Alleged Injury from Cell Phone Radiation Falls under CGL  

 

In Zurich American Ins. Co. v. Nokia, Inc., 2008 WL 3991183 (Tex.), Nokia, a wireless telephone manufacturer, was sued in a number of putative class actions alleging that radiation emitted by the phones caused biological injury. Nokia turned to its insurers, who had agreed to defend claims seeking damages because of bodily injury. After initially providing a defense, the insurers later sought a declaration that they had no duty to do so.

 

The district court entered summary judgment in favor of insurers and the manufacturer appealed. The court of appeals affirmed in part, reversed in part, and remanded. The insurers petitioned for review.

 

The Supreme Court of Texas concluded that most of the underlying suits sought damages because of bodily injury, and thus modified the court of appeals' judgment and, as modified, affirmed.

The court first held that coverage for “bodily injury” extended to alleged biological injury to human cells caused by radio frequency radiation from cellular telephones.

 

It looked to the policy language at issue, which covered “all sums which [Nokia] shall become legally obligated to pay as damages because of … bodily injury” caused by an occurrence during the policy period. None of the complaints used the term “bodily injury”, and all are phrased in terms of “biological injury” or “biological effects”; thus, it had to determine whether biological injuries or effects qualify as bodily injury. The court explained that although it had held that purely emotional injuries are not “bodily injuries,” it also explained that it had concluded that “ 'bodily injury' … unambiguously requires an injury to the physical structure of the human body,” and the cases at hand alleged that.

 

The court explained that the court of appeals had relied on dictionary definitions and similar cases from other jurisdictions to conclude that injury at the cellular level was sufficient to allege a bodily injury under the policies at issue here. The court agreed, concluding that the biological injuries alleged by the plaintiffs potentially stated a claim for bodily injuries under the policies, and likened it to the subclinical injuries alleged by plaintiffs who have been exposed to asbestos.

 

The court also held that the complaints in the underlying actions sought damages, bringing the claims within policy coverage. The insurers had asserted that the plaintiffs sought headsets, not damages, thus removing their claims from coverage. Nokia responded that the plaintiffs sought damages including, but not limited to, headsets, and those damages were squarely covered by the policy. The court explained that although the complaints sought compensation for headsets that would eliminate their exposure to the allegedly harmful radiation, the users did not disclaim damages for injuries based on their physical exposure to radiation.

 

Next, the court held that the policies' business risk exclusions precluded coverage for economic loss claims based on product defects. The exclusions, while inapplicable to personal injury claims, precluded coverage for economic loss claims based on product defects.

 

The court explained that these exclusions, however, did not excuse the duty to defend , as the insurer must defend its insured if a plaintiff's factual allegations potentially supported a covered claim. This duty to defend was not affected by the facts ascertained before the suit, developed in the course of litigation, or by the ultimate outcome of the suit , and over-inclusive allegations did not negate the insurer's duty to defend;

Finally, the court held that the CGL policy exclusions applying to “property damage to your product,” “property damage arising out of a defect, deficiency, inadequacy or dangerous condition in 'your product,”' and damages related to a product recall, were all inapplicable to claims alleging bodily injury.