The Looming Long-Tail Risk of E-Cigarettes

 
 

e-cigarettes

In July 2007, Dr. Cecile Rose, a pulmonologist with the National Jewish Medical and Research Center in Denver, Colorado, wrote a letter to the U.S. Food & Drug Administration describing a case in which one of her patients was diagnosed with the debilitating lung disease Broncholitis obliterans. Dr. Rose said that the 53-year-old patient appeared to have contracted the disease from approximately 10 years of at-home exposure to diacetyl fumes from microwave popcorn.

By 2007, popcorn lung bodily injury lawsuits pertaining to industrial diacetyl exposures had already been pending throughout the United States for several years and there had been concerns about the true scope and universe of diacetyl bodily injury risks. But the letter crystallized these concerns and marked a turning point of sorts. Weeks after it was published, four large U.S. producers comprising a significant share of the microwave popcorn market announced plans to cease using the chemical diacetyl in their products.

Eventually, hundreds of consumer plaintiffs asserted claims, ultimately creating new legal and financial exposures for supplier, manufacturer and distributor insureds, along with their liability insurers. Today, these exposures persist, including consumer suits involving cases like those of Dr. Rose’s patient.

A New Group of Diacetyl Risks?

As diacetyl-related popcorn lung litigation continues, diacetyl-related liability and insurance coverage may be approaching a new battleground: e-cigarettes. Meant to replicate smoking without the harmful effects of tobacco, an e-cigarette is a device that heats and vaporizes a liquid nicotine known as “e-juice.” Along with nicotine, e-juices contain the chemicals glycerin and glycol in addition to chemical, often “food-grade,” flavorings. One of these chemicals is diacetyl, which can be used to create a wide range of vaporized aromas.

E-cigarettes have seen a dramatic increase in regulatory attention since 2016, as a patchwork of federal, state and local laws has started to emerge. One focus for the FDA in this respect is young, school-aged users. Last year, the FDA and the Centers for Disease Control and Prevention jointly released findings showing dramatic spikes in youth use of e-cigarettes since 2017. “Youth use of electronic cigarettes has reached an epidemic proportion,” FDA Commissioner Scott Gottlieb said in September, when he announced that the agency had issued 1,300 warning letters and fines to e-cigarette retailers following a “nationwide, undercover blitz” of brick-and-mortar and online stores over the summer. The FDA’s concern for younger e-cigarette users was also part of its motivation for a surprise inspection and seizure of documents at the San Francisco offices of e-cigarette manufacturer Juul Labs in October 2018.

Public health advocates have also called for increased regulatory attention on the marketing of e-cigarettes and e-juices to young consumers. They contend the e-cigarette industry is using tactics similar to those used in the past by the tobacco industry, such as packaging, labeling and trade dress that is geared toward younger audiences and suggestive of healthy, even glamorous, lifestyles.

Industry proponents have vigorously responded to the new regulatory attention by underscoring the primary benefit of e-cigarettes, which is helping wean addicted smokers from traditional cigarettes and encouraging young people not to pick up the smoking habit. “Our mission is to improve the lives of adult smokers by providing them with a true alternative to combustible cigarettes,” Juul Labs CEO Kevin Burns said in a statement. “By working together, we believe we can help adult smokers while preventing access to minors, and we will continue to engage with the FDA to fulfill our mission.”

Whatever the merits of the industry position pertaining to the safety and advisability of e-cigarette use, it seems very likely the plaintiff’s bar will at least test the waters on behalf of e-cigarette users alleging harm resulting from e-juice vapors. For plaintiff’s lawyers, much of the groundwork for diacetyl exposure suits pertaining to e-cigarettes is already in place. These firms have already litigated and settled thousands of consumer and industrial diacetyl exposure claims. Causation has been tested with respect to Bronchiolitis obliterans in several jurisdictions, and plaintiffs’ firms are armed with decades’ worth of  accumulated institutional knowledge and stables of testifying experts.

A Hypothetical E-Cigarette Diacetyl Plaintiff

With the rapidly changing regulatory posture toward diacetyl in e-cigarettes, insureds and insurers alike should be considering liability and insurance coverage issues that frequently arise in connection with diacetyl-related claims and suits. For example, consider the background and allegations associated with a hypothetical e-cigarette plaintiff filing suit in the year 2024:

  • In 2016, at age 16, the plaintiff began using diacetyl-containing e-juices from various manufacturers and quickly became addicted due to nicotine content.
  • In 2022, he began experiencing a chronic cough and symptoms resembling those associated with chronic obstructive pulmonary disease.
  • The plaintiff was soon diagnosed with Broncholitis obliterans. The plaintiff says that, until his diagnosis, he was not aware he was being injured by diacetyl. At just 24 years old, he now may also need a lung transplant and cannot work as a result of his condition.
  • The plaintiff sues dozens of e-juice suppliers, retailers and manufacturers in “shotgun” fashion, as is already often done with other health hazard matters like asbestos exposure. Note that once a defendant is identified by a firm, it is routinely named in new complaints even where there are no allegations or “product identification” pertaining to that defendant.
  • The complaint recites the long history of patchwork regulations and alleges diacetyl risks were known for years before the plaintiff purchased his first e-cigarette in 2016. The plaintiff alleges claims for strict liability, failure to warn, negligence, and breach of express and implied warranties, among other things. The plaintiff may also seek punitive damages.

Coverage Issues

Setting aside underwriting considerations, these hypothetical allegations create coverage-related issues and potential coverage defenses in the context of insureds’ claims for defense and indemnification pertaining to diacetyl-related exposures.

Diacetyl-related exclusions may bar coverage altogether or make the applicability of coverage subject to determination by courts. Additional coverage-related complexities will mimic those arising in the context of health hazard matters such as asbestos, construction defect, food contamination and other products-related claims. For instance, because of the “long-tail” nature of diacetyl exposures and delayed manifestation, each claimant may implicate a unique block of coverage such that several insurers’ policies may be involved. Many of these issues will be guided by a large body of case law already addressing allocation and trigger of coverage.

It also seems likely that any e-cigarette-related claims will give rise to familiar disputes among insureds, primary and excess carriers, and reinsurers regarding the number of occurrences associated with the relevant exposure that will impact erosion of limits and self-insured retentions, insured responsibility for deductibles, and the availability of excess coverage, along with related questions associated with aggregated coverage limits. Further, for insureds with diacetyl-related exclusions for at least part of a triggered coverage block, the availability—or lack thereof—of diacetyl-insurance could dramatically impact allocation issues and the insured’s cost-sharing responsibility.

The above is meant to illustrate the types of coverage issues likely to arise in connection with hypothetical e-cigarette matters. Where there are multiple claimants, addressing these issues can quickly become a data-intensive exercise. As with other health hazard matters, these issues underscore the need for insureds and risk managers to consider legacy coverage and potential exposures associated with long periods of time.

 

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About the Author

William Lalor is of counsel at Early Sullivan Wright Gizer and McRae LLP.

 
 
 

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