USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 94-1276
CPC INTERNATIONAL, INC.,
Plaintiff - Appellant,
v.
NORTHBROOK EXCESS & SURPLUS
INSURANCE COMPANY,
Defendant - Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ronald R. Lagueux, U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Judge,
___________
Bownes, Senior Circuit Judge,
____________________
and Cyr, Circuit Judge.
_____________
_____________________

Jerome P. Facher, with whom Michelle D. Miller, Nicholas

_________________
___________________
________
Carter, Hale and Dorr, David L. Harris, Geoffrey A. Price and
______ ______________
_______________
__________________
Lowenstein, Sandler, Kohl, Fisher & Boylan were on brief for
_____________________________________________

appellant.
Philip J. McGuire, with whom Douglas G. Shreffler, Gleason,
__________________
____________________ ________
McGuire & Shreffler, Kenneth P. Borden, Higgins, Cavanaugh &
____________________
__________________
_____________________
Cooney, Stephen W. Miller, James B. Burns and Clark, Ladner,
______
_________________
_______________
_______________
Fortenbaugh & Young were on brief for appellee.
___________________

____________________
January 25, 1995
____________________

TORRUELLA,
TORRUELLA,
International,

Chief Judge.
Chief Judge.
____________

Inc.

("CPC"),

Plaintiff-appellant,

filed

this

action

CPC

seeking

declaration that defendant-appellee, Northbrook

Excess & Surplus

Insurance Company ("Northbrook"),

to indemnify

for

environmental

contamination

cleanup

allegedly

costs
caused

("Peterson/Puritan"), a former
of

CPC's evidence in

judgment as

related
by

to

land

water

Peterson/Puritan,

Inc.

of the

of law.

At

the close

case, the district

motion, pursuant to

a matter

it

and

subsidiary of CPC.

the jury trial

court granted Northbrook's

50(a), for

is obligated

CPC

Fed. R. Civ.

P.

appeals 1)

the

district court's pretrial choice-of-law decision predicting

that

New Jersey

court would

apply

the substantive

Island and 2) the district court's

of law.
court's

For the reasons

Rhode

grant of judgment as a matter

stated herein, we affirm

choice-of-law decision

law of

and certify

the district

question to

the

Rhode Island Supreme Court.

I.
I.
BACKGROUND
BACKGROUND
A.
A.

Factual Background
Factual Background
__________________

The ultimate issue

is obligated
related

to

to indemnify
land

Peterson/Puritan, an
CPC.

CPC

is

and

1, 1980,

CPC for
water

multinational

Northbrook

whether Northbrook

environmental cleanup
contamination

aerosol packaging

corporation headquartered
July

in this case is

in New Jersey.
served as

caused

plant formerly

packaging

CPC's

and

costs

by

owned by

manufacturing

From July 1,
first layer

1979 to

excess

-2-

insurance carrier, with a $25 million umbrella liability policy.

In 1968, CPC
renamed

it

acquired the Puritan Aerosol

Peterson/Puritan.

Peterson/Puritan

Company and

manufactures,

among other things, flea spray, hair spray, spot remover and oven
cleaner.

Its manufacturing facility

Cumberland,

Rhode

Peterson-Puritan

Island,

site") fronted

Blackstone River.
town

of

on

is located in the

seventeen-acre

on

its

western

In 1979, both Cumberland

Lincoln

discovered

municipal water supplies,

chemical

town of

site
side

("the
by

the

and the neighboring

contamination

the Quinnville Wellfields.

in

their

The wells

were closed later that year.

In

1980,

the United

States

Environmental Protection

Agency ("EPA") hired the environmental engineering firm GoldbergZoino and

Associates to conduct

a hydrogeological study

aquifer underlying the Blackstone

of the

River (the "GZA Report").

In

1982, based on the results of the GZA Report, the Town of Lincoln
sued Peterson/Puritan for contamination
That

suit was settled in 1984 for

paid

by Northwestern

National"),

of the Quinnville Wells.

$780,000.

National Insurance

The settlement was

Company ("Northwestern

CPC's primary insurance carrier, under a policy with

a coverage limit of $1 million.

In

1983,

Peterson/Puritan
River

site and

(designated

Priorities

List.

negotiations, EPA

EPA

by
In

issued

placed

an

the aquifer
the

EPA as

1987,

area
east

"OU-1")

following

an Administrative
-3-

including
of the
on

Blackstone

its

several
Order

the

National
years

by

of

Consent,

pursuant

to

the

Compensation and

Comprehensive

Environmental

Liability Act ("CERCLA"),

seq., which identified Peterson/Puritan

___

ordered

Peterson/Puritan

responsible parties and

42 U.S.C.

9601 et
__

as the party responsible

for numerous hazardous chemicals migrating

and

Response,

to

into the groundwater,

investigate

additional

further analyze site conditions.

Later

that year, Northwestern National informed CPC and Northbrook that

the

primary

insurance

policy

was

exhausted,

thus

bringing

Northbrook into the fold.1

In July of
New

1987, CPC filed suit

Jersey state court seeking a

obligated to

indemnify it

cleanup.

On

the

Northbrook removed the case

declaration that Northbrook is

for environmental

damages arising from the Town

ordered

against Northbrook in

cleanup costs

and

of Lincoln settlement and the EPAbasis

of

diversity

to the United States

for the District of New Jersey.

jurisdiction,

District Court

In 1989, the New Jersey district

court granted Northbrook's motion to transfer venue to the United

States District Court for the District of Rhode Island.
After
declaration

the

transfer,

CPC

that the substantive law of

filed

motion

for

New Jersey governs this

litigation.

In an Opinion dated

June 21, 1990, the Rhode Island

district court concluded, first, that in ruling

upon the choice-

____________________

1 In May of 1987, CPC agreed to sell Peterson/Puritan to Hi-Port

Industries, Inc., a Texas corporation.
As part
of that
agreement, Peterson/Puritan assigned to CPC its rights to claims
under any insurance policy for expenses already paid by CPC in
connection with the environmental contamination claims against
Peterson/Puritan.
-4-

of-law issue it must apply the law of the state which

been applied

had the change

that a New Jersey

because, as the

would have

of venue not occurred

and, second,

court would apply New Jersey law

to this case

home base of the

insured, CPC, it has

significant interest in the outcome of the case.

the most

CPC Int'l, Inc.

