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Insurance Law

The Owens-Illinoise That Will Be Heard Around The World: New Jersey Supreme Court Overrules Decision Adopting The Continuous Trigger

It has been said so many times - to the point of uber-cliché - that the only certainties in life are death and taxes.  I have always believed that this list of sure things could include a third - there will never be a greater movie made than Airplane.  And if the list of certainties were expanded to the world of insurance coverage, then add that Owens-Illinois would never see the word Overruled next to it.  Well today my powers of prediction revealed their significant limitations - as if I needed  more evidence of that than simply looking at my NCAA Tournament bracket.

The New Jersey Supreme Court recently issued its eagerly anticipated decision in Troy Surplus Lines Ins. Co. v. Three Jokers, LLC.  The court addressed coverage for the thousands of cases pending in Atlantic County, against a slot machine manufacturer, for repetitive stress shoulder injuries sustained by casino patrons, on account of pulling the arms of its slot machines over the course of many years. 

The injuries at issue involved a long latency period that spanned numerous years of policies issued by multiple insurers.  Faced with such a situation, both the New Jersey Law Division and Appellate Division -- relying on the New Jersey Supreme Court's decision in Owens-Illinois and analogizing the claims to those involving asbestos -- applied the continuous trigger to a determination of the insurers' liability.  The New Jersey Supreme Court agreed to hear the insurers' appeal. 

There had been much speculation whether the court in Three Jokers would hold that these claims should be governed by the continuous trigger, since repetitive stress injuries are distinguishable in many ways from the asbestos injuries at issue in Owens-Illinois.  That's what the debate had been about - did the continuous trigger apply to claims of this nature.

 But nobody, and I mean nobody, could have predicted what the New Jersey high court did today - overruling its landmark decision in Owens-Illinois, which not only adopted the continuous trigger in New Jersey, but served as support for so many other courts around the country to also adopt this same trigger mechanism.

The theme of the court's opinion - over a vigorous dissent - was that the Owens-Illinois Court admitted that it was adopting an "imperfect solution," but its decision was driven by a recognition that "[m]ass-exposure toxic-tort cases have simply exceeded the capacity of conventional models of judicial response."  Three Jokers at 2 (quoting Illinois-Illinois at 459).  The Three Jokers Court concluded that the time had come to correct such imperfection.     

In place of Owens-Illinois the court set out a new methodology for identifying which insurers are obligated to provide coverage, for injuries with a long latency period, that span numerous years of policies issued by multiple insurers.  The court was clearly mindful of the turmoil that its decision would bring.  Nonetheless, it stated that courts must confront this challenge, noting that "[t]he legal system frequently resolves issues involving considerable uncertainty."  Three Jokers at 6 (quoting SL Industries).    

The Three Jokers opinion was issued a short time ago and I am still analyzing and coming to terms with it and trying to determine how this 10.0 of an earthquake will impact New Jersey coverage - both for so many cases currently pending and arising in the future - not to mention its potential ramifications nationally. 

A copy of this morning's New Jersey Supreme Court decision in Troy Surplus Lines Ins. Co. v. Three Jokers, LLC may be downloaded below.  I direct you to the opinion for an explanation of the court's trigger mechanism that was adopted in place of what had been continuous.     

Needless to say, insurance coverage in New Jersey was turned upside down and in the weeks and months ahead we will see how this monster of a decision plays out.        

Please let me know if you have any questions.



Randy J. Maniloff
White and Williams LLP
1800 One Liberty Place | Philadelphia, PA 19103-7395
Direct Dial: 215.864.6311 | Direct Fax: 215.789.7608

The views expressed herein are solely those of the author and not necessarily those of the firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. The term "Binding Authority" is used herein for literary purposes only and is not an admission that any case discussed herein is in fact binding authority on any court.

Download Troy Surplus Lines Insurance Company, Et Al., V. Three Jokers, LLC