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Court to decide issue on cleanup orders

SAN FRANCISCO-The California Supreme Court will decide whether government cleanup orders are sufficient to trigger a duty to defend a policyholder in a pollution case.

The state Supreme Court's decision last week to rule on the issue comes after two panels of the same appellate court in California issued opposing rulings.

In Foster-Gardner Inc. vs. National Union Fire Insurance Co. of Pittsburgh, Pa., a three-judge panel of the 2nd Appellate District of the California Court of Appeals favored policyholders by ruling that a cleanup order from an environmental regulatory body is equivalent to a lawsuit and that insurers must defend policyholders against such orders (BI, July 28).

But, in Fireman's Fund Insurance Co. vs the Superior Court of Los Angeles County, another panel of the same court ruled that Fireman's Fund need not pay the defense costs of Vickers Inc., which had received a potentially responsible party letter from the U.S. Environmental Protection Agency.

Central to both cases was the definition of the word "suit" and whether it has a narrow meaning confined to legal actions or whether it has a broader meaning and can include government directives.

The Supreme Court has agreed to consider the Foster-Gardner case.

Lawyers in the Fireman's Fund case have about 10 days left to petition the Supreme Court for a hearing.

Panel formed to help

with dispute resolution

NEW YORK-A new national panel established by the American Arbitration Assn. aims to help companies resolve complex, protracted mass claims and mass torts.

Due to the growing popularity of alternative dispute resolution mechanisms and the growth of mass torts over the past few decades, the association created a panel comprising 13 attorneys, retired judges and former U.S. government officials skilled in the resolution of mass claims and complex, multiparty disputes.

The panel members are available to provide such services as: facilitation of settlement discussions between parties and insurers; design of administrative mechanisms to process and evaluate claims without litigation; serve as special masters for the management and/or assessment of mass claims litigation; coordination of pretrial discovery and prioritization of critical issues; and serve as special masters to secure a final and comprehensive settlement.

The national panel coincides with the association's Mass Tort Recommendations released last March.

The recommendations give 12 considerations in developing ADR procedures for the resolution of mass claims.

For more information, call the American Arbitration Assn. at 800-778-7879 or visit the association's site on the World Wide Web at

Partner health benefits

violate law: State lawyer

RICHMOND, Va.-Arlington County, Va., will not withdraw its new domestic partner health benefit, despite a state attorney general's opinion that the benefit violates state law.

Virginia Attorney General Richard Cullen last Monday wrote in an official opinion on the benefit that no state statute either "expressly or by necessary implication" allows the county to offer the benefit.

The county's definition of an eligible partner also does not satisfy state and federal income tax law definitions of eligible adult dependents, who are eligible for health coverage under state law, Mr. Cullen wrote.

Tax laws specify that an adult dependent must receive more than half of his or her support from the taxpayer.

The county specifies that an eligible partner must be financially independent.

House Delegate Robert G. Marshall, R-13th District, requested the opinion.

The county's supervisors do not agree with Mr. Cullen's opinion, said a county spokeswoman, who would not elaborate.

The spokeswoman said the county does not have to withdraw the benefit unless the county is sued and a court agrees with Mr. Cullen's opinion.

The partners coverage is available through the county's self-insured plan, which covers about 60% of county employees (BI, May 12).

During open enrollment earlier this year, the plan's enrollment grew by 24 employees, which has been typical in recent years, the county spokeswoman said.

Even if all of those additional enrollees obtained partners coverage, the county's additional cost is $110,000, the minimum the county originally estimated, the spokeswoman said.

But, all of the new enrollees are not obtaining that coverage, so the "cost is far less than the minimum we had anticipated, at least for the first year."


CHARLOTTE, N.C.-First Union Corp. has agreed to pay 239 former employees $58.5 million to settle a class-action age discrimination lawsuit.

The settlement, said to be the largest yet involving age discrimination allegations, was approved last week by a federal judge in Washington.

In a statement, the Charlotte, N.C.-based bank said the settlement agreement is not an admission of guilt but a reflection of the company's desire to end costly litigation.

The class action stems from layoffs that occurred after First Union's 1992 and 1993 acquisitions of First American Bankshares Inc. and Meritor Savings FA.

The plaintiffs alleged that the displacements disproportionately fell on older and minority employees and were discriminatory.

First Union said it is properly reserved for the settlement and that the settlement will not affect earnings.