_______________

v. Northbrook Excess & Surplus Ins. Co., 739 F. Supp. 710, 713-15
____________________________________
(D.R.I. 1990).
The parties
and, on

filed cross-motions

March 15, 1991,

for summary

the district court denied

judgment

CPC's motion

for summary judgment and allowed Northbrook's cross-motion on the

ground that the pollution exclusion clause in Northbrook's policy

precluded coverage

for gradual

pollution.

The district

court

concluded that CPC failed to sustain its burden of establishing a

genuine issue of fact

with respect to whether the

contamination

of the aquifer was "sudden and accidental," within the meaning of

New Jersey law,
applied.

and therefore held that the

pollution exclusion

CPC Int'l, Inc. v. Northbrook Excess & Surplus Ins.

________________
__________________________________

Co., 759 F. Supp. 966, 976 (D.R.I. 1991).

___
CPC appealed
district court's
remanded the case

and, on March

grant of

summary judgment

to the district court.

predicting how the New Jersey

"sudden

and

insufficient

accidental"
weight

Court's Appellate
court),

which had

24, 1992, we

to

reversed the

for Northbrook

We

concluded that, in

Supreme Court would interpret

provision,

the

decisions of

the

Division (New Jersey's

concluded that

the

and

district
New

court

the

gave

Jersey Superior

intermediate appellate
"sudden and

accidental"

-5-

provision
insureds as

is ambiguous

and

had

providing coverage for

interpreted

it

favorably

gradual pollution.

to

See CPC
___ ___

Int'l, Inc. v.
___________

Northbrook Excess and Surplus Ins. Co., 962 F.2d

_______________________________________

77, 97-98, reh'g denied, 962 F.2d 98 (1st Cir. 1992).2

____________
After

the

reconsideration
decision.

case

of

the

remanded,

district

Northbrook moved

court's

1990

for

choice-of-law

In a Memorandum and Order dated December 16, 1993 (the

"Second Choice-of-Law
Northbrook's
Island

was

would

Decision"),

the

motion, holding that

henceforth

govern

district

court

the substantive law

the case.

We

granted

of Rhode

denied

CPC's

1994.

Over

petition for mandamus.

The
eleven

days,

including

case went
CPC

to trial

offered

three

experts,

Peterson/Puritan

facility.

Northbrook moved for

Civ.

P.

50(a).

on

testimony
and

January 28,
from

employees

At the

close

judgment as a matter
On

February 16,

several

1994,

of
of

witnesses,
the

CPC's evidence,

of law under Fed.

the

district

delivered a detailed oral opinion concluding that CPC had

to present evidence

from which a reasonable

that there was an "occurrence"

motion

R.

court

failed

jury could conclude

-- an event resulting in property

damage -- during the policy period.

________________________
granted Northbrook's

former

The district court therefore

for judgment

as a

matter of

law.

____________________

2 Because the New Jersey Supreme Court had never interpreted the
"sudden and accidental" provision, and New Jersey does not have a
procedure for certification of questions, the district court
based its decision on its interpretation of decisions from New
Jersey's trial and appellate courts, and general principles of
contract interpretation gleaned from a review of New Jersey
Supreme Court cases. See generally CPC Int'l, 759 F. Supp. 966.
_____________ __________

-6-

This appeal followed.

II.
II.
STANDARD OF REVIEW
STANDARD OF REVIEW
We review
de novo.
__ ____

the district court's

choice-of-law decision

See Crellin Technologies, Inc. v. Equipmentlease Corp.,

___ __________________________
____________________

18 F.3d

1, 4

(1st Cir.

court's

grant of judgment

1994).

With respect

as a matter

outset, that judgment as a matter

to the

of law, we

district

note, at the

of law is proper at the

close

of the plaintiffs' case only when, after scrutinizing plaintiffs'

evidence and the
the

light most

inferences reasonably to be
favorable

to the

plaintiffs,

drawn therefrom in
the trial

court

concludes that no reasonable jury could find in plaintiffs' favor

on

any

permissible

claim

Municipality of San Juan,

___________________________

or
1

Judgment as a matter of law may

theory.
F.3d 74,

Rol n-Alvarado
______________
76

(1st

Cir.

v.

1993).

be entered only if the evidence,

viewed from this perspective, is such that reasonable minds could

not differ as to the outcome.

We review

Id.
__

the Rule 50(a) motion decision

de novo, see
__ ____ ___

Salve Regina Coll. v. Russell,

__________________
_______

499 U.S. 225, 231-32, 111 S.

1217, 113

Jordan-Milton Mach., Inc.

_________________________

L.Ed.2d 190 (1990);

Ct.

v. F/V
___

Teresa Marie, II, 978 F.2d 32, 34 (1st Cir. 1992), under the same
________________

standards governing the district court, Rol n-Alvarado, 1 F.3d at

______________
76,

with

view

to

the legal

sufficiency

of

the

evidence

presented by the plaintiffs.

III.
III.
DISCUSSION
DISCUSSION
-7-

CPC contends that

determining that

Rhode Island law

previously determining
second,

the district court erred,

that New

in concluding that

would govern the

Jersey law

CPC had

first, in

case, after

would govern,

failed to

and,

present evidence

from which a reasonable jury could find in its favor.3

A.
A.

Choice of Law
Choice of Law
_____________

CPC asserts that

its

the district court erred

original choice-of-law determination.

arguments in support of this assertion.

the district
changing
maintains

court violated

its

original

was erroneous

CPC makes two related

First, CPC contends that

the "law of

choice-of-law

that the district

in changing

the case"
ruling.

doctrine in
Second,

CPC

court's second choice-of-law ruling

-- i.e., that a

New Jersey court would

not apply

the substantive law of Rhode Island to this case.

In its
court ruled that

original choice-of-law

decision, the

a New Jersey court would

district

apply the substantive

law of New Jersey to the facts of this case.

The court concluded

that, under New Jersey's choice-of-law rules, New Jersey, as

the

location

the

of

the insured,

outcome of the case.

that

the

has

the

strongest interest

The court rejected

substantive law

the

contamination, or, in the alternative,

the law of Illinois,

the

state

the

the

Rhode

Northbrook's contention
of

in which

of

in

insurer accepted

Island,

the site

risk, should

apply.

