Hunton Insurance Recovery Blog

Listeria is a bacterium that can infect humans and cause intestinal illness and other harm. So when might listeria not qualify as a “communicable disease” under an insurance policy? According to a federal court in Oregon, the answer may turn on an exclusion for “any infectious and/or contagious disease[.]” (emphasis added). In Scottsdale Insurance Co. v. Bruce Packing Co., the policy’s use of the conjunctive and disjunctive “and/or” rendered the exclusion ambiguous and, thus, inapplicable to a lawsuit alleging bodily injury from listeria.

The decision is a useful reminder that coverage exclusions and limitations must be written clearly and precisely and that a failure to do so may render them inapplicable.

The Dispute

Bruce Packing Company operated meat-processing facilities. In 2024, testing detected listeria in several areas at one facility, prompting Bruce Packing to recall products made there during the preceding months. Several claimants then alleged that exposure to listeria in those products caused bodily injury.

Bruce Packing was insured under a commercial excess liability policy issued by Scottsdale Insurance Company. Among other exclusions, the policy contained a “Communicable Disease Exclusion,” which provided in pertinent part (bold in original):

A. The following exclusions are added to SECTION 1—COVERAGES, subsection 2. Exclusions:

* * *

Communicable Disease

(1) “Injury or damage” arising out of the actual or alleged transmission of or exposure to a “communicable disease,” illness or condition related to any “communicable disease.”

 * * *

For purposes of this exclusion, the following definition applies:

“Communicable disease” means any infectious and/or contagious disease, including but not limited to, diseases caused by bacteria, fungi, protozoa, viruses, or any combination of the foregoing.

After the claimants filed the underlying actions, Scottsdale sought a declaration that it had no duty to defend or indemnify Bruce Packing. It later moved for partial summary judgment, arguing that the Communicable Disease Exclusion barred coverage for the listeria-related bodily-injury claims.

The Decision

Applying Oregon law, the court first examined the policy’s definition of “communicable disease.” It found that listeria is an “infectious disease” under the term’s ordinary meaning: “These definitions make clear that listeria—a bacteria that can cause several types of harmful diseases—is an infectious disease within the plain meaning of the term.” But that finding did not end the analysis.

The court distinguished an infectious disease, which is classified by its microbial cause rather than its means of transmission, from a contagious disease, which spreads through contact with an infected person, the person’s bodily discharge, or a contaminated object. Because listeria spreads through food rather than personal contact, the court found that it is not a “contagious disease.”

The court next considered the phrase “infectious and/or contagious disease.” Scottsdale argued that it covered diseases that are infectious, contagious, or both. The court found the phrase ambiguous because Oregon courts treat “and/or” as ambiguous when its conjunctive and disjunctive readings yield different results. Although other courts have interpreted the phrase differently in other contractual settings, choosing between “and” and “or” changed the outcome here.

Under the conjunctive reading, the exclusion did not apply because listeria is infectious but not contagious. Under the disjunctive reading, it applied because listeria is infectious. The policy did not resolve the conflict. Scottsdale argued that “all contagious diseases are infectious; but not all infectious diseases are contagious,” but its interpretation would render “contagious disease” superfluous. The court therefore found that the policy as a whole did not clarify the exclusion.

Because the exclusion remained ambiguous after the court examined its text and context, the court construed it against Scottsdale and held that it did not unambiguously bar coverage for the listeria-related bodily-injury claims.

Key Takeaways

An exclusion’s ambiguity can matter as much as its apparent breadth. Here, the phrase “and/or” created two reasonable readings with opposite coverage results: one required a disease to be both infectious and contagious; the other required only one. Because the policy did not resolve the conflict, the court construed the exclusion against the insurer.

For policyholders, the decision underscores the need to review policy language carefully and understand fully the basis for any coverage denial or limitation imposed by the insurer.

The decision also shows that labels do not control. Simply labeling a provision as a “Communicable Disease Exclusion” did not speak to whether that provision applied to foodborne illness. The exclusion’s operative wording and the terms defined in that wording controlled.