ABM Wins Landmark Verdict in 9/11 Lawsuit

In a victory that may have far-reaching consequences for building service contractors (BSCs), the U.S. Court of Appeals, Second Circuit, recently ruled that an insurance policy’s owner can be eligible for “Business Interruption” (BI) coverage, even if that policy holder does not actually own or lease property where he or she conducts business.

The ruling, which reversed an earlier decision by the District Court for the Southern District of New York, awarded ABM Industries, a national BSC, damages against Zurich American Insurance Co. for the loss of business it had in the World Trade Center Complex (WTC) prior to the terrorist attacks of September 11, 2001.

ABM provided various janitorial services in the common and tenanted areas of the WTC. The major debate in the lawsuit was whether or not ABM’s loss of income, resulting from the destruction of the WTC, could be covered under BI specifications. In order for a company to claim BI damages, it has to prove that it lost property that it “used” or “controlled.”

Zurich American Insurance argued, unsuccessfully, that ABM’s loss of income should be considered Contingent Time Element, which means that ABM did not operate or control property, but that the property was operated by ABM customers. In that case, ABM could not be compensated for the loss of business.

“We’ll obviously have to go back and fight for damages, but if it’s not already north of $100 million for ABM, it will soon approach that figure,” Rich Lewis, a partner with Anderson, Kill & Olick, New York, the firm representing ABM in the case, recently told Sanitary Maintenance.

“The ruling is a huge victory for service-oriented businesses nationwide, since it affirms that companies have an insurable interest in properties they do not own or lease, but upon which they may nonetheless rely for business income,” says John Ellis, who represented ABM with Lewis on behalf of Anderson, Kill & Olick.

Already, says Lewis, Zurich has moved for a rehearing, but they are not assured of their request being granted. “There are three levels of federal courts: District, Circuit and Supreme. This isn’t a case that the Supreme Court would likely take, so if they don’t get the rehearing, this will be the resolution.”

Individual victims and families of victims will not receive damages in this particular case, because the lawsuit only addresses property damages.

However, the victory will likely influence the position of other BSCs and service-oriented businesses as they negotiate with insurance providers.

“The decision will be quoted a lot,” says Lewis. “Before it was reversed by the Second Circuit, insurance companies quoted this case all the time in order to not pay out on certain policies. Now, I think you’ll see a lot of companies like ABM quoting the case in order to recover damages.”

NEWS MAKERS

ISSA Members Approve FSP Membership
Following a “record voter turnout,” the International Sanitary Supply Association (ISSA), Lincolnwood, Ill., has announced that a new category of membership has been created, allowing U.S. and Canadian facility service providers (FSPs) to be ISSA members. FSPs include building service contractors and in-house service providers.

Maryland Could Publish Hospital Infection Rates
According to the Associated Press, Michael Bennett, whose father contracted hospital infections that proved terminal, is pushing for a state law in Maryland that would require hospitals to publish reports on their infection rates. Maryland is one of 25 states considering statutes that would require hospitals to post such information.

U.S. Building Services to Exceed $138B in Revenue
Revenues for building maintenance services are projected to increase more than 4 percent per year, eventually reaching $138.5 billion in 2008, says a new report from The Freedonia Group Inc., a Cleveland-based industrial market research firm. Gains will be driven by improvement in the overall economy, and ongoing growth in both the size of the building market and the number of business establishments, says the study.

Green Seal to Certify Cleaning Services
Cleaning companies committed to green-cleaning programs will soon be able to apply for Green Seal certification, says Arthur Weissman, president and CEO of Washington, D.C.-based Green Seal. Prior to the announcement, Green Seal certified only cleaning products. The new standard is estimated to be released within 6 to 9 months.

MERGERS & ACQUISITIONS

A recent report by The NewsHour with Jim Lehrer, a PBS-produced television program that reports on political and cultural news, detailed new efforts by leadership at Veterans Administration (VA) Hospitals to use “alcohol foam-cleansing agents” to significantly reduce bacterial infections.

According to Dr. Ross Fletcher of the VA Hospital in Washington, D.C., satisfactory hand-cleaning originally occurred only 40 percent of the time in VA Hospitals. Now that hospitals have taken proactive steps to increase hand-cleansing, the level is now at about 80 percent.

“And we hope to get it close to 100 percent,” Fletcher told The NewsHour. “Using the alcohol foam-cleansing agent, we’ve been able to further reduce — even over simple handwashing — the incidents of very serious antibiotic-resistant infections.”

VA hospitals have installed these alcohol-based hand sanitizers at doorways to patient rooms in a belated reaction to the 1999 report by the Institute of Medicine “To Err is Human.” According to the report, avoidable errors in U.S. hospitals were killing between 44,000 and 98,000 Americans each year.

Although time has passed since the initial shock of December 2004’s disastrous tsunami that resulted in more than 170,000 deaths in Southeast Asia, long-term relief and sanitation aid is now moving to full-throttle.

The Red Cross has shifted its focus from disaster relief to long-term rebuilding, healthcare, nutrition and sanitation for survivors of the tsunami. Several companies in the sanitary supply industry are contributing to the long-term health of people in the 11 Asian and African affected nations.

JohnsonDiversey Inc., Racine, Wis., an international manufacturer of cleaning chemicals and supplies, has directed the company’s operations in Asia to donate “products and expertise to relief organizations as the need for sanitation, hygiene and safe drinking water becomes a top priority.”

Kimberly-Clark Corp.(K-C), Roswell, Ga., an international manufacturer of sanitary supply and paper products, has joined with its employees in recently pledging up to $1.5 million to aid residents of the affected countries.

The company originally donated $500,000 to UNICEF, and now has donated another $500,000. In addition, K-C will match dollar-for-dollar gifts made by its employees, up to an additional $500,000, bringing the total to $1.5 million.

Like JohnsonDiversey, K-C’s regional plants in Southeast Asia are contributing cleaning and paper products to relief work. The company has 9,500 employees in Malaysia, Thailand and Indonesia
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Unger Enterprises, Bridgeport, Conn., an international manufacturer of jan/san cleaning tools, was another of the companies that reached out to provide aid to victims. The company, which has a branch location in India, encouraged its U.S. employees to donate by matching every dollar. Some Unger employees contributed as much as $2,500.

In addition, many other jan/san companies — manufacturers, distributors and cleaning firms — have made product donations through the International Sanitary Supply Association’s (ISSA) partnership with Gifts In Kind International, which can be contacted at Gifts In Kind International.