____________________

3
CPC also maintains that the district court erred in deciding
the case on "general principles of law," rather than the law of
New Jersey or Rhode Island. We address this contention with our
discussion of the merits of the case.
-8-

Northbrook

sought,

question certified

unsuccessfully,
to

this

to have

court.

The

the

choice-of-law

district

court

then

granted Northbrook's motion for summary judgment under New Jersey

law.
In reversing

the

ruling, we noted that the

district

court's

summary

judgment

district court's June 21, 1990 choice-

of-law decision that New Jersey law governs was not questioned on
appeal and that,

therefore, it "is law of the case."

962 F.2d at 91.

We rejected Northbrook's petition for rehearing

on

the choice-of-law issue,

preserve

the issue

Northbrook

concluding that Northbrook

on appeal.

filed a

CPC Int'l,
_________

After the

motion requesting

that

case was

did not

remanded,

the district

court

reconsider its previous choice-of-law ruling.

In its
court

made

decided

Second

two

Choice-of-Law

related rulings.

that the New

Decision,

First,

district

the district

Jersey Supreme Court's

Gilbert Spruance
Co.
_______________________

the

court

recent decision in

v.

Pennsylvania
Manufacturers' Ass'n
____________________________________

Insurance Co., 629 A.2d 885

_____________

(N.J. 1993), represents "a clear and

contrary

change

therefore, that
Second,

in

the

law

"the law of

the court

held that

applicable

to

the

the case presumption

a New

Jersey court,

case"

and,

is overcome."

applying the

newly articulated principles of Gilbert Spruance, would apply the

________________
substantive law

of Rhode Island to

therefore, that Rhode

Island law,

the facts of
rather than

this case and,

New Jersey

law,

would govern this litigation.

As noted

previously,

under

normal

circumstances

we

-9-

review de novo
__ ____
to

apply in

additional
court's

a district court's choice of

a

particular

consideration

choice-of law

case.
guides

decision.

In
our

this
review

Under the

the substantive law

case, however,
of

the

"law of

an

district

the case"

doctrine, a decision by an appellate court on a particular issue,

unless

vacated

subsequent

or

set

stages of the

Mart nez, 931

________

aside,

governs the

litigation.

F.2d 148, 151

on appeal.

during

all

United States v. Rivera______________

_______

(1st Cir.), cert. denied,

____ ______

___, 112 S. Ct. 184, 116 L.Ed.2d 145 (1991).

doctrine bars litigants from

issue

___ U.S.

The law of the case

rearguing issues previously decided

See, e.g., United States v. Rosen, 929 F.2d 839, 842

___ ____ _____________
_____

n.5 (1st Cir.),

cert. denied, ___ U.S.

____ ______

L.Ed.2d 51 (1991); United States v.

_____________
43 (1st Cir.
1967).
the

predictability

relationships between

1993).

De Jes s, 752 F.2d 640, 642________

based on considerations of "stability in

decisionmaking process,

judicial economy."
Cir.

77, 116

1985); White v. Martha, 377 F.2d 428, 431 (5th Cir.

_____
______

The doctrine is

working

___, 112 S. Ct.

trial and

of results,

proper

appellate courts,

and

United States v. Connell, 6 F.3d 27, 30 (1st

______________
_______

Under

the law of

court, on remand, seeks

the case doctrine,

to dispose of a case

when a trial

in accordance with

an appellate court's mandate, it "'must implement both the letter

and the spirit of the

mandate, taking into account the appellate

court's

the

(quoting

opinion

and

United States
_____________

circumstances

v. Kikumura,
________

it

947 F.2d

embraces.'"
72, 76

Id.
__

(3d Cir.

1991)).

The law of the case was not intended, however, to serve

-10-

as

an absolute

bar to

reconsideration, nor

a limitation

on a

federal court's
have,

power.

Rivera-Mart nez, 931 F.2d

_______________

therefore, recognized

exception to the
ruling

that a

district court

law of the case doctrine,

when "controlling

authority has

that the New

Spruance
________

does not

since

applicable"

to

Jersey Supreme Court's

represent

the

"a contrary

district

court's

may,

We

as an

reexamine a previous
made a

decision of the law applicable to such issues. . .

argues

at 151.

."

contrary
Id.4
__

CPC

decision in Gilbert
_______
decision

original

of the

law

choice-of-law

decision.
We

agree

with the

district

court's

Gilbert Spruance represents a decision

_________________
law as applied
law decision.
not

it

which is contrary to the

by the district court in

its original choice-of-

We also think that, although Gilbert Spruance does

________________

necessarily mandate
_______

court,

conclusion that

certainly

the decision

provides ample

court's prediction

that the New

with the question,

would conclude that

reached
support

by the
for

district

the district

Jersey Supreme Court,

Rhode Island law

if faced

should

govern this dispute.

In its
court analyzed
Division.

The

original
a host of

choice-of-law

ruling,

decisions by the New

district court

also reviewed

the

district

Jersey Appellate
what was,

at the

____________________

4 Under the law of the case doctrine, issues once decided should
not be reopened "'unless the evidence on a subsequent trial was

subsequently different, controlling authority has since made a

contrary decision of the law applicable to such issues, or the
decision
was clearly erroneous and would work a manifest
injustice.'" Rivera-Mart nez, 931 F.2d at 151 (quoting White v.
_______________
_____
Martha, 377 F.2d 428, 432 (5th Cir. 1967)).
______
-11-

time,

the

New

Jersey

Supreme

concerning choice-of-law

Court's

in the

A.2d 488

would

(1980) --

consider

principal

New

--

the

that a New

location

of

Jersey court
the

insured's

headquarters, the state with the strongest interest in

the outcome of the case.

as

decision

Estate of Simmons, 84 N.J. 28,

_________________

and predicted

Jersey,

recent

liability-insurance context

State Farm Mut. Auto. Ins. Co. v.

______________________________
417

most

a possibility,

In eliminating the law of

the district

Division's decision in

court relied

Rhode Island

on the

Westinghouse Elec. Corp. v.

