Notwithstanding the absence of a congressional war declaration since Japan bombed Pearl Harbor, Zurich American Insurance Company has invoked a “war exclusion” in an attempt to avoid covering Illinois snack food and beverage company Mondelez International Inc.’s expenses stemming from its exposure to the NotPetya virus in 2017. The litigation, Mondelez Intl. Inc. v. Zurich Am. Ins. Co., No. 2018-L-11008, 2018 WL 4941760 (Ill. Cir. Ct., Cook Cty., complaint filed Oct. 10, 2018), remains pending in an Illinois state court. Continue Reading Zurich Invokes War Exclusion in Battle Over Coverage for NotPetya Attack
Broad Forum Clause Favors Policyholders’ Choice of Venue
The Washington Supreme Court’s recent en banc decision in Pacific Lutheran University et al. v. Certain Underwriters At Lloyd’s London et al. looked to the broad language of the forum selection clause in the governing insurance policies in upholding the policyholders’ rights to select the forum for their coverage suit.
In Pacific Lutheran, 60 higher education institutions (the “Colleges”) filed suit in the Superior Court for Pierce County, Washington, against 16 insurers (the “Insurers”) that issued all risk insurance policies to the Colleges through the Educational & Institutional Insurance Administrators Inc. (“EIIA”), a risk retention group. The Colleges brought suit to recover losses incurred as a consequence of the COVID-19 pandemic. The Colleges selected the Washington state court based on the forum selection provisions contained in their insurance policies. In particular, the Colleges relied on the policies’ “suit against the company” clause, which expressly allowed the Colleges to file suit “in any court of competent jurisdiction.” The suit sought breach of contract damages and a declaration that the Colleges’ COVID-related losses are covered under the policies.
Continue Reading Broad Forum Clause Favors Policyholders’ Choice of VenuePolicyholders Score Win as Another State’s High Court Adopts the “Continuous-Trigger” Theory for General Liability Policies
Commercial general liability insurance policies are often written on an “occurrence” basis. An “occurrence” is typically defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Coverage, therefore, requires generally that the “bodily injury” or “property damage” (or “advertising injury” or “personal injury”) happen fortuitously during the effective policy period. Central to this inquiry is knowing when the injury or damage took place.
Continue Reading Policyholders Score Win as Another State’s High Court Adopts the “Continuous-Trigger” Theory for General Liability PoliciesThe Hunton Policyholder’s Guide to Artificial Intelligence: The Importance of Auditing AI Risk
As previewed in part 1 of our AI Policyholder’s Guide, we now discuss how businesses can assess their AI risk to ensure that they are properly positioned to secure insurance coverage should those risks come to fruition. Because no two businesses will have the same AI risk profile, businesses should consider undertaking organization-wide AI risk audits to evaluate their unique AI risk profile.
Understanding the nature of AI-focused legal risk is not only important for business planning, but essential to crafting a comprehensive AI-specific risk management plan. Indeed, because insurance is often underwritten relative to specific risks, knowing the risks to be insured is a prerequisite to procuring the right type of coverage with terms most suitable to a given risk profile.
Continue Reading The Hunton Policyholder’s Guide to Artificial Intelligence: The Importance of Auditing AI RiskA Great River of LLC’s: The Eighth Circuit’s Take on Properly Assessing Diversity Jurisdiction
Earlier this month, the Eighth Circuit remanded a COVID-19 insurance recovery case to the district court on jurisdictional grounds. See Great River Ent., LLC v. Zurich Am. Ins. Co., No. 21-3815, 2023 WL 5839565 (8th Cir. Sept. 11, 2023).The Eighth Circuit’s decision underscores federal courts’ continued scrutiny of subject matter jurisdiction—especially in complex cases involving limited liability companies.
Continue Reading A Great River of LLC’s: The Eighth Circuit’s Take on Properly Assessing Diversity Jurisdiction“Catch-All” Can’t Catch ‘Em All: Seventh Circuit Finds Coverage for a BIPA Claim Despite Catch-All Provision in Policy’s Statutory Violation Exclusion
When is a catch-all provision too broad? When “a plain-text reading of that provision would swallow a substantial portion of the coverage that the policy otherwise explicitly purports to provide,” according to the Seventh Circuit Court of Appeals. Citizens Insurance Co. of America v. Wynndalco Enterprises LLC, Case No. 22-2313.
Continue Reading “Catch-All” Can’t Catch ‘Em All: Seventh Circuit Finds Coverage for a BIPA Claim Despite Catch-All Provision in Policy’s Statutory Violation ExclusionDrugmaker Wins (Again) in False Claims Act Coverage Dispute Over DOJ Settlement
The False Claims Act continues to make headlines. The DOJ announced earlier this year that its fiscal-year recoveries—across 351 settlements and judgments—exceeded $2.2 billion, which was the second-highest number of settlements recorded in a single year. More recently, the US Supreme Court heard oral argument and is poised to issue a decision in a closely-watched FCA case that could radically change the balance of power between the government and industry.
Continue Reading Drugmaker Wins (Again) in False Claims Act Coverage Dispute Over DOJ SettlementNine-Figure Verdicts: What is BIPA and Why You Should Care
In 2008, Illinois enacted the Biometric Information Privacy Act (BIPA) to protect individuals’ privacy rights in their biometric information, including retina or iris scans, fingerprint, voiceprint, hand scans, facial geometry, DNA and other unique, identifying biological information. Companies are now paying hundreds of millions of dollars to settle employee and consumer suits for BIPA violations. In a recent Reuters Legal News article, Hunton Andrews Kurth LLP attorneys Syed Ahmad, Rachel Hudgins and Torsten Kracht, discuss what BIPA is, how it applies to companies operating outside of Illinois, and how insurance can shield companies from potential exposure.
A copy of the article can be found here.
Boots on the Ground or Hands on a Keyboard: Merck and Insurers Battle Out the War Exclusion
Update: On May 1, 2023, the New Jersey appeals court affirmed the trial court’s decision that a war exclusion did not bar $1.4 billion in coverage for Merck’s losses stemming from the NotPetya attack.
On June 27, 2017, the skies over New Jersey were clear and the ground steady. But Merck & Co., a New Jersey-based pharmaceutical company, was under attack. Malware ripped through its computers, damaging 40,000 of them and causing over $1.4 billion in losses.
Merck was not the sole target.[1] Dubbed “NotPetya,” the virus tore through the US economy,[2] and did an estimated $10 billion in damage. The US Department of Justice charged six Russian nationals, alleged officers of Russia’s Intelligence Directorate (the GRU), for their roles in the NotPetya attack, among others. The attackers’ goal, according to the DOJ, was:
Continue Reading Boots on the Ground or Hands on a Keyboard: Merck and Insurers Battle Out the War ExclusionRecent Decision Highlights the Importance of Avoiding Disclosure Pitfalls
Earlier this month, the US District Court for the Northern District of Illinois ruled that Call One Inc., a tele-communications company, must litigate a claim by its insurer, Berkley Insurance Company, seeking to rescind coverage based on the information provided by the policyholder in its application for insurance. The coverage dispute is illustrative of insurers’ increased scrutiny of the answers to all policy application questions—including where no response is provided—to identify new or additional grounds to avoid coverage, even if it requires rescission of the policy. Policyholders should thus carefully consider all questions and requirements during the policy application process (including during renewal) to avoid potential disclosure disputes should a claim arise.
Continue Reading Recent Decision Highlights the Importance of Avoiding Disclosure Pitfalls