(Article from Insurance Law Alert, November 2023)
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In one of the first lawsuits of its kind, New York Attorney General Letitia James has sued PepsiCo, alleging harm to the public and environment stemming from the company’s single-use plastic bottles. New York v. PepsiCo, Inc., No. 814682/2023 (N.Y. Sup. Ct. Erie Cnty. filed Nov. 15, 2023). The complaint alleges that PepsiCo’s packaging “contributes significantly to high levels of plastic pollution along the Buffalo River, pollution that is contaminating drinking water and harming wildlife.” Additionally, it alleges that PepsiCo failed to warn consumers about these risks and misled the public about its efforts to combat pollution. According to the lawsuit, the vast majority of the trash collected at sites along the Buffalo River over the past decade was plastic, a significant amount of which came from PepsiCo products. The suit seeks injunctive relief, disgorgement, civil penalties and restitution for the alleged damage.
The PepsiCo lawsuit raises the question of whether insurance coverage is available for this and future similar lawsuits. Such determinations will ultimately depend on governing jurisdictional law and applicable policy language, including in particular, exclusions relating to pollution and known loss. With respect to the pollution exclusion, it may be noteworthy that the New York suit does not allege direct discharges of harmful plastic by PepsiCo into the environment, but rather that its products ended up in New York rivers through consumer misuse. Coverage disputes may implicate numerous other issues, including whether a policyholder’s conduct constitutes an “occurrence” rather than intentional conduct and whether injunctive relief or monetary damages in the form of penalties or disgorgement is subject to insurance coverage.