Avent America, Incorporated (“Avent”)
1
appeals the district court’s declaratory
I. Background
A. Underlying Lawsuits
This duty to defend case centers around a series of class action suits filed against Avent for using BPA in their products without informing the consumers of the health risks associated with the potential leaching of BPA. The classes in the underlying suits consist of parents who purchased Avent’s products for their children. While the fifteen complaints vary in their specific allegations, they all sketch out the same general claim: Avent manufactured products that contained BPA; Avent was aware of a large body of research that showed that BPA, even at low levels, is harmful to humans and is particularly harmful to children; despite this knowledge, Avent marketed their products as superior in safety to other products for infants and toddlers; parents would not have purchased Avent’s products if they knew that using products with BPA could be harmful to their children; upon learning of the safety problems associated with products that contain BPA, the plaintiff-parents stopped using the products and therefore did not receive the full benefit of their purchase.
These class actions were consolidated for pre-trial purposes into
In re: Bisphenolr-A (BPA) Polycarbonate Plastic Products Liability Litigation,
MDL No.1967, in the Western District of Missouri. After the consolidation, many of the underlying plaintiffs from the consolidated class action suits filed a new class action complaint against Avent in the Western District of Missouri. This new action,
Broadway v. Avent America, Inc.,
No. 08 CV 997 (W.D.Mo.) (the “Broadway Action”) is the current operative complaint, but the other class action complaints remain relevant insofar as they might be used to send the matters back to the transferor courts. The complaint in the Broadway Action (the
The Broadway Complaint summarizes the suit in the following manner:
This action arises out of Defendants’ misrepresentations and/or omissions and failures to warn of and/or otherwise disclose that their Baby Products are manufactured using a dangerous chemical recognized to be toxic in several respects for yеars and which poses serious risks to an individuals’ health as the fact that it leaches into food and beverages in the course of normal, everyday use.
(Broadway Complaint, ¶ 1.) The complaint defines the purported class of plaintiffs to be “all persons who purchased polycarbonate plastic baby bottles, nipples, training or ‘sippy’ cups, and other products manufactured, sold and/or distributed by Defendants that contained Bisphenol-A.” (Broadway Complaint, ¶ 97.) The complaint dedicates thirteen pages to the health risks caused by exposure to BPA. (Broadway Complaint, ¶ 40-76.) These pages cite to numerous scientifiс studies that show that BPA exposure causes various problems, including early sexual maturation in females, increased obesity, and increased neuron-behavioral problems such as ADD/HD and autism, in a variety of lab animals. The complaint alleges that the general prevailing consensus from these studies has been that there should be concern about exposure to BPA for humans. However, at no point in those thirteen pages, or anywhere in any of the underlying complaints, do the plaintiffs allege that any of these negative health effects have manifested in their children. Notably, the plaintiffs never allege that they or their children ever used the products or were actually exposed to the BPA. Instead, the plaintiffs allege a uniform injury across all plaintiffs that stems from their purchasing an unusable product. (Broadway Complaint, ¶ 101) (“In every related case, Plaintiffs and Class members suffered uniform damages caused by their purchase of Baby Products produced, manufactured, distributed, and/or sold by Defendants.”) The counts alleged against Avent include: Violation of Illinois Consumer Fraud Act, Violation of Connecticut Unfair Trade Practices Act, Violation of State Consumer Protection Laws, Breach of Express Warranty, Breach of Implied Warranty of Merchantability and Fitness for a Particular Purpose, Intentional Misrepresentation, Negligent Misrepresentation, and Unjust Enrichment. Plaintiffs’ prayer for relief includes damages in the form of: the amount of monies paid for Defendant’s offending Baby Products and/or other consequential or incidental damages; actual damages, statutory damages, punitive or treble damages, and other relief as provided by the statutes cited in the complaint; injunctive relief barring Defendants from continuing their use of BPA in their Baby Products in the manner described in the complaint; and all other relief to which Plaintiffs and members of the Class may be entitled at law or in equity. The prayer for relief also asked for attorneys’ fees and class certification.
