When litigation targeting PFAS, or per- and polyfluoroalkyl substances, first emerged, actions were focused on potential harm to the environment or human health. These legal battles focused on the manufacturers of PFAS chemicals accused of causing environmental impacts, contamination of drinking water and in some instances, bodily injury. More recently, a new wave of lawsuits have emerged premised on allegedly misleading advertising of products containing PFAS, often unintentionally. This new theory of liability could have significant insurance coverage implications if appropriate coverages are not in place. Companies should consider enhancing their insurance portfolios with advertising-specific coverages that can be found under coverage lines such as errors and omissions (E&O), media liability, and even cyber liability insurance.
PFAS, known as “forever chemicals” due to their slow breakdown and accumulation in people and the environment, are used in many consumer products like clothing, cosmetics, cleaning items, and cookware. Because of their widespread utility, PFAS can be found nearly everywhere. In fact, according to the CDC, most of the U.S. population has been exposed to PFAS, with levels typically low. In the past two decades, concerns have been raised about the environmental and biological persistence of certain PFAS (specifically PFOS and PFOA). Although the science surrounding any human health effects of exposure to PFAS remains inconclusive, there has been a significant regulatory and media focus on the chemicals, leading to a wave of lawsuits around the country.
The focus of PFAS litigation has expanded from claims sounding in public nuisance, product liability and environmental remediation to now include claims centered on unfair and deceptive trade practices, violations of consumer protection laws, false advertising, and fraudulent or negligent misrepresentations. Companies are facing claims from state actors as well as the class action plaintiff’s bar.
For example, on December 11, 2024, the Texas Attorney General issued a press release announcing a new lawsuit against the largest manufacturers of PFAS chemical products, 3M and DuPont, for misrepresentations and alleged omissions they made in advertising the safety of brand names such as Teflon and Scotchgard. Texas Attorney General Ken Paxton stated,
“These companies knew for decades that PFAS chemicals could cause serious harm to human health yet continued to advertise them as safe for household use around families and children . . .Texas is taking action to penalize these companies and hold them accountable for deceiving Texans into buying consumer products without vital information.”
Further, in 2024, Costco found itself at the center of high-profile class action lawsuit over the manner in which it advertised products containing PFAS. In Bullard v. Costco Wholesale Corp., Costco was accused of misleading consumers by advertising its Kirkland Signature Baby Wipes Fragrance Free as being “made with Naturally Derived Ingredients.” Bullard v. Costco Wholesale Corp., No. 3:24-cv-03714-RS (N.D. Cal.). The suit further alleged that the wipes contain PFAS. The Bullard complaint contained 10 counts, including alleged violations of consumer protection and false advertising laws in California and New York, breach of express warranty, unjust enrichment, fraud, fraudulent concealment or omission, and negligent misrepresentation.
These lawsuits, which unlike the initial wave of PFAS liability lawsuits are not premised on any alleged environmental contamination, bodily injury or property damage, underscore the expanding and evolving legal risks for companies with regard to the marketing and sale of products that contain PFAS.
While much has been written about insurance coverage for lawsuits alleging environmental contamination or bodily injury caused by PFAS, the coverage inquiry shifts when the claim is not based on specific harm or injury, but rather, the economic harm that results from the alleged violation of consumer protection laws, breaches of express or implied warranties, false advertising, and fraudulent or negligent misrepresentations. These types of alleged liability implicate entirely different lines of insurance from those typically associated with claims alleging bodily injury. These newly implicated coverage lines include E&O, media liability and cyber.
In its most basic sense, E&O insurance covers claims based on professional negligence. These claims often allege errors, mistakes, omissions or failures to meet expected standards of care or service levels, including false advertising, negligent misrepresentation, and certain violations of consumer protection laws.
Experience dictates, however, that insurers may not agree and may attempt to limit or deny coverage for PFAS-related claims based on wrongful act exclusions or even pollution and contamination exclusions. Whether these or any other exclusion might apply is highly fact-specific, so a careful review of the exclusion against the specifics of the alleged wrongful act is essential. And, in any case, wrongful acts exclusions seldom relieve an insurer of its duty to defend, which can often be of greater value to the insured than any ultimate liability. Furthermore, under most E&O coverages, the insurer will be obligated to defend unless and until the insured is actually adjudicated to be liable for the alleged wrongful act. Additionally, while courts have not specifically ruled on its applicability to PFAS-related lawsuits, the typical pollution exclusion would appear on its face to simply not apply. Generally, pollution exclusions apply to the “actual or threatened discharge, dispersal, or release of a pollutant.” But where the claim involved the manner of marketing or sale of the product, as opposed to the product having an adverse impact on the environment, the requisite trigger for the exclusion (e.g., a “discharge . . .”) simply is not present. Similarly, history teaches that where even a hazardous product is put to its intended use, pollution exclusions do not apply.
Media liability insurance protects companies against third-party claims related to advertising injury. This coverage is broader than the personal and advertising injury coverage provided by standard general liability insurance policies and has a particular focus on the manner by which a company advertises its products. For example, commercial general liability policies provide coverage for claims for infringement on a person’s or business’s personal or intellectual property rights, such as claims for slander, libel, and copyright infringement. In contrast, media liability policies provide coverage for various types of claims related to the advertising or dissemination of content, including for advertising that results in negligence in connection with the content or unfair competition or unfair trade practices. Given that more recent PFAS lawsuits are centered around the advertisement of products in various forms of media, media liability insurance will be implicated where the alleged conduct falls within the scope of a covered advertising injury.
Here, too, however, insurers should be expected to raise the potential applicability of exclusions for anti-trust violations or deceptive trade practices, which are included in many media liability policies. These exclusions usually apply to claims based on alleged violations of anti-trust and consumer fraud or protection laws. Even so, policyholders should scrutinize their specific insurance policy wording closely, as it may include carve-outs that allow coverage for certain wrongful acts. For example, the exclusions may preclude coverage for claims alleging a violation of consumer protection laws, unless the claim also arises out of another type of covered wrongful act. Moreover, as previously noted, if the complaint includes any claims covered under the policy, the insurer is likely obligated to defend the entire suit, even if some allegations fall outside the scope of coverage.
Most cyber insurance policies include media liability coverage, offering policyholders protection against claims of slander, libel, and false advertising related to online content. Some policies even provide the option to extend this coverage to print materials. Traditionally, these protections were included in standard general liability policies. More recently, however, general liability insurers have added exclusions to the personal and advertising injury coverages that limit coverage for claims arising from online content, making cyber insurance coverage even more valuable.
PFAS liabilities continue to evolve with companies now facing class action lawsuits over the manner by which they advertise products that may contain intentionally or unintentionally added PFAS. These economic harm-based actions create a need for uniquely specialized insurance that many companies may not have as part of their present insurance portfolio. As with any expanding and evolving potential for liability, companies should be proactive about ensuring that they are adequately protected against potential PFAS liabilities tied to the manner in which they market and package their products. Given the evolving nature of these claims and the anticipated response from insurers as the frequency and value of claims rise, practitioners should evaluate their clients’ specific risk profile and ensure that insurance is tailored appropriately for potential PFAS-related liabilities.
