Federal Court Applies Bacteria Exclusion to Preclude Coverage for Legionnaires Disease Class Action

Case: Paternostro v. Choice Hotel Int'l Servs. Corp.
Federal District Court, Eastern District of Louisiana
2014 U.S. Dist. LEXIS 161157 (11/14/ 2014)

New Orleans partners, Maureen Sullivan and Karen Dicke, recently won dismissal for the $25 million first layer umbrella policy (and an additional $75 million in follow form excess policies) in a Legionnaires disease class action pending in New Orleans.

The case involved claims for bodily injury by all persons visiting a hotel and conference center who had been exposed to Legionella and Pseudomonas aeruginosa, both forms of bacteria. One of the class representatives allegedly contracted Legionnaires disease and died.

Primary and excess insurers of the franchisor and of the franchisee/hotel operator were named in the liability action under the Louisiana Direct Action statute. Our client’s policy contained a broadly worded Fungi and Bacteria Exclusion; however, the class action complaint carefully avoided the use of the word “bacteria.”

Insurers filed over 20 motions on a variety of coverage issues under Federal Rules 12(c), 12(b)(6) and 56. To end run the supposed fact issue of whether “bacteria” was causative, we urged the court to take judicial notice under Daubert and Fed. R. Evid. 201 that Legionella and Pseudomonas aeruginosa are “bacteria,” citing learned treatises and recognized scientific authorities, including the CDC and WHO.

At oral argument, class counsel was challenged to concede that the claims involved “bacteria” because their experts would undoubtedly so testify at the class certification hearing and at trial. We also suggested that the court might require the purported class to stipulate at the hearing that their alleged injuries were not caused by “bacteria.” In response, class counsel backed down and conceded that both Legionella and Pseudomonas aeruginosa are “bacteria.” Based on the concession and an unambiguous bacteria exclusion, the court granted our motion to dismiss.

Other insurers whose policies lacked broadly worded bacteria exclusions but contained traditional pollution exclusions were not successful in obtaining dismissal. The court rejected the argument that the bacteria are “pollutants” under controlling Louisiana law, finding that microbial agents are not pollutants as that term is generally understood and differ from typical environmental pollutants, such as asbestos, carbon monoxide, gasoline, and lead paint. Bacteria are microorganisms existing in the natural environment and do not “discharge, disperse, seep or migrate,” as a typical pollutant does.

However, in another victory for insurers, the court rejected the argument that policies which contain both a pollution exclusion and a bacteria exclusion are inherently ambiguous, thus rendering an otherwise clear bacteria exclusion ineffective.

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Karen Dicke
Partner
Albuquerque, NM
Lafayette, LA
New Orleans, LA

Albuquerque: 505.545.8305
New Orleans: 504.272.2784
Karen.Dicke@lewisbrisbois.com
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