Jury says insurance companies must cover Appleton Papers' PCB cleanup costs

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Who is going to pay to clean up the Fox River?

On March 18, a jury in Brown County Circuit Court ruled that nine insurance companies could be liable for between $550 and $730 million in costs charged to Appleton Papers, Inc. to remove polychlorinated biphenyls (PCBs) contaminants from the river.

Although the decision is not expected to immediately impact future cases, according to attorneys outside of the proceedings, it may raise awareness as to how jurors evaluate cases of this nature.
Christine Bremer Muggli, president of the Wisconsin Association for Justice (WAJ) said in this case, the insurers were “held to the fire,” by the jury.

“This was a very narrow issue of a contract dispute between two large corporations,” said Bremer Muggli, who speculated jurors likely looked at the evidence in the case as it specifically related to insurance coverage.

Columbia Casualty Co. of Chicago filed suit in 2005 claiming its policy with Appleton Papers did not cover property damage caused by PCBs in the Fox River and that the paper company did not give the insurance company timely notice that it was responsible for cleanup costs.

After a five-week trial, the jury took just four hours to determine that the insurance polices in effect from 1979-85 covered damages caused by the PCBs.

Eight additional insurance agencies subsequently joined the suit and are, at least for now, responsible along with Columbia for costs of the clean-up initially assessed to Appleton Papers.

Six other paper mills have been ordered by the U.S. Environmental Protection Agency (EPA) and the state Department of Natural Resources (DNR) to present a design plan for dredging and capping PCB-contaminated sediment from the river.

But the companies have been unable to agree on the financial responsibility for what would be the largest river PCB cleanup project in the United States. In 2001 Appleton Papers became employee-owned after an $810 million buyout from R.J. Wiggins.

A stipulation of the sale indicated that Wiggins would be responsible for the first $75 million of cleanup costs, Appleton Papers would be liable for the next $25 million and Wiggins would be responsible for anything beyond $100 million. The case involved insurance coverage for the paper company and Wiggins.

Attorney Bernard T. McCartan of American Family Mutual Insurance Co. in Madison was not necessarily surprised by the dollar amount attached to the case.

“Costs for cleanups are typically very large,” said McCartan, who was not involved in the case. “In cases like these there can be significant disagreement as to what needs to be done in a particular clean-up and what the cost needs to be. I don’t know if the jury was asked to make any decisions about that.”

Attorneys for Appleton Papers could not be reached for comment.

Katrina Parker, Corporate Director of Media Relations for CNA Group of Insurance Companies, which had Fidelity & Casualty Company of New York as a plaintiff in the case, declined to comment on whether the company would appeal the decision.

But McCartan expected an appeal once the parties evaluate legitimate grounds to file.
“At this point, I’m sure the various parties are still considering what their options are, and it takes a little while to digest all of that,” said McCartan.

Bremer Muggli added that any long-term effects on the insurance industry and practitioners will not be realized until after an appeal. She also did not anticipate the decision would signal a movement toward juries siding against insurance companies.

“Does this mean there is going to be a trend of juries holding insurers liable for contracts they write and the damages of the insured?” asked Bremer Muggli. “No.”

This article includes information from the Associated Press.