In the
United States Court of Appeals For the Seventh Circuit ____________________ Nos. 24-1217 and 24-1223 GRIFFITH FOODS INTERNATIONAL INC., et al., Plaintiffs-Appellees, v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Defendant-Appellant. ____________________ Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 1:21-cv-06403 & 1:21-cv-04581 — Mary M. Rowland, Judge. ____________________
ARGUED SEPTEMBER 25, 2024 — DECIDED APRIL 11, 2025 ____________________
Before SCUDDER, ST. EVE, and KIRSCH, Circuit Judges. SCUDDER, Circuit Judge. Before us is an important question of Illinois law about the meaning and scope of the pollution exclusion in standard-form commercial general liability poli- cies. The exclusion owes its existence to the confounding risk of liability insurance companies faced in recent decades stem- ming from highly publicized environmental disasters (like the Love Canal crisis in Niagara Falls, New York and the 2 Nos. 24-1217 & 24-1223
Times Beach catastrophe in Missouri). In its 1997 decision in American States Insurance Co. v. Koloms, 687 N.E.2d 72 (Ill. 1997), the Illinois Supreme Court carefully recounted this his- tory and interpreted the standard CGL pollution exclusion to exclude coverage for bodily injuries caused by traditional en- vironmental pollution (essentially industrial emissions of pol- lutants), but not by more commonplace emissions—for exam- ple, a leak of carbon monoxide from a residential furnace or excess chlorine in a backyard swimming pool. This appeal requires us to interpret and apply Koloms as part of determining whether an industrial pollutant dis- charged pursuant to a permit issued by an Illinois regulatory agency constitutes traditional environmental pollution sub- ject to a CGL policy’s pollution exclusion. The issue comes to us in an insurance dispute that accompanied highly publi- cized mass tort litigation arising out of substantial injuries, in- cluding cancer, allegedly caused by emissions of ethylene ox- ide over a 35-year period by Griffith Foods International and later Sterigenics U.S. in the suburban Chicago community of Willowbrook, Illinois. Our own reading of Koloms suggests that the pollution ex- clusion applies. But a post-Koloms decision by an intermediate Illinois appellate court suggests that industrial emissions of a contaminant like ethylene oxide pursuant to a regulatory per- mit changes the analysis and renders the pollution exclusion not applicable, essentially on the theory that the injury-caus- ing emissions were authorized by law and thus cannot consti- tute a form of traditional pollution otherwise excluded by a CGL pollution exclusion. So the question is unsettled in Illi- nois law. Mindful that the answer will have substantial con- sequences—for this case, others, and indeed the broader Nos. 24-1217 & 24-1223 3
insurance market—we believe the most appropriate path for- ward is to certify the question to the Illinois Supreme Court, the definitive authority on Illinois law. I All agree that Illinois law governs this dispute and estab- lishes principles for deciding whether an insurer shoulders a duty to defend. Under those principles, we must compare the insurance policy in question with the underlying complaint an insured calls its insurer to defend. See Koloms, 687 N.E.2d at 75. So we begin by relaying the facts as alleged in the un- derlying complaint—in this case, what the parties refer to as the Master Complaint. See Plaintiffs’ Fourth Amended Master Compl., In re Willowbrook Ethylene Oxide Litig., No. 2018-L- 010475 (Ill. Cir. Ct. filed Apr. 16, 2021). In 2018 the U.S. Department of Health and Human Ser- vices released a public report revealing that Willowbrook, Il- linois was experiencing “staggering and disproportionate” rates of cancer. MC ¶ 11. The believed cause: ethylene oxide, or EtO, emissions from a local medical supply sterilization plant opened by Griffith Foods and subsequently operated by Sterigenics. While this was the first that Willowbrook resi- dents had heard of the toxic emissions, the companies’ role in driving the excessive cancer rates allegedly began decades earlier. In the early 1900s Griffith pioneered the use of EtO as an effective medical supply sterilant. MC ¶ 33. Griffith contin- ued its sterilization business for years, and in 1984 sought a construction and operating permit from the Illinois Environ- mental Protection Agency to open a plant in Willowbrook. MC ¶¶ 33, 40. In its communications with the IEPA about the 4 Nos. 24-1217 & 24-1223