________________________

Appellate

Liberty Mut.
____________

Ins. Co., 233 N.J.Super. 463, 559 A.2d 435 (App.Div. 1989), which
________

adopted the "uniform-contract-interpretation" approach to choiceof-law

determinations.

interpretation

should

Under
be

uniform

according to the location of the risk.

that

approach,

nationwide

and

policy
not

vary

At the time of the district court's first choice-of-law

opinion, State Farm
___________

was the

controlling

Jersey Supreme Court with respect

liability-insurance context.
law

of the

place

situs of
"unless

the

dominant

factors

and

the

concerning the principal

be applied

relationship

of another

State Farm, 84 N.J. at 37.

__________

making that

contacts

comport[s] with

the underlying issue dictates that this

basic rule should yield."

courts, in

New

because the

that state's law should

and significant

state to the parties and

directs

"generally

of the parties

the insured risk,"

the

to choice-of-law issues in the

State Farm held that,

__________

of contract

reasonable expectations

decision of

set

determination,

forth

in

sections

State Farm
__________

to rely
6

and

on the
188

of

-12-

Restatement (Second)
35.5

Thus, State Farm

__________

of Conflicts

of Laws (1971).

at 34-

creates a rebuttable presumption that the

law of the state where the contract was entered into

the dispute.

Id.
__

See J. Josephson, Inc. v. Crum & Forster

will govern

Ins. Co.,

___ __________________

________________________

265 N.J.Super. 230, 239, 626 A.2d 81, 86 (App.Div. 1993).

Gilbert Spruance changes
________________

the presumption by

the "uniform-contract-interpretation
"site-specific" approach
casualty-insurance
111-14.

adopting the

to choice-of-law determinations

context.

See
___

Gilbert Spruance, 134

________________

in the

N.J. at

The New Jersey Supreme Court now directs courts to look,

first, to
Laws,

approach" and

rejecting

section 193 of

which

sets forth

Restatement (Second)
the

site-specific rule

of Conflicts
by

of

creating a

presumption that a casualty-insurance policy be interpreted under

the substantive law of the state that "the parties understood was
to be

the principal

other

state has a more significant relationship" to the parties,

the

transaction, and

Restatement section 6
111 (quoting

location of the

the

outcome of

analysis.

insured risk,

the

unless some

controversy under

Gilbert Spruance, 134 N.J.

_________________

Restatement (Second) of

Conflicts of Laws

at

193).

____________________

5 Restatement (Second) of Conflict of Laws

188 provides that
the general rule in contract actions is that the law of the state
with the most significant relationship to the parties and the
transaction under the principles stated in Restatement
6
governs. Section 6 lists several factors to be considered in a
choice-of-law analysis: 1) the relevant policies of the forum; 2)
the
relevant policies of other interested states; 3) the
protection of justified expectations; 4) the basic policies
underlying the particular field; 5) the needs of the interstate
and international systems; 6) certainty, predictability, and
uniformity of result; and 7) the ease in determination and
application of the law applied.
-13-

Gilbert Spruance
________________
the
"the

also provides that

when the subject

matter of

insurance is a predictably multistate operation or activity,

significance of the principal

location of the insured risk

diminishes," and "the governing law is that of the state with the

dominant significant relationship according to the principles set

forth in Restatement section 6."

Id. (citations omitted).

__

The Gilbert Spruance decision resolved a conflict among

________________
different

panels

specifically

of

New

rejecting

Jersey's

the

Appellate

Division

by

"uniform-contract-interpretation

approach" to choice-of-law determinations and adopting the "sitespecific" approach.

Compare
_______

Westinghouse, 559
____________

Diamond Shamrock Chemicals Co. v.

_______________________________
N.J.Super. 167, 609 A.2d 440
where

pollution site lies

Johnson Matthey, Inc. v.

_____________________
N.J.Super 51,
where

593 A.2d

pollution

choice-of-law

A.2d 435;

with
____

Aetna Cas. & Surety Co., 258

_______________________

(App.Div. 1992) (interest of

is "more dominant

state

and significant");

Pennsylvania Mfrs. Ass'n Ins. Co., 250

__________________________________
367 (App.Div. 1991)

site lies

is

"paramount").

(interest of
In

its

state

initial

ruling, the district court relied on the reasoning

behind the Westinghouse court's adoption of the uniform-contract____________

interpretation
Island, the
CPC Int'l,
_________

location of the
739 F. Supp.

rejection of
highly
changes

approach in

determining that

the

law of

risk, should not govern

at 714.

change

the equation

in the

upon which

this case.

The Gilbert Spruance court's

_________________

the uniform-contract-interpretation is

significant

Rhode

controlling
the

therefore a

authority.

district court

It

relied in

making its initial choice of law decision. The district court was
-14-

obligated to predict which state's substantive law the New Jersey

Supreme Court would
all

the

apply to the facts of this case, a task made

more difficult

because

procedure for certifying questions.

New

Jersey

In our

does not

have

view, the principles

announced by the New Jersey Supreme Court represent a significant

change in the law
law

decision.

applicable to the district

court's choice-of-

We conclude, therefore, that the district court's

departure from the law of the case was justified.

We also conclude, on de novo review, that the
__ ____

district

court's prediction that the New

the law of Rhode Island in
case

law,

particularly

Spruance.
________

Under

Spruance, it
________
which

is

the

this case is supported by New

the

principles

site-specific

is presumed that

the principal

unless another state

the case.

Jersey Supreme Court would apply

announced

in

Gilbert
_______

adopted

by

Gilbert
_______

the substantive law of

location of

the insured

in New Jersey.

the case is that CPC's

the state

risk governs,

has a more significant overall

Gilbert Spruance, 134 N.J. at 112.

________________

connection with

interest in

New Jersey's only

headquarters are located

Moreover, Gilbert Spruance explained that "[w]hen

________________

the waste-producing
the same state,

facility and the

their common location

[the Restatement's choice-of-law

at 107.

rule

Jersey

waste site are

located in

makes the application

factors] straightforward."

of

Id.
__

As the district court noted, in this case the waste was

both generated and disposed of in Rhode Island.

CPC argues that
the question

of whose law

Gilbert Spruance explicitly left

________________
would apply in
-15-

a case such

open

as this.

CPC cites the following language in support of this proposition.

