Toxic mold comp suit can go forward, court rules

October 18, 2006

by o Ceniceros, Business Insurance, October 16, 2006

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SAN FRANCISCO—An injured employee has been allowed to proceed with a

lawsuit alleging that Costco Wholesale Corp. fraudulently concealed

information about the presence of toxic mold on its property, a

California appeals court has ruled.

The plaintiff in Bernadou vs. Costco Wholesale Corp. found

water leaking into her office window in Livermore, Calif., beginning

in 1995. Ms. Bernadou complained to Costco for years about the leak

that wet her office carpet each winter, court records show.

In 2003, her doctor diagnosed her with asthma, possibly related to

the flooding at her work site, and she filed a workers compensation

claim.

Ms. Bernadou later filed the current suit containing several

allegations, including that Costco provided her doctor with a report

issued by an environmental testing company that Costco retained, but

withheld five of the report's eight pages. She ultimately obtained

the entire report and alleged in her suit that Costco knew of toxic

mold in the workplace prior to her filing her workers comp claim.

A trial court dismissed other defendants including Costco from the

lawsuit after finding several causes of action in the suit were

barred by workers compensation exclusivity, among other

shortcomings.

However, California's 1st District Court of Appeals disagreed. The

San Francisco-based court ruled last Thursday that Ms. Bernadou's

complaint adequately met requirements necessary to establish an

exception to workers' compensation exclusivity, which prevents

workers from suing their employers.

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