Every now and again there are reports of groups becoming ill after eating something, whether it be hamburgers, chicken or certain fruits or vegetables. The foodborne illness usually affects multiple people in multiple areas, even when the contamination comes from one source. Such illnesses can then lead to multiple injury claims against that one source. The insurer of that source then must decide whether to address the claims as one occurrence or multiple occurrences.

As an example, consider the case of Republic Underwriters Insurance Co. v. Moore. Here, the County Cottage Restaurant in Locust Grove, Okla., was preparing and serving E. coli-contaminated food between Aug. 15 and Aug. 24, 2008. Some 341 people were infected: 21 ate food at a church gathering catered by the restaurant, while the rest became sick after eating at the restaurant. Were the bodily injury claims that were submitted a result of one occurrence or multiple occurrences?

Limiting Policy Language

It can be said that the drafters of the standard General Liability policy intended to limit liability for continuous or repeated exposure to the same general conditions to a single occurrence, rather than having each result or claim from the same incident counted as a different occurrence. The limiting language is contained in the definition of “occurrence,” which is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” In other words, the number of occurrences is determined by referring to the cause of the damage and not to the number of injuries or claims that may arise out of the incident. This is known as the “cause theory.”

There are several types of theories that courts use to determine the number of occurrences: the cause theory, the event theory, and the effect theory. The cause theory, as noted, holds that an occurrence is determined by the cause or causes of the resulting injury. This rule requires a court to determine whether there was only one proximate, uninterrupted, and continuing cause that resulted in all of the injuries and damage. As long as the injuries stem from one proximate cause, there is a single occurrence.

The event theory holds that time-and-space parameters are used to determine the number of occurrences. If the injuries happen close together, then there is one occurrence. For example, 21 people get sick all at the same time from eating together at the same banquet; this is considered one occurrence under the event theory. On the other hand, if the injuries happen over a period of time and in separate occasions, then the support for one occurrence gets rather weak (even if the source of the injuries is the same).

The effect theory looks at the number of injuries claimed and treats each one as a separate occurrence. If this were the theory applied by the court in the Republic Underwriters case, there would be 341 separate occurrences.

Cause and Effect, Expanded

Most courts today apply the cause theory. In the Republic Underwriters case, the U.S. Court of Appeals said that the issue is resolved by the proper application of the causation rule. All of the injuries were caused by the restaurant's preparation of contaminated food—that is, the illnesses of all of the claimants stemmed from that one cause. The cause theory is a valid and broadly accepted concept in determining the number of occurrences. (Of course, the ruling in one jurisdiction is not necessarily accepted in every jurisdiction. And it has been known that parties to a legal dispute can propose one theory in one court and oppose that same theory in another court.)

It should also be noted that, even though the cause theory is the most widely accepted theory when it comes to determining the number of occurrences, there are other related issues with which courts have to deal.

The court in Mason v. Home Insurance Co. of Illinois, for example, affirmed that the number of occurrences for purposes of a liability policy is determined by referring to the cause or causes of the damage rather than to the number of individual claims or injuries (the cause theory). However, the Third District of the Appellate Court of Illinois also stated that for purposes of the liability coverage, the cause of the occurrence was the act of serving its patrons contaminated food. Therefore, each instance in which a customer was presented with tainted food over the three-day period in this case created additional exposure to liability and constituted a separate occurrence.

In reversing the trial court's opinion, the appellate court said that “while the court below properly looked to the cause of the injuries to determine the number of occurrences, it failed to correctly identify that the injuries were caused by the restaurant's serving portions of contaminated food to individual patrons. Accordingly, we hold that the claims did not arise out of a single occurrence, but that the insured's service of separate portions of tainted food to individual patrons resulted in multiple occurrences under the policy's definition.”

Limiting Liability

Another pertinent issue is under which aggregate limit of insurance the claims for foodborne illness are to be paid—the general aggregate limit or the products-completed operations aggregate limit. The problem is that while the customer may have been served contaminated food on the insured's premises, the illness did not manifest until hours or days later—after the customer left the restaurant. And, as in the Republic Underwriters case, what if the insured prepares contaminated food on the premises but then serves the food at a church gathering off-premises? Are the claims to be settled using the general aggregate limit or the products-completed operations aggregate limit?

The products-completed operations aggregate limit applies when the injury or damage occurs away from the premises owned or rented by the named insured and arises out of the named insured's product or work; on-premises liability claims are subject to the general aggregate limit. The court in the Mason case stated that the injuries to the restaurant patrons occurred when they consumed food on the restaurant premises, notwithstanding the fact that symptoms of botulism poisoning were not immediately manifest. In other words, the actual bodily injury occurred when the tainted food was served and eaten on-premises, even though the effects of the tainted food were not felt until after the customers left the restaurant. Therefore, the general aggregate limit applied to the claims, since the products-completed operations aggregate required the occurrence to take place away from the insured's premises.

Now, while the cases cited in this article can serve as examples of how some courts have ruled when dealing with foodborne-illness claims, the fact is that judicial decisions can vary by court, by state, and by jurisdiction based on the facts of the incidents. Whether foodborne-illness claims constitute one occurrence or many; whether the cause is the improper preparation of the food or the serving of the tainted food; or whether the general aggregate limit or the products-completed operations aggregate limit applies are all questions that remain to be answered for insureds and insurers on a case-by-case basis.

Special Reports /

Liability Outbreaks From Foodborne Illness

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