Repeated Release of Chemicals Not “Unexpected”

On August 13, 1982, the Upjohn Manufacturing Company began its annual production of clindamycin, an antibiotic. It pumped two toxic chemical byproducts into a 10,000 gal. underground storage tank. Each workday, an employee measured the level in the tank and turned the measurement over to his supervisor. Before Aug. 16, 1982, the measurement remained constant at 10 in. or 475 gal. However, on Aug. 16, 1982, the measurement was 3 in. or 80 gal. Despite this discrepancy, Upjohn pumped eight more batches of by‐product into the tank in the next weeks. A monthly audit on Sept. 3, 1982, confirmed that the measurements did not coincide with what was intended, so no additional by‐product was pumped into the tank. Investigation revealed the tank had corroded through in three places and that 15,000 gal. of toxic by‐product had leaked out. Upjohn's comprehensive general liability (CGL) insurance policy issued by Allstate Insurance Company excluded pollution damages except for “sudden and accidental” releases. Upjohn and its subrogated property insurers sought coverage, but Allstate refused. This suit was brought by Upjohn. The trial and intermediate appellate courts ruled for Upjohn, but the state supreme court reversed the decision.