The opinion of the court was delivered by: LEISURE
Plaintiff seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 regarding the interpretation of certain liability insurance policies. This matter is before the Court on plaintiff's motion for partial summary judgment declaring that defendant has a duty to defend plaintiff against all lawsuits and claims arising either directly or derivatively from alleged exposure to a pharmaceutical substance known as diethylstilbestrol ("DES").
Plaintiff, Burroughs Wellcome Co., is a North Carolina corporation with its principal place of business in North Carolina. It is the surviving corporation of a 1970 merger with Burroughs Wellcome Co. (USA) Inc., a New York corporation which had its principal place of business in New York. The two corporations are hereinafter collectively referred to as "Burroughs." Burroughs is engaged in the production and marketing of pharmaceuticals. From 1941 until 1957 Burroughs sold DES, a synthetic hormone given to pregnant women in the United States from 1941 to 1971 to reduce the risks of miscarriage. See Pub. L. No. 99-28, 99th Cong., 1st Sess., 99 Stat. 54 (1985). Ingestion of DES has been linked to breast cancer in the women who took it while they were pregnant. Id. Exposure of female fetuses to DES has been linked to higher incidences of vaginal adenosis at birth (the abnormal presence of glandular tissue or cells), cervical cancer and incomplete development of the female reproductive system. See Schering Corp. v. Home Insurance Co., 712 F.2d 4, 7 (2d Cir. 1983). In addition, DES has been linked to higher incidences of ectopic pregnancies, miscarriages, infertility and premature deliveries by women who were prenatally exposed to DES. Pub. L. No. 99-28, supra. It has been suggested that ingestion of DES during the first trimester of pregnancy may interfere with the normal process of tissue replacement on the vaginal walls of the female fetus. This incomplete tissue replacement may create a disposition to the development in later life of vaginal clear cell adenocarcinoma. See Herbst, et al., Clear-Cell Adenocarcinoma of the Genital Tract in Young Females, 287 N.E.J. Med. 1259, 1263 (1972); Herbst, et al., Adenocarcinoma of the Vagina, 284 N.E.J. Med. 878, 880 (1971); Herbst, Clear Cell Adenocarcinoma and the Current Status of DES-Exposed Females, 48 Cancer 484 (1981); Ostergard, DES-Related Vaginal Lesions, 24 Clin. Obst. & Gyn. 379, 381 (1981).
Exposure of male fetuses to DES has also been linked to higher incidences of testicular cancer in adults. Pub. L. No. 99-28, supra. The effects of prenatal exposure to DES do not manifest themselves until years later in the form of vaginal or testicular cancer in young adults, or higher incidences of sterility and miscarriage and other child bearing problems. It appears, to a reasonable degree of medical certainty, that the problems experienced by persons so stricken in adulthood can be traced back to their exposure to DES while in utero.
As a result of these medical findings, Burroughs has been named a defendant in numerous lawsuits by (1) women who ingested DES; (2) the offspring of women who ingested DES and were allegedly injured as a result of prenatal exposure; (3) grandchildren of women who ingested DES and allegedly were injured as a result of injuries to their mothers' reproductive systems; and (4) spouses of individuals allegedly injured by exposure to DES, claiming lost services and consortium.
Burroughs claims that from December 22, 1949 to April 1, 1967, it was insured against its products liabilities by Comprehensive General Liability ("CGL") policies subscribed to by defendant Commercial Union Insurance Company ("Commercial Union") or its predecessors. Burroughs claims it has notified Commercial Union of the DES lawsuits and claims, and has demanded that Commercial Union defend and pay for the defense of these actions. Commercial Union has refused to do so, contending that the injuries had not become manifest before the termination of its coverage for DES-related products liabilities. Burroughs contends that Commercial Union's refusal to defend is based upon an erroneous interpretation of the relevant policies and Burroughs has been damaged thereby.
The Pre-Revision Policies
On this motion, Burroughs seeks to enforce the duty to defend provisions of the policies issued by Commercial Union before 1967. Burroughs alleges that these policies followed the standard form for CGL policies and therefore contain the same relevant language with respect to coverage, the duty to defend and the trigger of coverage. These policies provide coverage for "all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease . . . sustained by any person and caused by accident." With respect to the duty to defend, the policies provide that the insurer "shall defend any suit against the insured alleging such injury, sickness, disease or destruction . . ., even if such suit is groundless, false or fraudulent." Coverage is triggered in cases of "accidents which occur during the policy period."
The standard CGL form used by Commercial Union was changed in certain respects in 1966 to cover occurrences which resulted in bodily injury or property damage during the policy period. For this reason, the policies allegedly issued to Burroughs by Commercial Union's predecessors from December 22, 1949 to April 1, 1967 are hereinafter referred to as the "Pre-Revision Policies." The post-1966 policies are worded differently from the Pre-Revision Policies in significant respects and Burroughs does not seek to enforce the relevant provisions of these policies on this motion.
