similar to the within policy. However, a full reading of the decision in Leebov, 401 Pa. 477, 165 A.2d 82, reveals that what the court held was that preventive measures can be recovered where they are required to protect against a third person being harmed." (emphasis added) The court thereafter made clear that the logic behind Leebov would apply irrespective of the language employed. It would thus appear that Aronson, an opinion by a lower court in the state in which Leebov was decided and, therefore, presumably more closely acquainted with the interpretation of Pennsylvania Supreme Court rulings than the Slay Warehousing court, directly contradicts the off-hand assertion in Slay Warehousing that the Leebov court construed the "by reason of liability" phrase to require reimbursement of mitigation expenses.
Aronson's refusal to recognize a distinction between the two coverage phrases is eminently more reasonable than Slay Warehousing's recognition of that distinction and is strengthened by three factors. First, the court in Aronson was obviously aware of Slay Warehousing, as it cited it, 14 Pa. D & C. 3d at 7, apparently for the general proposition that mitigation expenses are recoverable by the insured. Second, Aronson was affirmed by the Pennsylvania Superior Court, which adopted the opinion below.
Third, a Pennsylvania Court of Common Pleas case, Lehigh Electric & Engineering Co. v. Selected Risks Ins. Co., 30 Pa. D & C 3d 120, relied on Aronson's interpretation of Leebov with reference to a policy which also used the "as damages" phraseology. Without explicitly discussing the distinction between the "as damages" and the "by reason of liability for damages" language, the Lehigh Electric court stated, "The language contained in the instant policy is strikingly similar to that . . . in Aronson Associates, Inc. . . .," and found Aronson Associates both persuasive and controlling.
In spite of its heavy reliance on the argument that the "by reason of liability" coverage language in the present policy should be construed to include and require reimbursement of mitigation expenses by the insurer to the insured, plaintiff has offered only Leebov and Slay Warehousing and there appear to be no other cases so construing similar coverage language.
Cases cited by plaintiff, other than those two, tend to show that, as far as reimbursement for mitigation expenses is concerned, the use of "as damages" or "by reason of liability" simply makes no difference. Goodyear Rubber & Supply, Inc. v. Great American Ins. Co., 545 F.2d 95 (9th Cir. 1976)("as damages" used in underlying policy, "by reason of liability" used in umbrella policy, insurers required to reimburse based on definition of "property damage"); American Economy Ins. Co. v. Commons, 26 Or.App. 153, 552 P.2d 612, 613 (1976)(in property damage policy, not liability policy, phraseology used both "by reason of" and "as damages because of bodily injury or property damage"; court rested liability for mitigation damages on the latter phrase).
Thus, the argument that case law requires this court to construe a coverage clause using the phrase "by reason of liability" as mandating the coverage of recall and recall-related expenses, an argument which plaintiff believes to be the jewel in its crown, is wholly unavailing. Only Leebov appears to have attached independent significance to the phrase "by reason of liability" as mandating first-party mitigation coverage in a liability insurance policy and the distinction made there is entirely unconvincing. Moreover, an analysis of Leebov, especially in light of its interpretation by the lower courts of Pennsylvania, makes clear that that conclusion was merely obiter dictum. Finally, the cases and learned commentary that have referred to Leebov have criticized that aspect of the court's decision. Under the standard set forth in Mazzilli v. Accident & Cas. Ins. Co., 35 N.J. 1, 170 A.2d 800, discussed supra at note 6, plaintiff's argument fails.
2. Significance of the Phrase "by reason of "
As there is no construction of the relevant terms of the coverage provision binding on me, or, indeed, persuasive to me, I turn to an analysis of whether the language of the coverage provision in the policy at issue here provides for the reimbursement of recall and recall-related expenses. LeFelt v. Nasarow, 71 N.J. Super. 538, 177 A.2d 315.
The majority of those cases which discuss the meaning of the phrase "by reason of" indicate that its meaning, in a legal context, while somewhat wider than the categories of coverage which follow that phrase in a particular policy - in this case, liability for damages imposed upon plaintiff by law and liability assumed by plaintiff under a contract or agreement - cannot widen liability significantly beyond the scope and nature of those categories.