After the initial pleadings stage in the consolidated actions and in the Broadway Action, Avent filed a motion to dismiss the complaints on the ground that they did not state a legally cognizable injury. Avent argued that because the plaintiffs’ prayers for relief “contain no allegations of physical illness, cost of future medical monitoring, fear of future injury, or emotional distress,” this was essentially a “no-injury product liability” action and should be dis
Defendants’ contention that Plaintiffs’ claim must be dismissed because Plaintiffs have failed to plead a legally cognizable injury mischaracterizes Plaintiffs’ claims and ignores Plaintiffs’ well-pled allegations regarding the economic injuries they sustained as a result of purchasing Defendants’ BPA-tainted goods. Defendants correctly note that Plaintiffs do not seek to recover for personal injuries or property damage. However, as Defendants concede, Plaintiffs do seek to recover for their economic losses. Courts routinely recognize a plaintiffs right to recover for economic loss where the plaintiff alleges he has purchased goods that do not perform satisfactorily or are worth less than represented. Plaintiffs have clearly alleged such injuries.
(Plaintiffs’ Suggestions in Opposition to Defendants’ Joint Motion to Dismiss All Claims of All Named Plaintiffs for Failure to Plead a Legally Cognizable Injury and Lack of Standing Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), p. 2, In re BPA.) In response to Avent’s motion, the district court dismissed some of the claims and let others go forward. In addressing the argument that this is a “no-injury product liability” case, the district court found that to be a mischaracterization of the complaint. It found that the essence of the claim was “not that someone was injured, but that consumers were not told of BPA’s presence and the corresponding health risk.” (Order and Opinion Addressing Certain of Defendants’ Motion to Dismiss, p. 18, In Re BPA) The district court reasoned:
The claims of Plaintiffs in this category do not depend on proving the products are defective. It is true that, in a general sense, Plaintiffs’ claims revolve around “safety” in that the allegedly material facts that were concealed relate to that issue. However, Plaintiffs’ claims are not predicated on proving the elements of any jurisdiction’s product liability laws----[T]he Plaintiffs in this category purchased a product they allege they would not have purchased had they known the true facts. Now that they know the true facts, they are unwilling to risk allowing their children to use the product. They cannot obtain the intended benefit from the goods, so they incurred damages.
(Order and Opinion Addressing Certain Defendants’ Motions to Dismiss, p. 18, In re BPA.) Based on this reasoning, the district court dismissed all of the counts of the complaints, except for the unjust enrichment claim, with regard to any plaintiffs who disposed of or used their products before learning about the BPA because those plaintiffs were unaffected by the defendants’ alleged concealment. The district court left the unjust enrichment claim intact for all plaintiffs because the measure of unjust enrichment damages is the benefit conferred to the defendant, not the harm to the plaintiff.
B. The Insurance Policies
The insurance companies provided Avent with General Commercial Liability Insurance at various times between 1997 and 2007. State Farm provided coverage from April 11,1994 through April 11,1996. Pennsylvania General provided insurance from April 11,1997 through April 11, 2001, under new policy contracts each year. Medmarc provided insurance to Avent from April 11, 2001 through April 11, 2003, and again from April 11, 2006 through April 11, 2007, under new policy contracts
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” included within the “products-completed operations hazard” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any “occurrence” and settle any сlaim or “suit” that may result.
b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”; and
(2) The “bodily injury” or “property damage” occurs during the policy period.
The agreements define “bodily injury” as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.”
C. Procedural Background of the Duty to Defend Case
Avent tendered the In re BPA and Broadway lawsuits to Medmarc, Pennsylvania General, and State Farm seeking defense and indemnification for the underlying actions. Medmarc and Pennsylvania General denied coverage. State Farm and Avent entered into a standstill agreement to defer the coverage dispute. However, Avent terminated that agreement and both parties filed declaratory judgment on that issue. Medmarc also filed a complaint against Avent in October 2008 seeking a declaration that it had no duty to defend Avent in these BPA class action suits. Avent answered the complaint and counterclaimed seeking coverage. Avent then filed a third-party complaint against Pennsylvania General and State Farm seeking a declaratory judgment that they also had a duty to defend and indemnify. Although the State Farm case was initially a separate case, it was consolidated into the Mеdmarc Action. All three insurance companies eventually moved for either a judgment on the pleadings or summary judgment on the grounds that this was not an “occurrence” for which they provided coverage and that there were no allegations of “bodily injury.” State Farm additionally claimed that any occurrence to which coverage might apply happened outside of its coverage period. Avent filed for summary judgment in opposition to the insurers’ various motions. The district court granted the insurance companies’ motions, basing its ruling on the lack of allegations of bodily injury. Avent appeals.