requested permit, Griffith informed the agency that its sterili- zation process produced significant EtO emissions that would be discharged into the air surrounding the plant. MC ¶¶ 39, 41. While the IEPA expressed concerns about the projected EtO emissions, it ultimately granted Griffith’s request for a permit. MC ¶¶ 42, 44–45, 48, 57. And, as far as we can tell from the Master Complaint, the permit did not specify or oth- erwise limit the amount of EtO that Griffith could emit from its Willowbrook sterilization operations. The Master Complaint alleged that Griffith proceeded to emit substantial and dangerous amounts of EtO while oper- ating the plant from 1984 to 1999. MC ¶ 13, 143. When Steri- genics purchased the facility in 1999, it continued to emit EtO until shutting down in 2019, after the IEPA imposed a specific limit on the plant’s EtO emissions. MC ¶¶ 4, 24, 210–14. The gravamen of the Master Complaint is clear: for the 35 years the sterilization plant operated in Willowbrook, local residents unknowingly inhaled EtO on a regular and contin- uous basis, with many individuals coming to experience a range of illnesses, including cancer and other serious diseases. See, e.g., MC ¶¶ 10, 13, 90–91, 300(a). For much of that time, Willowbrook residents lacked in- formation to connect their ailments to the sterilization plant’s emissions. Id. But in the wake of the 2018 governmental report and floodtide of publicity that followed, over 800 people filed individual lawsuits against Griffith and Sterigenics in Illinois state court, asserting various claims under Illinois law. The complaints commonly alleged that Griffith intentionally lo- cated and operated its facility in a residential area despite knowing that its dangerously high EtO emissions would mi- grate to areas near the facilities, including to homes and Nos. 24-1217 & 24-1223 5
neighboring schools, and eventually cause bodily injuries. To ease the administration of such a high volume of cases, the state court consolidated the matters for pre-trial and discov- ery purposes only, leading to the plaintiffs collectively pro- ducing the single Master Complaint. Significant satellite insurance litigation commenced alongside the tort litigation. National Union Fire Insurance Company had issued commercial general liability insurance to Griffith over a two-year period, with one policy providing coverage between September 30, 1983 and September 30, 1984, and a second materially identical policy covering the following year and expiring on September 30, 1985. Each CGL policy requires National Union to “defend any suit against the insured seeking damages on account of … bodily injury” that “occur[ed] during the policy period” and “personal in- jury” arising out of “offenses committed during the policy pe- riod.” The policies also contain an identical standard-form “pollution exclusion,” which bars coverage for bodily injuries arising from the discharge of various pollutants, including toxic chemicals, into the atmosphere, unless the discharge was sudden and accidental. In 2021 Griffith invoked the policies and demanded that National Union defend it in the ongoing Illinois litigation. Na- tional Union denied coverage and refused to defend. This lit- igation followed, with Griffith and Sterigenics separately go- ing to federal court in Chicago and seeking declarations that National Union had a duty to defend the companies against the state court tort litigation. The two cases proceeded before the same district judge and, as we often see, the parties filed cross motions for judgment on the pleadings to resolve 6 Nos. 24-1217 & 24-1223
whether National Union had a duty to defend Griffith and Sterigenics based on the allegations in the Master Complaint. The district court answered that question in the affirma- tive, applying Illinois law and determining that the Master Complaint’s factual allegations could be read to trigger cov- erage for both bodily and personal injuries. The district court further concluded that the pollution exclusion did not apply because the companies emitted EtO pursuant to a permit is- sued by the IEPA. The district court reached this latter con- clusion by applying Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214 (Ill. App. Ct. 2011), an Illinois interme- diate appellate court decision finding it ambiguous whether a CGL policy’s pollution exclusion bars coverage for emissions authorized by regulatory permit. The district court resolved several other issues challenged on appeal, but we limit our discussion here to National Un- ion’s challenge to the district court’s ruling on the pollution exclusion to the CGL’s coverage for bodily injuries. If the pol- lution exclusion applies, Griffith and Sterigenics have no claim to coverage and no basis for requiring National Union to defend them against the allegations in the Master Com- plaint. Put more directly, the answer to the pollution exclu- sion question may eliminate all other issues pressed by Na- tional Union on appeal. II Before reaching the heart of the question we ultimately certify to the Illinois Supreme Court, we address National Un- ion’s contention that the district court committed a broad le- gal error in its duty to defend ruling. Nos. 24-1217 & 24-1223 7