We have no occasion to consider in
this appeal the problem presented when
waste generated in New Jersey predictably
is disposed of in another state. . . .
Specifically, we express no view on the
proposition . . . that when another state
is the foreseeable location of the wastesite, the court must engage in a section
6 analysis to determine if that state has
the most significant relationship with
[the case].
Id. at 113-14.
__
possibility

In our view, this language merely leaves open the

that when

disposed of in

waste

is

generated in New Jersey

_________________________

another state, New Jersey law

and

might still apply.

As noted, in this case, the waste was both generated and disposed
____
of in

Rhode Island.

reason

to

predict

Under such
that

the

circumstances, there

New

Jersey Supreme

is every

Court

would

recognize with equal vigilance the "urgent concern for the health
and

safety of

[Rhode

Island's]

citizens"

implicated

generation and dumping of toxic waste in that state.

See
___

by

the

id. at
__

113 (quoting Johnson Matthey, 250 N.J.Super. at 57.

_______________
For

the

court's decision

foregoing
that the New

reasons,

we affirm

Jersey Supreme Court

the substantive law of Rhode Island in this case.

the merits

of

this

appeal --

the

the

district

district

would apply

We now turn to

court's

decision

granting Northbrook's motion for judgment as a matter of law.

B.
B.

The Grant of Judgment as a Matter of Law

The Grant of Judgment as a Matter of Law
________________________________________
1.
1.

The Policy Provisions

The Policy Provisions
_____________________

Northbrook issued
CPC which was in effect from

a comprehensive liability

policy to

July 1, 1979 through July 1,

1980.

-16-

Pursuant to that

policy, Northbrook agreed to

personal injuries,
"caused

by or arising out

in the world."
or direct
than

property damage and/or

advertising liability

of each Occurrence happening anywhere

The policy defines "property damage" as "loss of

damage to or

property owned

Occurrence

indemnify CPC for

during

by
the

destruction of tangible
an

insured) and

policy

period."

which
The

property (other
results in
policy

"Occurrence" as:
an accident, event or happening including
continuous
or
repeated
exposure to
conditions which results,
during the
policy
period,
in
Personal Injury,
Property Damage or Advertising Liability
neither expected nor intended from the
standpoint of the Insured
.

. .

All

such

Personal

Injury,

an

defines

Property Damage or Advertising Injury

caused by one event or repeated exposure
to substantially the
same conditions
shall be deemed to
result from one
Occurrence.
2.
2.
In

The District Court Decision

The District Court Decision
___________________________
ruling upon Northbrook's

matter of

law, the district

findings

of

fact.

Peterson/Puritan

plant in Cumberland,

court made the

Between

polluted the

motion for judgment

1963

and

environment in

Rhode Island.

routinely dumped chemicals, including

following pertinent
the
the

late

1970s,

area of

Peterson/Puritan

its

employees

volatile organic compounds

("VOCs"), into the drain and septic systems.

In 1974, a railroad

tank container at Peterson/Puritan spilled causing

6,200 gallons of

as a

approximately

the solvent perchloroethylene to spill onto and

into the soil (the "1974 PERC spill").

-17-

The

theory of

the

case presented

by

CPC at

trial,

primarily through the testimony of two expert witnesses, was that

prior

to

the

1974

PERC

spill,

the

VOCs

dumped

from

Peterson/Puritan were in the soil but, because of the presence of

silt and clay, had not reached groundwater.

were stagnant.
mobilized

Dr. Tod Delaney

these

groundwater

VOCs

in

the

and, eventually,

testified that,
been

but for

no pollution

testified that

testified that

the PERC

soil

them

the

several thousand foot path to

and

led

combined

force

the leading edge

Dr.

of the 1974 PERC

and contaminated the Quinnville Wells in 1979,

period.

into

the

Dr. Delaney

spill, there

Quinnville Wells.

spill

travelled

the Quinnville Wells.

the 1974 PERC

of the

In other words, they

would have

Delaney also

spill reached

during the policy

Pollution of the Quinnville Wellfields was discovered in

October 1979, during the policy period.

In its
matter of law

detailed oral

for Northbrook, the district

because the policy was

1,
from

1980, the burden

which a

opinion granting

judgment as

court reasoned that,

only in effect from July 1,

at trial was

reasonable

jury

upon CPC

could infer

1979 to July

to present evidence
that

there was

an

"occurrence" during that period.

The

district court stated

was that because the EPA

and cleaning

that CPC's theory

at trial

desires to reopen the Quinnville Wells,

the aquifer is

directly related to that

goal, the

"occurrence" for purposes of insurance should be measured by when

the contamination

of the

wells occurred.
-18-

The

difficulty with

this theory, as the district court explained, is that the Town of

Lincoln's

claim

against

Peterson/Puritan

Quinnville Wells had been settled

the

settlement under its

concerns the

to

clean

up

the

in 1984 and Northwood had paid

insurance policy.

The present action

EPA's claims against CPC regarding the aquifer east

of the Blackstone River -- the area designated by the EPA as OU-1

-- not the Quinnville Wells.
The

district court

motivations concerning
future

may be, "the

remediated

that

whatever

the

reactivating the Quinnville Wells

fact of the

is east

concluded that the

stated

of the

matter is that

Blackstone River."

"occurrence" in this

EPA's

in the

the area being

The

court then

case took place

before

the policy became effective.

The plaintiff seeks to recover the costs
of remediation of the aquifer east of the
Blackstone River from this defendant.
The evidence is clear in this case from
the experts presented by the plaintiff,
that the aquifer was damaged within the
____________________________________
meaning of
the policy when
it was
_________________________________________
polluted by the PERC spill in 1974 within
_________________________________________
days or at best, weeks of June 21, 1974
_________________________________________
when this PERC spill took place, five
__________________________________
years or more before July 1, 1979 when
this policy took effect.
Because

it

found

before the policy came into

that the

"occurrence"

took

place

effect, the district court concluded

that,

as

a matter

indemnify CPC.

of

law,

Northbrook

was not

obligated

to

The district court explained that:

If there is a principle of insurance law

that means anything it is the principle
that insurance protects a policyholder
against future contingent events. It is
not
for
the purpose
of
providing
-19-

compensation for events that have already

taken place, and that is so under the law
of New Jersey, Rhode Island, the First
Circuit, or any other jurisdiction within
the United States.
So, simply on that
ground alone, the occurrence in this case
clearly took place before the policy
became
effective, there
can be
no
recovery of the remediation costs from
this insurance carrier.

