Sriracha

 

This blog may appeal to fans (I being one of them) of the almost ubiquitous Sriracha hot sauce. Sriracha has been in the news as of late and is in the center of a controversy over spicy odors emanating from its factory in Irwindale, California where the condiment is produced. The City of Irwindale has taken legal action to curb the further production of the hot sauce contending that fumes generated by roasting chili peppers for the sauce are causing residents headaches and eye/throat irritation. Although on this blog we write mostly about property insurance issues, touching on concerns of homeowners and business owners, I momentarily digress. Following this Sriracha story has prompted me to wonder whether the company would be covered under its general liability policy if nuisance claims are made by the city or its residents.

Most comprehensive general liability (CGL) policies contain pollution exclusions, where if applicable, would allow insurers to deny coverage. In Cold Creek Compost, Inc. v. State Farm Fire and Casualty Company,1 a California appellate court answered the question as to whether offensive odors can be deemed a pollutant. In Cold Creek Compost, the insured operated a composting facility and was sued by nearby property owners under nuisance claims based on “foul and noxious odors.” The court affirmed that the claims based on odors emanating from the facility came within the pollution exclusion in the CGL policy and therefore, the insurer did not owe a duty to defend and indemnify the insured. In reaching its decision, the court held that a substance need not be toxic or particularly harmful to be considered a “pollutant” under the pollution exclusion. Moreover, under California law, “air pollutants” include “fumes, gases [and] odors” discharged into the environment.2

So, applying Cold Creek Compost to Sriracha, and assuming the standard pollution exclusion exists, it would be logical that claims made against the maker of Sriracha based on spicy odors would necessarily trigger pollution exclusion. Nonetheless, I hope the parties in the controversy can resolve their differences.


1 Cold Creek Compost, Inc. v. State Farm Fire and Casualty Co. (2007) 156 Cal. App. 4th 1469.
2 Id. at 1483 (citing Cal. Health & Safety Code section 39013).

  • Alex

    Just reading about this made my mouth water! It’s good to know that Sriracha actually uses fresh roasted peppers. I heard that politicians were given bottles of Sriracha and with the threat of moving the plant from California to Texas a deal was soon struck where Irwindale dropped the suit against Sriracha. Thanks for the post. I’m ready for lunch!