The error, National Union tells us, has major ramifications and came when the district court concluded that it owed Grif- fith and Sterigenics a duty to defend against the Master Com- plaint without then taking the necessary second step of dis- cerning the scope of that duty. That second step was neces- sary, National Union urges, because, while the Master Com- plaint encompasses 35 years of alleged injuries (from 1984 to 2019), its CGL insurance policies extended coverage for just two years (from 1983 to 1985). Given this substantial mis- match (between the scope of the Master Complaint—which, recall, is a compendium of allegations in the 800 or so individ- ual underlying complaints—and the scope of the insurance policies), National Union says it cannot possibly be on the hook for the entirety of the companies’ costs incurred in de- fending the Master Complaint. The only way to determine and ultimately monetize its duty to defend, it insists, is to take some step to examine the 800 complaints used to create the Master Complaint—itself just a procedural tool to facilitate consolidated pretrial proceedings on common issues—and determine which ones contained allegations of injuries occur- ring between September 30, 1983 and September 30, 1985, the effective dates of National Union’s policies. National Union’s contention has a lot to it, and very well may have prevailed had it been presented this way in the dis- trict court. But that never happened. Indeed, National Union waived the position in the district court. The record leaves little doubt on the point. In response to Griffith’s and Sterigenics’s motions for judgment on the pleadings, National Union did not respond with a clear and express articulation of the position it presses on appeal. Take, for example, the briefs National Union filed on the Rule 12(c) 8 Nos. 24-1217 & 24-1223
motions for judgment on the pleadings. Each refers only to one “Underlying Litigation” and directs the district court to consider the allegations in the Master Complaint. The briefs do not go the next step of explaining National Union’s argu- ment on appeal: that the motions were limited to threshold issues of coverage, leaving the more case-by-case issue of oc- currence dates, which would require examination of each of the 800 underlying complaints, for a future judgment on the pleadings motion. Not so, says National Union, because it included a foot- note within its opposition to the companies’ Rule 12(c) mo- tions stating that the insurer “accept[ed] the plaintiffs’ allega- tions only for the purposes of this motion” but reserved the “right to argue whether plaintiffs sustained ‘bodily injury’ caused by an ‘occurrence’ within the effective dates of the Pol- icies.” This footnote, though, fell short of clearly alerting the district court to National Union’s position regarding the Mas- ter Complaint’s role in determining the scope of its duty to defend. It asks too much of the district court to read that foot- note and conclude that resolution of National Union’s duty to defend required both evaluating the allegations in the Master Complaint and then—at a second step—analyzing each of the underlying 800 individual complaints to determine when each plaintiff’s alleged injury occurred. See Harmon v. Gordon, 712 F.3d 1044, 1053 (7th Cir. 2013) (explaining that “[w]e have often said that a party can waive an argument by presenting it only in an undeveloped footnote”). At the very least, Na- tional Union’s footnote left its position so opaque and under- developed as to amount to waiver. See, e.g., Puffer v. Allstate Ins. Co., 675 F.3d 709, 718 (7th Cir. 2012) (“[E]ven arguments that have been raised may still be waived on appeal if they are underdeveloped, conclusory, or unsupported by law.”). Nos. 24-1217 & 24-1223 9
