§17.17 - Trial of an Environmental Coverage Case

• Jurisdiction: Washington

§17.17 Trial of an Environmental Coverage Case

Considerations with respect to trial of an environmental coverage case are discussed below.

(1) Pretrial preparation

Thorough trial preparation serves not only its obvious purpose of preparing a case for trial, but also is a critical component of a successful settlement strategy. The most advantageous settlements are reached when one party believes there is a significant risk in proceeding to trial, based at least in part on the experience and preparation of the opposing party.

Good preparation involves developing and following a targeted litigation management plan. This will include propounding interrogatories, requests for production, and requests for admission. Subjects of discovery may relate to the policyholders organizational and employment structure, insurance program, financial information including annual reports, and document retention and destruction procedures. Communications regarding the pollution and/or contamination at issue, including contacts between the policyholder or its consultants and any regulatory agencies; preventive measures taken; alleged occurrence and property damage issues; and alleged cleanup costs, are certainly fair game for discovery. Communications between the policyholder and any insurer regarding the meaning or application of critical insurance policy terms, if they exist, may be as well. Expected depositions typically include the policyholders corporate managers, plant managers, and current or former employees in operations, engineering, safety, industrial hygiene, pollution control, and risk management. Early in the discovery process, counsel should take CR 30(b)(6) corporate depositions regarding what the corporation knew and when.

Additionally, counsel should identify and work with experts knowledgeable about the industry and about the particular pollutants and contamination pathways involved. These experts can study current and historical site information, reconstruct the history of the manufacturing and waste disposal processes at the facility, evaluate the completed or proposed cleanup technologies, characterize the present value of future cleanup liabilities, and research industry and scientific literature in the relevant time periods regarding industry knowledge of the effects on the environment of the disposal and/or manufacturing processes involved.

(2) Multiple site considerations

Complex environmental insurance coverage litigation often involves multiple sites, which are sometimes scattered across the country. In such circumstances, the parties often agree on a limited number of test sites for trial purposes. Considerations relating to a decision to phase discovery and a trial in this manner include the selection of representative sites, availability of witnesses, and evidence. Counsel may also wish to consider whether the evidence relating to one or more test sites will support attribution of corporate knowledge of the polluting effects of certain types of operations.

When multiple sites are at issue but only a limited number will be the subject of the trial, a number of Washington courts (and other courts) have ruled that insurers are entitled to discovery relating not only to the test sites but also to the other sites that might yield evidence of industry knowledge or corporate knowledge regarding the effects of certain pollutants and the availability and implementation of various processes relating to such pollutants. See J.T. Baker, Inc. v. Aetna Cas. & Sur. Co., 135 F.R.D. 86, 93 (D.N.J. 1989) (discovery allowed at other sites regarding same chemicals and wastes).

Similarly, evidence of the policyholders operations, complaints, lawsuits, and regulatory contacts at or regarding any sites not named in the lawsuit, but owned or operated by the policyholder and involving similar pollutants or processes, should generally be discoverable. Such evidence may reveal the policyholders pollution history, corporate knowledge, and the extent of warnings from regulators, product suppliers, and/or hygiene and safety program coordinators. If the policyholders election not to file suit regarding certain sites is motivated by the desire to keep evidence of egregious conduct from the finder of fact, this information should be discoverable, subject to later determinations of relevance for purposes of trial, as...