Two new opinions: insurance coverage and arbitration

Sapa Extrusions v. Liberty Mutual Insurance—civil / contract / insurance—partial reversal—Porter

The Third Circuit today decided a Pennsylvania insurance-coverage dispute, partially reversing a ruling in the insurers’ favor.

In the underlying lawsuit, a company that made parts used in windows was sued by the window maker after customers complained that the parts were rusting. The partmaker settled with the window company for “a large sum.”

The partmaker then sought to recover under the 28 (!) different commercial general liability policies it had purchased. One might imagine that, if you’re a company who makes a part, the big reason you buy liability insurance is precisely to cover you if you get sued over your part, no? But evidently that point was in doubt given Pennsylvania caselaw involving what occurrences trigger insurance coverage, and the district court ruled that the 28 policies provided zero coverage.

Today, the Third Circuit reversed in part. Focusing on the specific language of the different policies, the court held that under Pennsylvania law most of the policies did not provide coverage because the problems with the part were not unforeseeable, fortuitous events. But the court revived the partmaker’s claims as to nine of the policies which used different language to define coverable occurrences.

Joining Porter were Restrepo and Fisher. Arguing counsel, all three of them top-shelf advocates, were James Martin of Reed Smith for the partmaker, and Teresa Ficken Sachs of Marshall Dennehey and Stephen Cozen of Cozen O’Connor for the insurers. Audio of the argument is here.


In re: Remicade Antitrust Litigation—civil / arbitration—reversal—Krause

The Third Circuit today held that a drug wholesaler’s antitrust claims against a pharmaceutical maker for price inflation were covered by an arbitration agreement between the two companies covering any “controversy or claim arising out of or relating to” their distribution agreement. A key issue in the appeal was whether federal or state law governed interpretation of the arbitration clause; the opinion’s bottom line was that non-preempted state law generally governed when it dictated a clear outcome. Applying New Jersey law, the court concluded that the arbitration clause covered the antitrust claims here.

Joining Krause were Shwartz and Fuentes. Arguing counsel were William Cavanaugh Jr. of Patterson Belknap for the pharmaceutical maker and David Sorensen of Berger Montague for the wholesaler.