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Silgan Containers Asks U.S. Supreme Court to Revive Suit Against Insurer for Losses From Defective Pull Tabs on Del Monte Cans



Silgan Containers Corporation requested the U.S. Supreme Court to revive its coverage litigation against its insurer for payment of funds to indemnify Silgan's losses sustained from defective pull tabs it manufactured for Del Monte Corporation's fruit cups. Silgan is a steel and aluminum manufacturer of various types of containers. One of its more popular products is a can with a pull tab that is used for food products, such as cut fruit.

Who Are the Key Players in the Case and What Is Their Relationship to One Another?

Manufacturer Silgan's losses topped more than $4.6 million for the defective fruit cup pull tabs, when customer Del Monte refused to continue usage of Silgan containers and pulled its product contained in existing Silgan cups from retailer shelves. Del Monte sustained more than $6.5 million in losses associated with the defective pull tabs produced by Silgan.

Silgan's commercial umbrella insurance policy was issued by National Union. Its commercial general liability policy was issued by Zurich. Zurich ultimately accepted the Silgan claim and made payment. However, National Union held fast and denied coverage. National Union claimed that because the fruit product was not destroyed from the pull tab defect, umbrella coverage was not invoked and inapplicable under the property damage and occurrence provisions of the policy's own terms.

What Kind of Defect Was Involved With Silgan's Pull Tabs on Del Monte Fruit Cup Cans?

The defect at issue for Silgan was in both design and manufacture. Apparently, consumers were getting cut and injured from jagged edges when the tabs were pulled. More than 5,100 (in 2005 alone) complained to Del Monte about the problem. The complaints to Del Monte, and in turn to Silgan, began in 2004. Some consumers were also never able to open the fruit cups using the defective pull tabs because they did not function properly.

Procedural History of the Defective Pull Tab Litigation Brought by Silgan

A federal district court in the Northern District of California ruled that a Silgan insurer was not liable to the container corporation when Silgan sought coverage for its sustained losses associated with defective pull tab products under a commercial umbrella insurance policy. The California federal court held in favor of Silgan's insurer in its ruling of partial summary judgment.

The court went on to hold that Silgan sustained no property damage or use loss under its umbrella policy because the defective pull tabs (ultimately assembled onto Del Monte fruit cup cans) did not create a dangerous, contaminated, or unusable product. In essence, because the fruit cup product was not destroyed or harmed but only the external can or opening apparatus was defective, the California court failed to find a suitable and sufficient basis for awarding umbrella insurance coverage. Many legal commentators feel this decision is flawed and look to the U.S. Supreme Court to correct the allegedly erroneous precedent created by the lower court in this case.