West Virginia High Court slams St. Paul fire, blocks California trial
The West Virginia Supreme Court has ruled that a trial court has the power to reach across the continent and stop an insurer’s litigation in California, a decision that could affect other opioid-related lawsuits .
Lawyers called it unusual interstate action by the court, but not surprisingly, after judges said insurer St. Paul Fire & Marine was shopping the forum and was less than frank in his court records.
“An insurer waits more than three years to try to gain an advantage on the forum – by litigating in California, which insurers generally try to avoid – then annoys the court by not playing directly on what they are doing.” made. It doesn’t sell, ”said Andy Lundberg, lawyer and managing director of Burford Capital, which funds certain types of insurance coverage lawsuits.
The ruling also reflects how complex and extensive the opioid litigation has become, spanning coast to coast, in state and federal jurisdictions, and impacting some of the largest insurers.
St. Paul, a subsidiary of Travelers Insurance Co., along with Ace American Insurance Co., drew up policies for AmerisourceBergen Drug Corp., a drug distributor who is a defendant in lawsuits brought by the Attorney General of West Virginia and to ‘others on the opioid crisis. West Virginia has been particularly hard hit by prescription opioid addiction and was one of the first states to take legal action against drug manufacturers and distributors.
Amerisource, known as ABDC, faces multi-million dollar settlements and judgments resulting from state-led lawsuits and dozens of other lawsuits filed by local governments. Company executives had hoped that St. Paul and other insurers would cover its losses under 16 primary, umbrella and excess liability policies that ABDC had taken out over the years, the court said.
But St. Paul and Ace American have denied the allegations, saying the ABDC was not sued by people who used prescription opiates and were injured, but by government agencies. ABDC filed a lawsuit in West Virginia Circuit Court, seeking an order requiring its insurers to pay its liability and defense costs.
St. Paul then applied for his own declaratory judgment that he had no obligation to indemnify the drug distributor.
In November 2020, the West Virginia judge ruled against the insurer and ruled that St. Paul had at least some obligation to cover opioid-related damages under general liability policies. Perhaps Saint Paul saw the decision coming. Days earlier, the carrier had filed a lawsuit against ABDC and its affiliates in California, asking the West Coast court to declare that the insurer was not obligated to indemnify or defend ABDC in any opioid case. – at national scale.
Two weeks later, ABDC asked West Virginia Circuit Court to issue its anti-prosecution injunction to ban ST. Paul to litigate in California and elsewhere. The West Virginia Magistrate’s Court agreed in January of this year.
“All parties are hereby directed to commence or continue any ancillary litigation or other proceeding against each other relating to insurance coverage for prescription opioid lawsuits against… ABDC or any other affiliated entity “, wrote Boone County Circuit Judge William Thompson.
The West Virginia Supreme Court of Appeal upheld the injunction on Monday. He also dropped the hammer on St. Paul, noting that St. Paul’s action in California would “by design” complicate matters and cause unnecessary delays.
“The circuit court correctly concluded that the parallel St. Paul, California lawsuit was filed for improper purposes, namely forum shopping and the disruption of the orderly resolution of the West Virginia lawsuit,” said writes Judge John Hutchison in the high court. opinion.
Lawyers for St. Paul had argued that the California lawsuit exempted the West Virginia litigation, saying in a footnote in the complaint that the ABDC case “is not intended to be the subject of this action”. The circuit court and the Supreme Court did not believe that.
“The record reflects a substantially different factual picture from that painted by St. Paul in his brief,” Hutchison wrote for the Supreme Court.
St. Paul further argued that the Boone County Circuit Judge had interfered in litigation “in a court in another state over 3,000 kilometers” and that his anti-prosecution injunction “reflected a blatant disregard for the basic principles of comity and sovereignty between the courts of different states.
The Supreme Court recognized the need to follow the principles of comity and fairness among states, but found that there was precedent for similar interstate court injunctions. The Boone County Court, in the heart of the opioid-ravaged Appalachian Mountains, is ideally located because it was the first court in the country to oversee a prescription opioid lawsuit brought by a government entity, the High Court said. .
“Put simply, there is no question that courts in West Virginia have the power to issue injunctions to prevent parties from moving forward with parallel or duplicative litigation in a sister state,” wrote Hutchison for the High Court.
The court did not fully approve the action, however. He sent the case back to the circuit judge, warning that the injunction was too broad.
The injunction had directed all parties to the West Virginia action to initiate legal proceedings regarding ABDC’s insurance coverage, including separate policies of the 16 identified by ABDC. Such a drastic order could prevent the parties from settling the California case.
“We understand that the circuit court judgment interpreting the policies at issue will set a precedent for future cases in the sisterly states, but we do not yet see this as a compelling reason to prevent the parties from arguing comparable issues of coverage for opioid-related lawsuits, regarding different policies, in other forums, ”the Supreme Court wrote.
Lawyers handling the case declined to speak officially, but one noted that reaching state borders has little precedent and can be problematic. Nothing prevents a court in California or other states from taking similar action in opioid lawsuits, which now number in the thousands.
Lundberg, of Burford Capital, who has handled a number of cases involving forum issues, said St. Paul’s legal team had crossed the line. It is indeed rare for an insurer to seek legal rights in California, which is known for its verdicts favorable to policyholders.
Further, Lundberg said in an email, “The insurer got caught putting a little too much weight on the ball, from a factual standpoint. The Supreme Court really didn’t like the insurer’s (wrong) interpretation of what it did and didn’t do, another surefire way to lose court sympathy.
Waiting three years to try the move to California is also unusual and hasn’t helped, he said. “Asking a judge who has invested years in a case to let a new case of the accused threaten to undo his work is not going to go well, and here it is not. “
For now, the ultimate scope of the anti-prosecution injunction is unclear: The circuit judge who issued the anti-prosecution injunction is now the US attorney for West Virginia, and a new judge. will have to look into the matter.
“We’ll have to see how the new order is framed,” said an insurance lawyer.
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