states and several land trusts had standing to assert a federal common law nuisance claim against six electric power companies on the basis that those companies, through their emissions of carbon dioxide, were large contributors to global warming, which the plaintiffs alleged caused or would cause harmful effects to human health.

Similarly, in October 2009, the Fifth Circuit Court of Appeals held in Comer v. Murphy Oil USA [585 F. 3d 855 (5th Cir. 2009)] that a putative class of private landowners along the Mississippi Gulf Coast had standing to assert a private nuisance claim under Mississippi law against a number of companies which the plaintiffs alleged had contributed to global warming, thereby increasing the ferocity of Hurricane Katrina and, as a consequence, their damages from Hurricane Katrina.

…It should be noted that the courts in the foregoing cases expressed doubts as to the ability of the plaintiffs to ultimately prove their cases, particularly with respect to establishing causation. However, for insurance purposes, ultimate success on the merits is only part of the concern. Litigation costs are likely to be significant in defending global warming cases.

…While numerous commentators, lawyers and legal scholars have suggested various defenses to insurance coverage of global warming related claims, no court has yet issued a public ruling on any of these defenses.

Engraving of Gilbert and Sullivan's Trial by Jury, labeled "Chaos in the Courtroom"

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