We also recognize that National Union reacted to the dis- trict court’s adverse ruling by attempting to relitigate the duty to defend issue. It did so by filing what it styled as a “status report” with the district court, asserting for the first time with any clarity that additional issues, such as the dates each indi- vidual plaintiff lived in Willowbrook, needed to be resolved before applying the district court’s duty to defend ruling to the various individual state lawsuits. This change of course was the epitome of too little, too late. On our reading of Sterigenics’s and Griffith’s motions for judgment on the pleadings, National Union had fair notice that the companies were treating the individual lawsuits as if they had all folded into and become governed by the Master Complaint. If that impression is off, National Union did noth- ing to clarify its position. The time for National Union to chal- lenge the scope of its duty to defend by narrowing the rele- vant time period was before the district court granted judg- ment on the pleadings for the companies. Cf. RCBA Nutraceu- ticals, LLC v. ProAmpac Holdings, Inc., 108 F.4th 997, 1005 (7th Cir. 2024) (“A party may not raise an argument for the first time in a motion for reconsideration.”). National Union failed to do so. We have taken pains with this part of the analysis because National Union’s concern of overstated duty to defend liabil- ity has much to say for itself and has given us great pause. But, in our final analysis, no matter how many times we re- view what transpired below, we return to the same conclu- sion: National Union failed to preserve its contention in the district court. 10 Nos. 24-1217 & 24-1223
III That brings us to the crux of the issue we confront in this opinion—whether National Union owes a duty to defend Griffith and Sterigenics against the Master Complaint. Illinois courts interpret an insurer’s duty to defend broadly. If the fac- tual allegations in the Master Complaint fall “within or poten- tially within” the policies’ scope of coverage, we must con- clude that National Union has a duty to defend “even if the allegations are groundless, false, or fraudulent.” See United States Fid. & Guar. Co. v. Wilkin Insulation Co., 578 N.E.2d 926, 930 (Ill. 1991); accord United Fire & Cas. Co. v. Prate Roofing & Installations, LLC, 7 F.4th 573, 579–80 (7th Cir. 2021) (applying Illinois law). Two dimensions of coverage are relevant to this appeal: National Union agreed to defend all suits against its insured seeking damages on account of (A) personal injury and (B) bodily injury. We address each in turn. A As relevant here, the policies define personal injury as the “wrongful entry or eviction or other invasion of the right of private occupancy.” Griffith and Sterigenics contend that a private nuisance claim falls within that definition. For pur- poses of this appeal, we will assume that is so. But even on that assumption, we cannot read the Master Complaint, which everyone acknowledges contains no express claim for private nuisance, as pleading facts sufficient to raise the pos- sibility of such a claim. See Lexmark Int'l, Inc. v. Transp. Ins. Co., 761 N.E.2d 1214, 1221 (Ill. App. Ct. 2001) (explaining that courts look to “whether the alleged conduct arguably falls within at least one of the categories of wrongdoing listed in Nos. 24-1217 & 24-1223 11
the policy,” giving little weight to the “legal label that charac- terizes the underlying allegations”). Under Illinois law, a “private nuisance is a substantial in- vasion of another’s interest in the use and enjoyment of his or her land.” In re Chi. Flood Litig., 680 N.E.2d 265, 277 (Ill. 1997); see also Dobbs v. Wiggins, 929 N.E.2d 30, 39 (Ill. App. Ct. 2010) (“An invasion constituting a nuisance can include noise, smoke, vibration, dust, fumes, and odors produced on the de- fendant’s land and impairing the use and enjoyment of neigh- boring land.”); Schiller v. Mitchell, 828 N.E.2d 323, 329 (Ill. App. Ct. 2005) (“The interference must consist of an invasion by something perceptible to the senses.”). While geographically focused on the residents and com- munity of Willowbrook, the Master Complaint contains no al- legations that the EtO emissions affected the way the sterili- zation plant’s neighbors used or enjoyed their property. In- deed, to read the Master Complaint as potentially bringing a private nuisance claim (even if not expressly) would be at odds with the entire thrust of the underlying plaintiffs’ alle- gations, which describe “invisible” and “odorless” emissions that Willowbrook residents “unknowingly” inhaled. MC ¶¶ 8, 10. We cannot see how the emissions were simultane- ously unknown to residents yet substantially invaded the use and enjoyment of their property. At the very least, having re- viewed the Master Complaint in great depth, we see insuffi- cient factual allegations supporting a claim to recover for any loss of use and enjoyment of property—the lynchpin of any claim for private nuisance. The point need not detain us fur- ther. 12 Nos. 24-1217 & 24-1223