Coverage "by reason of" liability simply does not cover all damages related in some way to liability; rather, there must be a causal connection between the object of the prepositional phrase "by reason of" and the damage claimed. General Acc. Fire & Life Assur. Corp. v. Continental Cas. Co., 287 F.2d 464, 467 (9th Cir. 1961) (insured entitled to recover with "by reason of" phraseology only when the accident was directly caused by the object of the phrase; recovery "by reason of" something requires causation); Chrysler Motors Co. v. Royal Indem. Co., 76 Cal.App.2d 785, 174 P.2d 318 (1946) (injuries caused by insured's employee's negligence resulting in a flash electric fire were not injuries "by reason of" work let or sublet, but were due to insured's direct negligence and, thus, not covered; object of prepositional phrase "by reason of" must be direct cause of injury in order for insured to recover); Retherford v. Kama, 52 Hawaii 91, 470 P.2d 517 (1970) ("by reason of" narrower than "with respect to", the former requiring a causative connection while the latter does not); Michigan Stamping Co. v. Michigan Employers' Cas. Co., 235 Mich. 4, 209 N.W. 104 (1926) (liability "by reason of work . . . let to independent contractors" does not equal "in performance of work of independent contractors" and requires a causal connection; the language clearly implies coverage only for third party injuries and not injuries to workers).
The causal connection implied by the phrase "by reason of" is normally that of proximate causation. Currier v. McKee, 99 Me. 364, 59 A. 442 (1904) (to show injury "by reason of . . . intoxication" it was not necessary to show that the furnishing of the liquor was the proximate cause of the injury, but that the intoxication - the object of the prepositional phrase - was the proximate cause of the injury); Houston & T.C.R. Co. v. Anglin, 45 Tex. Civ. App. 41, 99 S.W. 897 (1907), writ of error denied 99 S.W. 897, 45 Tex. Civ. App. 41 (1907) ("by reason of" being the equivalent of "as the direct and proximate result of"). But see Dolph v. Maryland Cas. Co., 303 Mo. 534, 261 S.W. 330 (1924), with which compare the subsequent case Avery v. American Automobile Ins. Co., 350 Mo. 395, 166 S.W. 2d 471 (1942). The court in Alabama Great So. R. Co. v. Louisville & Nashville R. Co., 127 F. Supp. 363 (N.D. Ala. 1955) aff'd in relevant part, reversed on other grounds, 224 F.2d 1 (5th Cir. 1955), discussed this question at length. While it agreed that in general "by reason of" was the equivalent of "proximately caused by", citing a large number of cases, 127 F. Supp. at 369 nn.3-4, the court concluded that the wording of each agreement must be construed from context and found in that case that the ordinarily causal quality of the phrase "by reason of" was vitiated by the addition of the phrase "in whatever manner the same may be caused," and that "by reason of" in that specific instance meant only that the object of the preposition need have some part in, although not necessarily be a proximate cause of, the ultimate loss. In the present instance, of course, there is no such modifying language.
It is clear that the use of the phrase "by reason of liability" in the present case does not include recall and recall-related expenses as covered items but, to the contrary, excludes them. As explained above, "by reason of" requires at least some causal connection between the allegedly covered expense and liability and in most cases would appear to require proximate causation. The recall in the present case was not caused by liability for the seven deaths; it was at best merely related to the seven deaths in that they served as notice to plaintiff that the Tylenol remaining on the shelves was potentially harmful. The recall was thus prompted, if for any related reason, by the possibility of future liability for possible future poisonings and not, as the policy requires, by liability " imposed by law" - which can refer only to previously completed torts - or "assumed under contract" - which refers to settlements and is not applicable here. See Dreis & Krump Mfg. Co. v. Phoenix Ins. Co., 548 F.2d 681 (7th Cir. 1977). Indeed, given the deposition testimony of James E. Burke, Chief Executive Officer of Johnson & Johnson, that the Tylenol recall was motivated by both moral and business considerations, it came as no surprise when any possibility of the required causal connection between the recall and legal liability was disclaimed by counsel at the December 24, 1985 oral argument before Judge Lacey.
THE COURT: Well, what catastrophe were you stopping here?