II. Discussion
This is an appeal from a grаnt of summary judgment in favor of State Farm and a grant of a motion on the pleadings in favor of Medmarc and Pennsylvania General. We review grants of summary judgment and motions on the pleadings de novo.
See Bannon v. Univ. of Chi,
A. Judicial Estoppel
As an initial matter, the insurance companies argue that we should hold that Avent is judicially estopped from making the argument that the underlying complaints state claims because of bodily injury and therefore give rise to a duty to defend. Judicial estoppel provides that a party who prevails on one ground in a prior proceeding cannot turn around and deny that ground in a subsequent one.
Butler v. Round Lake Police Dep’t,
While the filings of Avent and the plaintiffs in the underlying actions are instructive on the duty to defend question, judicial estoppel is not appropriate in this case because Avent’s current argument is not sufficiently in tension with its position in the underlying suits. In the underlying suit, Avent argued that the complaints did not state claims for bodily injury and therefore did not state a cause of action. The district court in
In re BP A
agreed that the complaints did not state claims for physical harm, but it found that the complaints did state viable claims for economic damages resulting from plaintiffs purchasing a product less desirable than they believed they were purchasing. In the case at bar, Avent argues that such a claim for economic damages is sufficient to trigger a duty to defend. Avent points to the language in the insurance polices that covers
B. Duty to Defend
Avent argues that the factual allegations in the underlying complaints sketch out claims for damages due to Avent’s creation and sale of products that cause bodily injury. Avent focuses on the allegations that exposure to BPA causes physical harm. Based on these factual allegations, Avent characterizes the complaint as alleging: “(1) the underlying plaintiffs purchased BPA-containing products manufactured, sold, and/or distributed by Avent and that BPA migrates from those products; (2) BPA potentially causes a wide variety of adverse health problems that may not manifest for years; and (3) Avent somehow violated a standard of care by manufacturing, selling, and/or distributing BPA-containing baby products that allegedly cause these injuries.” Based on this chain of allegations, Avent argues that the complaints state claims for damages because of bodily injury and therefore fall within the policy coverage. The insurance companies argue that they do not owe Avent a defense because there are no allegations in the complaint that the products caused bodily injury. Rather, the complaints allege that, due to the risk of potential bodily harm from BPA exposure, the plaintiffs did not receive the full benefit of their bargain (because they now will not use the product) and therefore incurred purely economic damages unrelated to bodily injury. We agree with the insurance companies’ assessment of the complaints.
The problem with Avent’s argument is that, even if the underlying plaintiffs proved every factual allegation in the underlying complaints, the plaintiffs could not collect for bodily injury because the complaints do not allege any bodily injury occurred. Additionally, the complaints do not allege that the underlying plaintiffs now have an increased risk of bodily injury for which they should be compensated. The clоsest the complaints come to alleging bodily injury is the allegations that Avent was aware of a large body of scientific research, extensively cited in the complaints, that BPA exposure can cause physical harm. Proving such allegations would not entitle the plaintiffs to recover for bodily injury or for damages flowing from bodily injury because these allega
Avent recognizes this gap in the underlying complaints, but rebuts it with the argument that the plaintiffs left these claims out to make it easier to be certified as a class. Avent argues that “[i]t is precisely these ‘whims’ thаt are not, under Illinois law, supposed to change whether or not particular factual allegations are sufficient to trigger coverage under general liability insurance policies.” Although Illinois courts have recognized that a duty to defend should not be at the mercy of the drafting whims of plaintiffs’ attorneys,
Rollprint Packaging Prods. Inc.,
Avent relies heavily on
Ace Am. Ins. Co. v. RC2 Corp.,
Similarly, Avent’s reliance on
Travelers Insurance Co. v. Penda Corp.,
Avent also argues thаt the district court improperly interpreted the insurance contract as only providing coverage “for bodily injury” rather than providing coverage for damages “because of bodily injury.” Avent is correct that courts do interpret these phrases differently and courts generally interpret the phrase “because of bodily injury” more broadly.