B So that brings us to the Master Complaint’s allegations of bodily injury and, by extension, the CGL policy’s pollution exclusion. All agree that the Master Complaint contains alle- gations of bodily injuries. See, e.g., MC ¶¶ 7, 13, 221, 226. Under National Union’s CGL insurance policies, bodily injuries are not covered if they fall within the scope of the standard-form pollution exclusion, which bars coverage for: bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental[.] Pointing to the last clause, Griffith and Sterigenics invite us to avoid deciding whether its conduct falls within this ex- clusion because at least some of its EtO emissions were “sud- den and accidental.” But the plain focus of the Master Com- plaint belies such a theory. The Illinois Supreme Court has ex- plained that the sudden-and-accidental exception “applies to unexpected and unintended releases of pollutants.” Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204, 1221 (Ill. 1992). Yet the Master Complaint repeatedly alleges that Grif- fith and Sterigenics “intentionally,” and therefore, expect- edly, “emitted EtO into the air despite their knowledge that it would contact people who lived or worked near the facili- ties.” See, e.g., MC ¶¶ 9, 35, 81(j), 90, 153, 313. Nos. 24-1217 & 24-1223 13
That some emissions may have been the result of frequent accidental spills or other negligent business acts does not change the analysis or our conclusion that the sudden-and- accidental exception to the pollution exclusion finds no appli- cation here. See Fruit of the Loom, Inc. v. Travelers Indem. Co., 672 N.E.2d 278, 287–88 (Ill. App. Ct. 1996) (concluding that the sudden-and-accidental exception did not apply because “ac- cidental spills” occurred “in the ordinary course of busi- ness”). What this means by extension, then, is that if the pol- lution exclusion applies, National Union does not owe Grif- fith and Sterigenics a duty to defend against the Master Com- plaint. Griffith and Sterigenics nevertheless insist that the EtO emissions alleged in the Master Complaint do not fall under the pollution exclusion as interpreted by the Illinois Supreme Court because it is possible the emissions do not constitute “traditional environmental pollution.” National Union sees the question the opposite way, telling us that this case pre- sents a postcard example of where the pollution exclusion should apply to bar coverage for the bodily injuries alleged in the Master Complaint. With their positions staked out, both sides recognize that the answer turns on how to apply the Il- linois Supreme Court’s reasoning in American States Insurance Co. v. Koloms to the allegations in the Master Complaint. See 687 N.E.2d 72. We, too, see Koloms as standing centerstage in this dispute, for the decision interprets Illinois law, comes from the State’s highest court, and supplies essential guidance on the pollu- tion exclusion within standard-form CGL policies. Koloms it- self concerned whether injuries caused by carbon monoxide emissions from a defective furnace operating within a 14 Nos. 24-1217 & 24-1223
residential home fell within a CGL policy’s pollution exclu- sion for duty to defend purposes. See id. at 73. In the course of answering that question in the negative, the Court supplied substantial guidance on the meaning and scope of the stand- ard CGL policy’s pollution exclusion. The Court underscored that the question was challeng- ing—one on which courts across the country had “not reached a clear consensus.” Id. at 78. Some courts, it observed, strictly construed the exclusion’s plain language, finding that it barred coverage in a wide range of scenarios that would not normally be thought of as environmental pollution. See id. But other courts held that following the pollution exclusion’s plain language would lead to absurd results, like excluding coverage when a person slips and falls on the spilled contents of a bottle of Drano or has an allergic reaction to chlorine in a swimming pool. See id. at 77–79 (citing Pipefitters Welfare Educ. Fund v. Westchester Fire Ins. Co., 976 F.2d 1037, 1043 (7th Cir. 1992)). In the end, the Illinois Supreme Court, “troubled” by an “overbreadth in the language of the exclusion as well as the manifestation of an ambiguity which results when the exclu- sion is applied to cases which have nothing to do with ‘pollu- tion’ in the conventional, or ordinary, sense of the word,” looked beyond the exclusion’s plain language. Id. at 79. Re- counting the “well-documented and relatively uncontro- verted” events leading to the insurance industry’s adoption of the pollution exclusion, see id. (quoting Morton Int’l, Inc. v. General Accident Ins. Co., 629 A.2d 831, 848 (N.J. 1993)), the Court observed that “the predominate motivation in drafting an exclusion for pollution-related injuries was the avoidance of the ‘enormous expense and exposure resulting from the Nos. 24-1217 & 24-1223 15