The post-1966 policies defined a covered "occurrence" to mean either an accident "which results, during the policy period, in bodily injury or property damage," or an accident "which results in bodily injury or property damage [which occurs during the policy period]." The reasons for these changes were described by the Hon. Abraham D. Sofaer, United States District Judge of this Court, in his scholarly opinion in American Home Products Corp. v. Liberty Mutual Insurance Co., 565 F. Supp. 1485 (S.D.N.Y. 1983), aff'd as modified, 748 F.2d 760 (2d Cir. 1984).
Prior to 1966, general liability policies covered liability "because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the hazards hereinafter defined." 1 R. Long, Law of Liability Insurance § 11.101 at 11-4 (1979) (emphasis added). The word "accident" suggested an intent to cover only sudden, unexpected, but identifiable events. The courts were left in doubt as to whether, and to what extent, the standard policy was meant to cover liability for injuries that resulted from gradual processes, rather than from sudden events.
The insurance industry responded to the uncertainty created by the "accident" orientation of pre-1966 liability policies by establishing a task force to draft what eventually became the CGL.The task force substituted the "occurrence" approach now in the CGL for the "accident" approach, and it expressly provided that an occurrence included any injury or damage that resulted, not only from an accident, but also from injurious exposure over an extended period. This change adopted the result reached by courts that construed "accident" to include injuries resulting from long exposures.
565 F. Supp. at 1501. In American Motorists Insurance Co. v. E.R. Squibb & Sons, 95 Misc.2d 222, 406 N.Y.S.2d 658 (Sup. Ct. N.Y. Co. 1978), the Hon. Edward J. Greenfield, Justice of the Supreme Court, New York County, engaged in a similar discussion.
Great difficulty was encountered in many situations because of the rather vague definition of the word "accident" It was precisely because of recurring disputes as to whether the word "accident" referred to the act or the injury resulting from the act that the new definition was adopted.
95 Misc.2d at 224, 406 N.Y.S.2d at 660 (emphasis added). See also Comment, Liability Insurance for Insidious Disease: Who Picks Up the Tab?, 48 Fordham L. Rev. 657, 667 n.50 (1980); Tinker, Comprehensive General Liability Insurance - Perspective & Overview, 25 Fed'n Ins. Counsel Q. 217, 239-40 (1975).
Plaintiff argues that the Pre-Revision Policies should be interpreted so that coverage would be triggered when "exposure" to DES occurred during a policy period. This interpretation would be consistent with the growing body of case law that has adopted such an approach for diseases with long latency periods. See Keene Corp. v. Insurance Co. of North America, 215 U.S. App. D.C. 156, 667 F.2d 1034 (D.C. Cir. 1981) (asbestosis), cert. denied, 455 U.S. 1007, 71 L. Ed. 2d 875, 102 S. Ct. 1644, 102 S. Ct. 1645 (1982); Insurance Co. of North America v. Forty-Eight Insulations, Inc., 633 F.2d 1212 (6th Cir. 1980) (asbestosis), modified on rehearing, 657 F.2d 814 (6th Cir.), cert. denied, 454 U.S. 1109, 102 S. Ct. 686, 70 L. Ed. 2d 650 (1981); Porter v. American Optical Corp., 641 F.2d 1128 (5th Cir.), cert. denied, 454 U.S. 1109, 102 S. Ct. 686, 70 L. Ed. 2d 650 (1981) (asbestosis); Eli Lilly & Co. v. Home Insurance Co., 482 N.E.2d 467 (Ind. 1985) (DES); Commercial Union Insurance Co. v. Sepco Corp., 765 F.2d 1543 (11th Cir. 1985) (asbestosis); ACandS, Inc. v. Aetna Casualty & Surety Co., 764 F.2d 968 (3d Cir. 1985) (asbestosis); Ducre v. Executive Officers of Halter Marine, Inc., 752 F.2d 976 (5th Cir. 1985) (silicosis); Vale Chemical Co. v. Hartford Accident & Indemnity Co., 340 Pa. Super. 510, 490 A.2d 896, leave to appeal granted, 499 A.2d 576 (1985) (DES); Lac D'Amiante du Quebec, Ltee. v. American Home Assurance Co., 613 F. Supp. 1549 (D.N.J. 1985) (asbestosis); Allstate Insurance Co. v. Colonial Realty Co., 121 Misc.2d 640, 468 N.Y.S.2d 800 (Sup. Ct. Kings. Co. 1983) (lead poisoning). Defendant contends that those of its policies which provided coverage for product liabilities for "accidents" occurring during a ...