See Tara N. v. Economy Fire & Casualty Ins. Co.,
Even considering the broader duty to defend created by the phrase “because of bodily injury,” the complaints in the underlying suits do not reach the level of asserting claims “because of bodily injury.” Implicit in Avent’s argument is that the damages claimed are somehow, аt least tangentially, tied to a bodily injury caused by BPA. As discussed above, that simply is not the case here. The theory of relief in the underlying complaint is that the plaintiffs would not have purchased the products had Avent made certain information known to the consumers and therefore the plaintiffs have been economically injured. The theory of the relief is not that a bodily injury occurred and the damages sought flow from that bodily injury.
Our recent decision in
Health Care Industry Liability Insurance Program v. Momence Meadows Nursing Center,
The injuries to the residents as alleged by the plaintiffs relate back to Momence’s cost reports to the government where it certified that it provided quality services and care. Plaintiffs claim Momence knew that was false. The statutory damages they seek result from those allegedly false filings, and not from any alleged bodily injury to the residents. Although the allegations in the underlying complaint detailing the injuries suffered by Momence residents put a human touch on the otherwise administrative act of false billing, they need not be proven by the plaintiffs to prevail. Under the FCA and the IWRPA, the plaintiffs do not have to show that any damages resulted from the shoddy care.
Id. at 694. While Momence Meadows is procedurally distinct from the case at hаnd, the reasoning is exactly on point. The claims that BPA can cause physical harm only explain and support the claims of the actual harm complained of: the economic loss to the purchasers of the products due to the alleged false advertising and failure to warn. The underlying plaintiffs do not need to prove that any actual injury occurred, or even that BPA conclusively causes bodily injury, to recover on their claims.
The procedural difference between Momence Meadows and the case at hand affects our analysis only to the extent that the plaintiffs in Momence Meadows could not have amended the complaint to recover for the physical harm to the nursing home patients whereas the underlying complaints in this case could be amended to include allegations of damages stemming from actual bodily injury. If the underlying plaintiffs did amend the complaint to include factual allegations of bodily injury and damages because of that injury, Avent could re-tender the defense and the insurance companies would then be obligated to defend the action. The insurance companies’ counsel admitted at oral argument that if an underlying complaint was amended to allege actual bodily harm to a plaintiff and Avent re-tendered the defense, the insurance companies would provide a defense in that situation. We consider this statement by the insurance companies at oral argument a binding admission that they will provide a defense should the underlying plaintiffs amend the complaints in such a manner.
As a final matter, Avent points to two out-of-circuit, unpublished eases that contradict our decision in this case. Addressing factually analogous cases dealing with cellphone accessories, the Fourth Circuit and the Northern District of California both found that the insurance company in question had a duty to defend an insured corporation even if the complaint did not specifically allege that a bodily injury occurred.
See Northern Ins. Co. Of New York v. Baltimore Bus. Commc’n, Inc.,
Because we find that the insurance companies do not owe Avent a defense in the underlying lawsuits at this time, we do not need to reach State Farm’s additional argument regarding the statute of limitations and the timing of its policies.
IV. Conclusion
For the reasons set forth above, we Affirm the district court’s finding that there is no duty to defend for any of the insurance companies.
Notes
. Philips Electronic North America Corporation is the successor-in-interest to Avent America, Inc. Philips Electronic is the third-party Plaintiff-Appellant in the case against State Farm and Pennsylvania General. Avent America is the defendant and counter-claim
. All parties agree that this dispute is governed by Illinois law.
. This Court recently reversed the district court’s decision in
RC2
on the ground that the occurrence did not occur in China and therefore fell outside the scope of the insurance contract.
Ace American Ins. Co.
v.
RC2 Corp., Inc., et al.,