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

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

Limiting Policy Language

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

There are several types of theories that courts use to determinethe number of occurrences: the cause theory, the event theory, andthe effect theory. The cause theory, as noted, holds that anoccurrence is determined by the cause or causes of the resultinginjury. This rule requires a court to determine whether there wasonly one proximate, uninterrupted, and continuing cause thatresulted in all of the injuries and damage. As long as the injuriesstem from one proximate cause, there is a single occurrence.

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

The effect theory looks at the number of injuries claimed andtreats each one as a separate occurrence. If this were the theoryapplied by the court in the Republic Underwriters case, there wouldbe 341 separate occurrences.

Cause and Effect, Expanded

Most courts today apply the cause theory. In the RepublicUnderwriters case, the U.S. Court of Appeals said that the issue isresolved by the proper application of the causation rule. All ofthe injuries were caused by the restaurant's preparation ofcontaminated food—that is, the illnesses of all of the claimantsstemmed from that one cause. The cause theory is a valid andbroadly accepted concept in determining the number of occurrences.(Of course, the ruling in one jurisdiction is not necessarilyaccepted in every jurisdiction. And it has been known that partiesto a legal dispute can propose one theory in one court and opposethat same theory in another court.)

It should also be noted that, even though the cause theory isthe most widely accepted theory when it comes to determining thenumber of occurrences, there are other related issues with whichcourts 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 tothe cause or causes of the damage rather than to the number ofindividual claims or injuries (the cause theory). However, theThird District of the Appellate Court of Illinois also stated thatfor purposes of the liability coverage, the cause of the occurrencewas the act of serving its patrons contaminated food. Therefore,each instance in which a customer was presented with tainted foodover the three-day period in this case created additional exposureto liability and constituted a separate occurrence. 

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

Limiting Liability

Another pertinent issue is under which aggregate limit ofinsurance the claims for foodborne illness are to be paid—thegeneral aggregate limit or the products-completed operationsaggregate limit. The problem is that while the customer may havebeen served contaminated food on the insured's premises, theillness did not manifest until hours or days later—after thecustomer left the restaurant. And, as in the Republic Underwriterscase, what if the insured prepares contaminated food on thepremises but then serves the food at a church gatheringoff-premises? Are the claims to be settled using the generalaggregate limit or the products-completed operations aggregatelimit?

The products-completed operations aggregate limit applies whenthe injury or damage occurs away from the premises owned or rentedby the named insured and arises out of the named insured's productor work; on-premises liability claims are subject to the generalaggregate limit. The court in the Mason case stated that theinjuries to the restaurant patrons occurred when they consumed foodon the restaurant premises, notwithstanding the fact that symptomsof botulism poisoning were not immediately manifest. In otherwords, the actual bodily injury occurred when the tainted food wasserved and eaten on-premises, even though the effects of thetainted food were not felt until after the customers left therestaurant. Therefore, the general aggregate limit applied to theclaims, since the products-completed operations aggregate requiredthe occurrence to take place away from the insured's premises.

Now, while the cases cited in this article can serve as examplesof how some courts have ruled when dealing with foodborne-illnessclaims, the fact is that judicial decisions can vary by court, bystate, 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 theserving of the tainted food; or whether the general aggregate limitor the products-completed operations aggregate limit applies areall questions that remain to be answered for insureds and insurerson a case-by-case basis.