The district court also rejected CPC's case for another

reason.

The

remediation

of

court,
the

Quinnville Wells,

accepting

aquifer

tied

concluded that CPC

burden of showing that damage

during the

is

arguendo
________

policy period.

in

CPC's
with

theory

that

reopening

the

had failed to

sustain its

to the Quinnville Wells took place

Dr. Willard

Murray testified

that,

depending upon the undetermined porosity of the soil, the leading

edge

of

the PERC

plume

reached the

Quinnville

Wells between

October

or November

1978, and

December 1981.

testimony, the district court noted

Reviewing

that

that it is "just as probable

that that army of VOC's led by the PERC arrived at the Quinnville
Wells in 1978
1, 1979."

or early 1979 as it is that

it arrived after July

The district court therefore concluded that "[n]o jury

could find that

this pollution plume

arrived at the

Quinnville

Wells after July 1, 1979 without completely speculating."

The
that

CPC

district court held that there is "no possibility"

could

recover

from

Northbrook

for

the

costs

of

remediation of the OU-1 area and, therefore, granted Northbrook's

motion.

In conclusion,

the court stated

being decided on general principles

that "[t]his

case is

of law and it really doesn't

matter whose law applies in this case."

-20-

By declining
law in

this case, the

to look
law of

specifically to the
Rhode Island, the

controlling

district court

essentially held that, under general principles of insurance law,

there

is one

"occurrence"

trigger

date

for calculating

the

time when

an

causing "property damage" takes place; or, at least

that, if there is more than one possible trigger date, CPC

could

not recover under any of them.

In fact, there are at least seven

trigger dates utilized by different jurisdictions for determining

the

time at

place.6

which an occurrence

Moreover,

recover

under one

critical

as
or

to determine

causing property

discussed
more of

below,

these

which trigger

CPC

could

theories.
theory

damage takes

possibly

Thus,

of coverage

it

is

Rhode

Island would apply to this case.

As

noted, there

are at

least seven theories

used in

different jurisdictions for determining when an occurrence policy

provision is triggered.

See generally In re Acushnet River & New

_____________ __________________________

Bedford Harbor: Proceedings Re Alleged PCB Pollution, 725

________________________________________________________
Supp.

1264,

1274-75

(D.Mass.

1989)

(describing

the

F.

seven

standards), aff'd in part and rev'd in part on other grounds sub

_____________________________________________________
nom., Lumbermens Mut. Cas. Co.
____ _________________________

v. Belleville Indus., Inc., 938

________________________

F.2d 1423 (1st Cir. 1991), cert. denied, ___ U.S. ___, 112 S. Ct.
____________
969, 117 L.Ed.2d

134 (1992).

These seven

theories or standards

are as follows.
____________________

6
These different legal standards are critical because, as is
the case here, most, if not all, "occurrence" policy provisions
only allow recovery for an occurrence causing property damage
during the policy period.
-21-

First,

the wrongful

act theory

would

hold that

occurrence causing property damage took place when the

spill occurred.
occurrence
leeched

Second, the

causing

into

the

842 F.2d 977

property

damage took

environment.

See
___

place

when

place

Continental Ins. Co. v.

______________________

1984).7

1180, 1189

(8th Cir. 1988), cert. denied, ___ U.S. ___, 109 S.

____________
(1988).

that the occurrence

when the

level

actually injured
Corp.
_____

the VOCs

modified on other grounds after reh'g en banc,

______________________________________________

Ct. 66, 102 L.Ed.2d 43

would hold

1974 PERC

exposure theory would hold that the

Northeastern Pharmaceutical and Chem. Co., 811 F.2d

___________________________________________
(8th Cir. 1987),

the

of VOCs

Third, the injury-in-fact theory

causing damage to
was

or contaminated.

See
___

v. Liberty Mut. Ins. Co.,

_______________________
Fourth,

the manifestation
property damage

became "reasonably

capable of .

the aquifer

was

American Home Products

_______________________

748 F.2d

occurrence causing

Indus., Inc. v.
____________

such that

property took

760,

765 (2d

theory would hold

took place

when the

. . diagnosis."

Cir.

that the

damage

Eagle Pitcher
_____________

Liberty Mut. Ins. Co., 682 F.2d 12, 25 (1st Cir.

_____________________

1982) (applying the

law of Ohio and Indiana),

cert. denied, 460

____________

U.S. 1028, 103 S. Ct. 1280, 75 L.Ed.2d

Assurance Co. v.
_____________
1986) (applying

500 (1983); American Home

_____________

Libby-Owen-Ford Co., 786 F.2d 22,

___________________
Ohio law).

Fifth,

30 (1st Cir.

the first discovery

occurrence causing damage

theory

would

hold that the

to property took

place

when the property owner actually discovered the pollution.

____________________

7
This appears to be the theory used by the district court in
its initial decision, under "general principles of law," that CPC
could not recover because injury to the aquifer took place "when
it was polluted by the PERC spill in 1974 within days or at best,
weeks of June 21, 1974 when this PERC spill took place . . ."
-22-

Pittsburgh Corning Corp. v.

_________________________
1988

WL 5291

combination

Travelers Indem. Co.,

____________________

(E.D.Pa. Jan. 20,

of the

fourth and

1988).
fifth.

No. 84-3985,

The sixth theory

Under this

is a

theory, the

occurrence causing damage to property took place when the insured

"knew or should
Acushnet,
________

725

have known" of the

F.

Supp. at

1274

Insurance Co. of North America,

__________________________________

property damage.
n.17
502

See
___

In re
_____

(citing Bartholomew
______ ___________
F.

Supp.

246,

v.

252-54

(D.R.I.),

aff'd, 655
_____

continuous

time of

America,
_______

(1st

Cir. 1981).

Finally,

the

trigger theory would hold that the occurrence causing

property damage
the

F.2d 27

took place both at

manifestation.

the time of exposure

Keene
_____

667 F.2d 1034, 1047

and at

v. Insurance Co. of North

________________________

(D.C.Cir. 1981), cert. denied, 455

____________

U.S. 1007, 102 S. Ct. 1644, 71 L.Ed.2d 875 (1982).

The

question of

critical in this case.

