Coverage for public nuisance claims.(ENDUSER: construction/wood products)

Lead-paint manufacturers are currently facing another round of liability. This liability comes in the form of "public nuisance" lawsuits filed by government agencies seeking to require lead-paint manufacturers to abate a public nuisance, i.e., the incorporation of their allegedly hazardous product into buildings. (See, e.g., County of Santa Clara v. Atlantic Richfield Co., 137 Cal. App. 4th 292 [2006] ["Santa Clara"].) This development in product liability law has broad implications for any company that manufactures a product that has been incorporated into construction projects. If such a product turns out to have a potential for harming human health, governmental agencies may create a substantial liability problem for the product manufacturer by seeking to abate the public nuisance. This tactic is extremely problematic for the product manufacturer, because the difficulty of an individual claimant proving actual exposure and injury is removed. In some ways, this tactic is analogous to governmental agencies' pursuit of tobacco companies in recent years, creating far greater exposure for the tobacco companies than did individual bodily injury lawsuits.

The financial impact of such public-nuisance lawsuits against product manufacturers may become substantial. One of the first places that product manufacturers should look for assistance is their liability insurance. Lawsuits to abate a public nuisance raise many interesting coverage questions under comprehensive general liability ("CGL") insurance policies.

One issue is the trigger of coverage, i.e., what must take place during …