Varlen Corporation v. Liberty Mutual Insurance Comp
924 F.3d 456
7th Cir.2019Background
- Varlen owned two industrial sites (LASI and Silvis) that were found to have groundwater contamination: hexavalent chromium at LASI; chlorinated solvent and diesel contamination at Silvis.
- Varlen sought indemnification from its insurer, Liberty Mutual, but the policy contained a pollution exclusion; an exception covered releases that were "sudden and accidental."
- Lacking direct evidence of the release mechanisms, Varlen relied exclusively on the expert report and testimony of geologist Daniel Rogers to show the releases were sudden and accidental.
- Rogers opined the LASI discharge resulted from a leaking concrete sump that failed in spurts, and that Silvis contamination was from large overfills (diesel) and a drum overturn (solvent), but he did not present a clear methodology tying observations to those conclusions.
- The district court excluded Rogers’s testimony as unreliable under Federal Rule of Evidence 702/Daubert and granted Liberty Mutual summary judgment; Varlen appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rogers’s expert testimony is admissible under Rule 702/Daubert | Rogers’s experience and site observations suffice to infer sudden-and-accidental releases | Rogers’s opinions are speculative and lack reliable methodology | Excluded: testimony unreliable and speculative; court did not abuse discretion |
| Whether there is admissible evidence that releases were “sudden and accidental” | Rogers’s opinions are the only evidence supporting sudden-and-accidental exception | No admissible evidence; pollution exclusion bars coverage | No admissible evidence; summary judgment for insurer affirmed |
| Burden of proof on the exception to the pollution exclusion | Varlen: exception can be shown by expert inference | Liberty Mutual: insured bears burden to prove exception; insurer satisfied exclusion | Varlen bears burden and failed to meet it without expert evidence |
| Choice-of-law impact on proof burden | Varlen claimed it would prevail under either Illinois or New York law | Liberty argued New York law applies; but either law requires insured to prove exception | Irrelevant: outcome same under either state's law; Varlen still fails to carry burden |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (establishes admissibility standard for expert testimony)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard requires no genuine dispute of material fact)
- Celotex Corp. v. Catrett, 477 U.S. 317 (entry of summary judgment when party cannot establish an essential element)
- Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748 (expert testimony based on experience can be admissible but must show how experience supports conclusions)
- Brown v. Burlington N. Santa Fe Ry. Co., 765 F.3d 765 (review of district court Daubert determinations for abuse of discretion)