If

which

trigger

theory

to

apply

the Rhode Island Supreme Court

is

would

apply the wrongful act, exposure, or injury-in-fact theories, the

district
Island

court's decision
Supreme

discovery,
the case

Court

should

would

apply

or "reasonably knew
should be

trial.

The

trial,

a reasonable

be affirmed.
the

If the

Rhode

manifestation,

first

or should have

remanded to

reason for this is

the

known" theories,

district court

that, based on the

jury could

have found

for a

new

testimony at

that the

1974 PERC

spill caused the VOCs to migrate to the Quinnville Wells and that
the

PERC-led

contaminants

reached

-23-

the

wells

before

October

1979.8

Under

be entitled
that

the

aquifer

to infer,
first time

was

Quinnville
holds

the manifestation theory, a

in

CPC

October

Wells was

true for

based on

CPC's uncontroverted

should have
1979, when

discovered.9

the first

reasonable jury would

known
the

It

discovery

evidence,

of damage

to the

contamination

of the

follows

and "knew

that the

same

or should

have

known" theories.
The

district court was obligated to determine which of

these trigger-of-coverage theories the Rhode Island Supreme Court

would apply in this case.
to do

so here.

Island law
applied

In

Because it did not, we have endeavored

the end,

is unclear as

conclude that

Rhode

to which trigger-of-coverage is

to be

and, therefore, choose

however, we

to certify

the question

to the

Rhode Island Supreme Court.

CPC argues

that Bartholomew,
___________

a case

from the

United

____________________

8
The particular testimony that would support this is: 1)
Dr. Delaney's testimony, that, but for the PERC spill, the
Quinnville wells would not have been polluted; 2) the testimony
that the pollution was discovered in October 1979; and 3)
Dr. Murray's testimony that the leading edge of the PERC plume
reached the Quinnville Wells between October or November 1978,
and December 1981. If the jury accepted all these facts as true,
which we must do on appeal, it could determine that the PERC-led
pollutants, stimulated by the 1974 PERC spill, reached the wells
before October 1979.

9
The district court did not make specific findings as to
whether CPC (or Peterson/Puritan) reasonably should have known
that the 1974 Perc spill would damage the environment, although
the court did note that "the event was well recognized by the

management of Peterson/Puritan."
The district court also noted
that it is "unfortunate that people were not environmentally
tuned in at that time because, of course, Peterson/Puritan could
have made a substantial claim against [the railroad carrier] for
polluting the environment."
-24-

States District Court for Rhode Island, purporting to apply Rhode

Island

law,

is

the

controlling

Rhode

Island

precedent.

Bartholomew holds
___________

that the

date of the

occurrence is

when

"knew or

should have

known" of

the insured

damage.10

Northbrook, on

the other

hand,

Rhode Island
date

of an

occurs.

We

follows the
occurrence

A.2d 1358 (R.I. 1994), indicates that

the date

when

Rhode Island on

analysis of

the two cases,

-- i.e.,

the property

agree that Bartholomew and Textron are

___________
_______

cases from

the

in Textron, Inc. v.
_____________

"injury-in-fact" theory
is

the property

maintains that

Rhode Island Supreme Court's recent decision

Liberty Mut. Ins. Co., 639
_____________________

the date

damage

the most apt

the trigger-of-coverage issue.

however, leads us to

the

Our

the conclusion

that they raise more questions than they answer.

The district

court in

Bartholomew,
___________

finding no

Rhode

Island

law

on

Supreme Court
known"

the subject,
would adopt

difficulties with this case as

our research

either explicitly
in fact,

that

the Rhode

the "reasonably knew

trigger-of-coverage

First,

predicted

standard.

or should

There

are

have

several

an indicator of Rhode Island law.

indicates that

no Rhode

adopted or rejected

to our knowledge, no

Island

Island court

has

the Bartholomew standard;

___________

Rhode Island court has

ever even

____________________
10

CPC

actually

maintains

that

Bartholomew establishes a
___________
"manifestation"
trigger of coverage -- i.e., there is no
"occurrence" under the policy until the "property damage" becomes
known.
Bartholomew, however, clearly holds that the date of
___________
occurrence is the date when the insured "knew, or reasonably
_____________
should have
known," of
the injury
or property
damage.
____________________
Bartholomew, 502 F. Supp. at 254. Accord American Home Assur.,
___________
______ ____________________
786 F.2d at 29 (reciting the Bartholomew test).
___________
-25-

cited Bartholomew.
___________

Second, our decision affirming

the district

court in

did not explicitly

the standard

that case

comment on

adopted

by the

district court,

but rather

relied on

fundamental fact that the "defects were fully

for, before the policies took effect."
can only construe
defendants."
29

(1st

Cir.

Bartholomew
___________
Island

Finally,

conflict with

Supreme Court

attempt to 'job' the

v. Appalachian Ins. Co., 655

____________________

1981).

is in

known, indeed sued

Thus, we commented, "[w]e

the present action as an

Bartholomew
___________

decision

the more

and

most

Textron,
_______
controls

F.2d 27,

importantly,

obviously the
the present

if

Rhode

diversity

action.
In a
Co., 639
___

footnote in

A.2d 1358 (1994),

Textron, Inc.
_____________

v. Liberty Mut. Ins.

__________________

the Rhode Island Supreme

Court made

the following statement.

In
the
area
of
general-liability
insurance, an occurrence policy provides
coverage for any "occurrence" which takes
place during the policy period.
Under
this type of policy it is irrelevant
whether the resulting claim is brought
against the insured during or after the
policy period, as long as the injury_________________________
causing event happens during the policy
_________________________________________
period.
______
Id. at 1361 n.1 (emphasis
__

added) (citing DiLuglio v. New England

________
___________

Ins. Co., 959 F.2d 355, 358

________
Home Indemnity Co., 119
__________________
n.1

(1978)).

(1st Cir. 1992) and Gereboff v.

________

R.I. 814, 818

n.1, 383 A.2d 1024,

the
___

1026

Northbrook maintains that this statement indicates

that

Rhode Island looks

occurs

to the

point when

as the trigger date for coverage.

it could
_____

be read that

way, we

the injury

in fact

Although we agree that

have several concerns

about the

-26-

reliability of

this general

statement as

a predictor

of Rhode

Island law in this case.

