In Republic Underwriters Insurance Company v. Moore, No. 11-5075, 2012 WL 2948177 (10th Cir., July 20, 2012), the Tenth Circuit Court of Appeals, applying Oklahoma law, held that a restaurant’s general liability insurers were entitled to summary judgment that several hundred E. coli claims against the policyholder arose out of a single occurrence because all of the injuries were caused by one restaurant’s ongoing preparation of contaminated food.  In so holding, the Tenth Circuit reversed a lower court order holding that the claims arose out of two separate “occurrences” because the contaminated food was served at two different locations. 

This case arose from the largest E. coli outbreak in the United States, which infected several hundred people.  Id. at 1.  The contaminated food was prepared and served at the policyholder’s restaurant, and also at a church event catered by the restaurant.  Id.  The insurers moved for summary judgment, arguing that all of the underlying claims arose out of one occurrence and that, therefore, only one per occurrence limit was available to the policyholder, with the total available per occurrence limits being $3 million.  Id. at 2.  The underlying claimants[1] argued in the district court that there were at least eight occurrences, which meant that the insurers’ coverage was limited only by the policies’ aggregate limits, which totaled $6 million.  Rejecting both arguments, the district court concluded that the outbreak constituted two separate occurrences because the contaminated food was prepared and served in two separate locations.  Id. at 4. 

On appeal, however, the Tenth Circuit reversed and held that the E. coli outbreak arose out of one overarching occurrence.  In reaching this conclusion, the court began with the relevant policy language, which defined an occurrence as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”  Id. at 3.  The court relied on its decision in Business Interiors, Inc. v. Aetna Casualty & Surety Co., 751 F.2d 361, 363 (10th Cir. 1984), in which it applied the causation rule[2] to similar policy language for determining the number of occurrences, and concluded that forgery of forty separate checks by one dishonest employee arose out of one continuing occurrence.  Id. at 5.  The court noted that the causation rule “requires that we determine whether there was but one proximate, uninterrupted, and continuing cause which resulted in all the injuries and damage.”  Id. (citing Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56, 61 (3d Cir.1982)).  Applying this rule, the court concluded that the outbreak was a single occurrence because “all the injuries were proximately caused by the restaurant’s ongoing preparation of contaminated food.”  Id.   The court further explained, “It does not matter that the food was served with other food items prepared at another location because the contamination originated at the restaurant.  Nor does it matter that the precise underlying cause of the contamination is unknown . . . .”  Id. at 5-6.

This case may have implications for other mass-contamination or mass-outbreak cases.  The global economy ensures that food and other products produced or prepared in one location can quickly make their way across the country and around the world.  This vast distribution network can result in contamination stemming from a single source spreading far and wide at great speed.  The court’s holding that an outbreak of significant magnitude constituted a single occurrence could serve as precedent to for applying a policy’s per occurrence limit in similar situations.