Insurance companies claimed a major victory after a jury decided Shell Oil Co. would have to spend up to $2 billion to clean up three decades of pesticide pollution at the Rocky Mountain Arsenal in Colorado.
"The verdict was a clean, straight win for the insurers," said Barry Bunshoft, an attorney for Lloyd's of London, the British insurance market that had faced the biggest share of possible liability. "To say that this is an exciting win and a gratifying win is an understatement."The 250 insurance companies involved convinced a jury they should not be held responsible for the contamination because Shell knew of the pollution for 30 years. They claimed Shell was not covered by its 800 different policies any more than a homeowner who set fire to his own home.
"Naturally, we're extremely disappointed with the outcome of this lengthy trial," said Betty Lynn McHam, a Shell spokeswoman in Houston. "We believe there are sound legal grounds for appealing to a higher court and we will appeal."
In 1983, the Justice Department ordered the oil company to pay the cleanup bill, then estimated at $1.8 billion. Shell subsequently began trying to collect the money from its insurers.
Dozens of insurance company attorneys whooped for joy when the verdict was read in San Mateo County Superior Court. The lengthy trial was held in a makeshift courtroom at Crestmoor High School to make room for all the lawyers.
Eleven jurors voted for the insurance companies for the period from 1952-59, with one juror against. For the period 1960-82, the vote was 11 for the insurers and one undecided. A jury in a civil suit does not have to reach a unanimous verdict.
The jurors declined to comment on their decision.
During those years, Shell leased the U.S. Army land at the arsenal north of Denver's Stapleton International Airport for a pesticide production plant. The soil and groundwater at the plant was polluted by Shell and Army operations, and the pollution seeped into nearby drinking water wells.
Shell attorneys also argued before Judge William Lanam that the liability should be mainly with the Army because it provided the leaking pipes and ponds used by the oil company.
"Regardless of the outcome of this litigation, the citizens of Colorado can be confident that Shell has and will continue to meet its share of responsibilities at the Rocky Mountain arsenal. We are hopeful that the remaining issues between the state of Colorado, the U.S. Army and Shell can be resolved, thereby allowing the arsenal cleanup to proceed expeditiously," McHam said.
The trial, which began in October 1987, was held in San Mateo County because of the county's record of completing cases promptly. It included more than 4,000 exhibits and hundreds of hours of testimony.
McHam said she could not estimate the cost of the cleanup. Insurance industry sources put it at $2 billion.