First,

the statement in Textron is entirely dictum; it

_______

appears only in a very general fashion and in a footnote;

was not relevant to decision of the case.
sought

indemnification

occurred

policy

property

during the coverage

until twenty-one years

case

for

was disposed
provision

In Textron, an insured
_______
damage

period but which

after the last policy's

of, in
which

favor of the
required that

property damage within one year

Textron, 639 A.2d at 1363.
_______

Thus,

and it

which

allegedly

was not reported

expiration.

insurer, pursuant
the

insured

The

to a

report the

of the expiration of the policy.

the outcome of the case in

no

way depended upon the langauge in the footnote.

Second, Textron
_______

does

not

cite

Bartholomew,
___________

case

purportedly applying Rhode Island law, which is cited extensively

by courts in the First Circuit and other jurisdictions, and which

adopts

an entirely

questions

as to

different standard.

exactly how

broad

We

a sweep

think this

raises

the Textron
_______

court

intended its statement to have.

Third, the

phrase

"injury-causing

think reasonably)

be interpreted

trigger theories.

It could

act theory"

in its trigger

as either

that

Rhode Island

could

of three

(we

potential

mean Rhode Island uses the "wrongful

of coverage analysis, which

case would be the 1974 PERC spill.

argues,

event"

follows

in this

It could mean, as Northbrook

the

injury-in-fact theory.

Here, according to CPC's own expert witnesses, the injury in fact

-27-

would have occurred within days of the 1974 PERC spill.

it could refer
have been

to the exposure theory.

when the VOCs

minutes of the

In this case, that would

leeched into the environment

1974 PERC spill.11

Finally,

Moreover,

court noted, the wrongful act theory, which

-- within

as the Bartholomew
___________

we think is the most

literal

reading of "injury-causing event," "has been rejected by

the vast majority

of jurisdictions."

Bartholomew, 502
___________

F. Supp.

at 253 (citing Annotation, 57 A.L.R.2d 1358 (1958)).12

For the reasons stated above,

we think that the law of

Rhode Island is "unclear" with respect to the trigger-of-coverage

issue.

See
___

Lehman Brothers v. Schein,

_______________
______

1741, 40

L.Ed.2d 215 (1974).

coverage

issue is determinative

issue,

Island law

of this

consistent both

and with

certify the question

to Rule 6 of

S. Ct.

We also think that the trigger-of-

conclude that the most appropriate

coverage

416 U.S. 386, 94

appeal.

We therefore

way to resolve the trigger of

with our

duty to

important principles of
to the Rhode Island

the Rhode Island Supreme

apply Rhode

federalism, is

to

Supreme Court pursuant

Court Rules of

Appellate

____________________

11 Judgment as a matter of law for Northbrook would be justified

under all three of these theories because, based on the evidence
adduced by CPC at trial, the pertinent events under these
theories of coverage did not take place during the policy period.
The significance of the fact that the statement could be
interpreted as
adopting any of three different standards,
however, lies not in the substance of the three potential
standards, per se, but in the way it reflects the indeterminate
___ __
nature of the statement itself.

12 Rhode Island is, of course, entitled to adopt a minority rule

and, provided it does not contravene federal law, which this
clearly would not, we would be bound to apply it in this case.
However, given the other considerations listed above, we think it
is appropriate to take this factor into account.
-28-

Procedure.

For the foregoing reasons, the district court's choice-

of-law decision is affirmed and a question certified to the Rhode

______________________________________________

Island Supreme Court, with jurisdiction retained pending that

_________________________________________________________________
determination.
_____________

-29-

UNITED STATES COURT OF APPEALS

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
________________
No. 94-1276
CPC INTERNATIONAL, INC.,
Plaintiff - Appellant,
v.
NORTHBROOK EXCESS & SURPLUS
INSURANCE COMPANY,
Defendant - Appellee.
_______________
CERTIFICATION
_______________
This

Court hereby certifies a question of Rhode Island

state law to the Rhode

of the Rhode

Island Supreme Court, pursuant to Rule

Island Supreme Court Rules

of Appellate Procedure,

and provides a brief statement of the grounds for certification.

The

insurance policy

at issue

in CPC Int'l Inc. v.

________________

Northbrook Excess & Surplus Ins. Co., No.

____________________________________

94-1276, requires that

the "occurrence" causing "property damage" must take place during

the policy period in

order for coverage to be provided.

In the

body of its Opinion in that case, this Court has identified seven
different approaches used
for determining
coverage.

by courts

in different

when an injury takes place

jurisdictions

in order to trigger

The different approaches are: the wrongful act theory,

the exposure theory, the injury-in-fact theory, the manifestation

theory,

the

should have

first

discovery theory,

known" theory,

and the

the

"reasonably

knew or

continuous trigger

theory.

-30-

Neither

of

identified

the

two

potentially

relevant

cases

the

Court

from Rhode Island -- Textron, Inc. v. Liberty Mutual

______________
______________

Insurance Co.,
______________

639 A.2d

1358

(R.I. 1994)

and

Bartholomew v.
___________

Appalachian Insurance Co., 502 F. Supp. 246

_________________________
F.2d 27 (1981)

(D.R.I.), aff'd, 655

_____

-- provides the necessary means

to predict which

trigger-of-coverage standard the Rhode Island Supreme Court would

apply.

Accordingly, the Court certifies the following question

to the Rhode Island Supreme Court:
What trigger-of-coverage standard would
the Rhode Island Supreme Court use for
determining at what point an "occurrence"
causing "property damage" took place,
within the meaning
of the insurance
policy
provisions
provided
in
the
separate opinion in this case, where an
insured alleges that a spill of hazardous
contaminants in 1974 migrated through the
groundwater, causing immediate injury to
the pertinent property, which was not, in
fact, discovered, however, until at least
1979?
The

relevant

opinion in this case.

Island
course,

facts

are

discussed

in

the

separate

In putting the above question to the Rhode

Supreme Court, we

wish to make

clear that

we would, of

welcome the advice of the Court on any other question of

Rhode Island law it deems material to this case and upon which it
wishes to comment.

-31-

The Clerk of this court will transmit this question and

our

separate opinion

briefs and

in this

appendix in

case,

this case, to

along with
the Rhode

copies of

Island Supreme

Court.
United States Court of Appeals
for the First Circuit
By: _______________________
Juan R. Torruella
Chief Judge
Dated:

January 19, 1995

the

-32-