Surging legal action over BPA targets manufacturers

KANSAS CITY, MO. (Nov. 9, 1:20 p.m. ET) -- Dozens of lawsuits have been filed against the manufacturers of baby bottles, baby formula and other plastic food containers containing bisphenol A, raising the question of whether BPA is the next major cause for plaintiffs attorneys.

More than 25 lawsuits, which seek class action status, were consolidated last year as multidistrict litigation No. 1967 in U.S. District Court in Kansas City, Mo. The lawsuits accuse manufacturers of knowing that BPA is harmful, particularly to infants and children, and failing to warn consumers. They seek economic damages — return of their purchase price for millions of baby bottles and other food containers — as well as punitive damages.

According to court papers, defendants in the multidistrict litigation are Avent America Inc., a division of Phillips Electronics North America Corp.; Handi-Craft Co.; Evenflo Co. Inc.; Gerber Products Co.; Playtex Products Inc.; New Wave Enviro Products; Nalge Nunc International Corp.; and RC2 Corp.

Attorneys and brokers said they know of no BPA suits that allege the products caused bodily injury. Although animal studies have raised concerns that BPA, which mimics estrogen, is harmful to human development and may be tied to cancer and other diseases, plaintiff attorneys chose not to allege personal injury.

“The allegations [in the proposed class actions] are designed to avoid the problems in certifying personal injury claims,” said Brent Austin, a partner at Wildman, Harrold, Allen & Dixon LLP in Chicago, who is not involved in the litigation.

The price of millions of baby bottles and defense costs “are an incentive for plaintiff attorneys,” said Michael Vanselow, a partner at Oppenheimer Wolff & Donnelly LLP in Minneapolis, who also is not involved in the litigation.

BPA has been used in consumer products for almost 50 years, and the U.S. Food and Drug Administration has said it is safe. But in April 2008, two reports appeared that raised “a perfect storm” of alarm that resulted in numerous lawsuits as well as regulatory and legislative activity, said Leonard Kurfirst, also a partner with Wildman, Harrold, Allen & Dixon LLP in Chicago. In one report, the National Institutes of Health’s National Toxicology Program expressed concern about neurological, behavioral and other effects of BPA on fetuses, infants and children. That same month, Health Canada took steps to ban the use of BPA in baby bottles and infant formula cans.

FDA then initiated a review of BPA safety and has said it is targeting Nov. 30 as the date it will announce its position.

Because the class actions do not allege bodily injury, they “may have brought manufacturers into an uninsurable situation,” said Vanselow.

Neither commercial general liability insurance nor product liability insurance would provide coverage unless a suit alleges bodily injury, experts said.

In August, a federal judge in Chicago ruled that Medmarc Casualty Insurance Co., State Farm Fire and Casualty Co. and Pennsylvania General Insurance Co. have no duty to defend or indemnify their insured, Avent America, against BPA class actions included in the multidistrict litigation. Avent’s CGL policies do not provide coverage because the lawsuits do not allege bodily injury, the judge ruled.

Cindy Khin, chief claims officer of Medmarc Insurance Group, said Avent has appealed and that Medmarc will “vigorously oppose the appeal sought by Avent America.”

Insurance coverage for manufacturers in the multidistrict litigation “is going to be a continuing source of coverage litigation,” Austin said.

“A big-sum award in the MDL would not likely be covered by insurance,” said John Vishneski III, a partner with Reed Smith LLP in Chicago. But “if the FDA comes out with a negative finding [in the anticipated Nov. 30 report], the manufacturers might want to issue a recall” if they have purchased a specialty insurance policy that covers recalls, he said.

“If [plaintiffs] get a big verdict or settlement, I can only guess it will be a significant incentive for more suits like that,” Vanselow said.

Although a large group of lawsuits often are referred to as a mass tort, the MDL and any class action lawsuits alleging consumer fraud technically would not be a mass tort, Austin said.

“A mass tort is a large group of plaintiffs filing their individual claims. A class action is a single or small group filing a case purporting to be on behalf of all the other potential claimants. The science is not really there to show bodily injury claims [for BPA]. Without that, it’s unlikely that a large group of plaintiffs are going to sue. Asbestos is a classic mass tort and asbestos claims have tended not to be class actions,” Austin said.

Even so, the BPA litigation has “elements of a mass tort because you have a product that’s ubiquitous — almost everyone has been exposed to standard food containers — and the things it has been alleged to cause, such as breast cancer, heart disease, diabetes, liver disease, are also ubiquitous.” Vishneski said.

“It will be a mass tort because it’s such a ubiquitous material,” said Rod Taylor, managing director of Aon Risk Services. Because studies purportedly showing BPA’s harmful effects continue to appear in the media, “that’s how the public gets influenced, and therefore the judiciary. There’s plenty of evidence [from experts on both sides], and that makes a great case for litigation,” said Taylor, who is based in Windermere, Fla.

It will be difficult for manufacturers to obtain coverage for products containing BPA, brokers said. Aside from the lawsuits, bills have been introduced in the U.S. Senate and the House this year that would ban using BPA in food and beverage containers or those intended for use by children younger than 3. Similar bans have been enacted in Canada, Chicago, Connecticut, Minnesota and Suffolk County, N.Y.

Insurers either will exclude BPA from coverage in a CGL policy or “say you’ll be responsible for a $5 million deductible before we pay any defense costs,” Taylor said.

“Many insurers that write CGL and product liability coverage have filed exclusions, but at this time the carriers I spoke to have not used the filed exclusion,” said Pam Ferrandino, executive vice president and national casualty practice leader at Willis North America in New York. “That being said, to entertain a new type of risk that had a significant exposure, they might include a significant retention. Going forward, it may be reasonable to anticipate that an exclusion could be applied.”

On their Web sites, several manufacturers who already have been sued say their baby bottles and related products are now free of BPA.

FDA also is considering whether BPA is safe in medical devices used in bypass surgery and hemodialysis. Lawsuits seeking the return of the purchase price of medical devices would yield much greater damage awards, Vanselow said.

“If the FDA came out and said there is a health hazard, that would take it to an entirely new dimension. My guess is there would be plaintiff lawyers trampling each other on the way to the courthouse,” Vanselow said.

Most insurers contacted for this story declined comment, citing the sensitivity of the issue.

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