“explosion” of environmental litigation.’” Id. at 81 (quoting Weaver v. Royal Ins. Co. of Am., 674 A.2d 975, 977 (N.H. 1996)). So to give true meaning to the intent of its drafters, the Court read the pollution exclusion as applying only to “injuries caused by traditional environmental pollution.” Id. at 82. We recognize, to be sure, that the pollution exclusion in Koloms, unlike the one before us here, lacked an exception for sudden-and-accidental emissions. But that difference is not one the parties make anything of. Nor do we see the differ- ence as having any significance, for the entirety of our reason- ing turns on how the Illinois Supreme Court interpreted the core meaning of the pollution exclusion. So if Koloms stood in the Illinois Reports as the only perti- nent authority on the question presented, we would hold that the pollution exclusion in the CGL policies at issue here ap- plies to exclude the possibility of coverage for the bodily inju- ries alleged in the Master Complaint—thereby relieving Na- tional Union of any duty to defend Griffith and Sterigenics. The companies operated an industrial sterilization plant and emitted thousands of pounds of EtO into the air of Willow- brook at a time when the exact and full dangers of the chemi- cal remained unclear. Decades later, hundreds of people liv- ing and working near the Willowbrook facility alleged that continuously inhaling those emissions caused them to de- velop cancers and other serious diseases. See, e.g., MC ¶¶ 7, 13, 221. This type of “gradual” and “repeated discharge of hazardous substances into the environment,” in our view, stands in stark contrast to the types of routine commercial hazards the Koloms Court thought absurd to include within the pollution exclusion. 687 N.E.2d at 81 (emphasis omitted) (quoting W. Am. Ins. Co. v. Tufco Flooring E., Inc., 409 S.E.2d 16 Nos. 24-1217 & 24-1223
692, 699 (N.C. Ct. App. 1991)). Instead, what the Master Com- plaint alleges happened in Willowbrook strikes us as much more reminiscent of the “well-publicized, environmental dis- asters” of Times Beach and Love Canal that prompted the ex- clusion’s adoption and inclusion in the CGL policies. Id. at 80. But Griffith and Sterigenics implore us to pause and con- sider an intermediate appellate court decision that came in the wake of and indeed interpreted and applied Koloms. That de- cision is Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214. There a marble manufacturer sought insurance coverage under its CGL policy after nearby residents sued the company for bodily injuries caused by its emission of odorous and toxic chemicals. See id. at 1217, 1220. The manufacturer had emitted the chemicals pursuant to a permit issued by the Illinois Environmental Protection Agency but allegedly dis- charged more than authorized by the permit. See id. at 1216– 17. Relying on Koloms, the trial court held that the pollution exclusion applied to bar coverage because the emissions were “traditional environmental pollution.” See id. at 1221. But the Illinois intermediate appellate court, likewise applying Ko- loms, reversed, concluding that the exclusion was “arguably ambiguous as to whether the emission of hazardous materials in levels permitted by an IEPA permit constitute traditional environmental pollution excluded under the [CGL] policy.” Id. Resolving the ambiguity in the insured-manufacturer’s fa- vor, the court held that the insurer had a duty to defend against the underlying claims. See id. To our eye, then, Imperial Marble could be read to suggest that legally authorized emissions—those that occur pursuant to a regulatory permit—may not constitute the type of Nos. 24-1217 & 24-1223 17
traditional environmental pollution that Koloms envisioned. The decision at least makes that conclusion possible. Further muddying the waters is one of our own decisions applying Illinois law and interpreting a CGL pollution exclu- sion but coming after and taking an altogether different view than the one offered by Imperial Marble. In Scottsdale Indemnity Co. v. Village of Crestwood, an Illinois municipality asserted that its insurer had a duty to defend it against claims for bod- ily injuries resulting from its mixing of water contaminated with perc into the municipal drinking water. See 673 F.3d 715, 716 (7th Cir. 2012). Citing Koloms and undergoing a compre- hensive analysis of the standard pollution exclusion in CGL insurance policies, we held that the exclusion applied to bar coverage. See id. at 718–21. In doing so, we rejected the mu- nicipality’s contention that the perc-contaminated drinking water was not pollution “because the amount of perc in the Village’s water supply was below the maximum level permit- ted by environmental regulations.” Id. For purposes of the pollution exclusion, we explained, all that mattered was that the suits alleged the contaminated water caused the underly- ing injuries. See id. Scottsdale, then, is in line with our own natural reading of Koloms but in tension with Imperial Marble. In many instances, a circumstance like this would call for us to decide whether to adhere to the reasoning in Scottsdale or to shift course and re- solve whether Imperial Marble aligns with how we believe the Illinois Supreme Court would resolve the question presented. See Agribusiness Ins. Co. v. Dugan, 810 F.3d 446, 450 (7th Cir. 2015) (“Where the Illinois Supreme Court has not ruled on an issue, decisions of the Illinois Appellate Courts control, unless there are persuasive indications that the Illinois Supreme 18 Nos. 24-1217 & 24-1223
Court would decide the issue differently.”). Given the im- portance of how this question is resolved and the uncertainty created by Imperial Marble, we are hesitant to take either ap- proach here and believe the best path forward is to afford the Illinois Supreme Court an “opportunity to illuminate a clear path on th[is] issue.” Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 639 n.18 (7th Cir. 2002) (quoting In re Badger Lines, Inc., 140 F.3d 691, 698–99 (7th Cir. 1998)). Under Illinois Supreme Court Rule 20, certification to the Illinois Supreme Court is proper if we have before us a ques- tion of Illinois law that “may be determinative” of the case, and there are “no controlling precedents” from the Illinois Su- preme Court. Ill. Sup. Ct. R. 20(a). That criterion is satisfied here. Koloms goes a long way in telling us how to interpret a standard pollution exclusion in a CGL insurance policy, but, underscored by the tension between Imperial Marble and Scottsdale, the exact scope of traditional environmental pollu- tion remains unclear, and leaves us “genuinely uncertain” as to how to proceed. In re Hernandez, 918 F.3d 563, 570 (7th Cir. 2019) (“In exercising our discretion to certify a question, ‘the most important consideration is whether we find ourselves genuinely uncertain about a question of state law that is key to a correct disposition of the case.’” (quoting Lyon Fin. Servs., Inc. v. Ill. Paper & Copier Co., 732 F.3d 755, 766 (7th Cir. 2013))). Further pushing us toward certification is the significance this question has for Illinois insurance law and the broader insurance industry. See Martin v. Goodrich Corp., 95 F.4th 475, 481 (7th Cir. 2024) (“[I]f it is ‘an important issue of public con- cern’ and ‘likely to recur,’ certification is a better bet.” (quot- ing Cutchin v. Robertson, 986 F.3d 1012, 1028 (7th Cir. 2021))). Because federal law requires any company that emits large Nos. 24-1217 & 24-1223 19
amounts of pollutants to obtain a permit, see 40 C.F.R. § 71.3, and environmental regulations are constantly evolving, the situation before us is likely to recur and our decision would have substantial ramifications for insurers and insureds alike. The stakes are just as high for the parties in this litigation— how the question is answered may be the difference between $150 million in defense costs and zero. For these reasons we certify the following question to the Illinois Supreme Court: In light of the Illinois Supreme Court’s decision in American States Insurance Co. v. Koloms, 687 N.E.2d 72 (1997), and mindful of Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214 (2011), what relevance, if any, does a per- mit or regulation authorizing emissions (gener- ally or at particular levels) play in assessing the application of a pollution exclusion within a standard-form commercial general liability pol- icy? By framing our question this way, we do not intend to limit the scope of the Illinois Supreme Court’s inquiry, and we welcome the Justices to reformulate the question as they see fit.
QUESTION CERTIFIED.