Insurance and reinsurance companies engaged in complex disputes need counsel who understand the impact of litigation on their bottom line. Shook, Hardy & Bacon insurance attorneys have earned a reputation as one of the preeminent practices representing insurance carriers in coverage and bad faith disputes. Our clients face litigation across the country, often involving multiple parties, complex coverage issues and conflicting legal standards. Many of our cases have resulted in landmark decisions that changed the industry. Many matters involve high stakes and some issues affect entire portfolios.
Shook insurance attorneys have handled litigation, arbitrations and appeals concerning coverage for toxic torts and environment contamination, product liability, business torts, premises liability, professional and fiduciary liability, credit union and banking fraud, punitive damages, advertising injury, construction defects and intellectual property claims. The group has also tried, mediated and negotiated bad-faith claims associated with primary, umbrella and excess policies across the country.
Many of our matters have involved long-tail environmental or toxic tort claims resulting in nine- or 10-figure losses. Our track record of successfully resolving these matters has produced more than a billion dollars in savings for our clients over the years. As a result of our long-standing relationships, our clients trust us with their largest and most complex insurance disputes, often litigated against extremely sophisticated and well-funded opponents. Our clients also look to us for advice and ongoing consultation prior to litigation, including analyzing existence of coverage, claims handling, regulatory matters and other important issues.
Shook’s insurance practice is truly nationwide in scope. We have decades of experience litigating coverage disputes in dozens of state and federal jurisdictions throughout the United States.
- BorgWarner Litigation – We are litigating a complex asbestos insurance coverage case in Illinois state court involving many primary and excess carriers that issued insurance to BorgWarner as well as multiple parties asserting rights under the same set of policies. We have won important rulings on a number of occurrences and exhaustion of multi-year policy limits and successfully negotiated a settlement with the most significant adversary. We are continuing to litigate the case against three other adversaries and a number of other insurers.
- New York Powerhouse Litigation – In a landmark decision, the New York Appellate Division First Department held that our client had no remaining coverage obligations to its insured. The case involved alleged unlimited “non-products” insurance coverage for asbestos claims, which the policyholder claimed involved more than one billion dollars. Opponents and the trade press called this one of the most significant asbestos coverage decisions in recent years.
- Thorpe Insulation Co. Litigation – We represented a major insurer and served as lead counsel in a California state court coverage case in which the policyholder sought alleged unaggregated “non-products” coverage for asbestos bodily injury claims. On the eve of trial of non-products issues similar to those we tried in the New York Powerhouse Litigation, Thorpe and our client settled the coverage and bankruptcy matters.
- Lac-Mégantic Oil Train Derailment – We successfully resolved additional insured and contractual indemnity claims against our client arising from the derailment of 72 crude oil rail cars in Lac-Mégantic, Quebec, and the resulting oil spill and explosion.
- Lower Fox River CERCLA Litigation – We defended an insurer against a claim for clean-up costs associated with PCB contamination of the Lower Fox River in Wisconsin. Issues litigated included known-loss, the effect of non-cumulation clauses, and allocation and/or contribution rights among successive insurers. After defeating summary judgment motions and aggressively litigating the key issues, we were able to negotiate a settlement for our client.
Other Mass Tort and Product Liability
- Kolbe and Kolbe Litigation – We obtained summary judgment in federal court in Wisconsin holding that the integrated system doctrine precluded any duty to defend a window manufacturer who sought CGL coverage for a class action alleging damage resulting from defects in its window products.
- Four Loko Litigation – We represented an insurer in multiforum litigation involving insurance coverage for injuries arising out of the consumption of alcohol-energy beverage Four Loko. After the Seventh Circuit ruled in our client’s favor, the makers of Four Loko brought two new cases that attempted to evade that ruling. We aggressively pursued an anti-suit injunction prohibiting further litigation as well as summary judgment on any remaining Four Loko claims, leading to final settlement of all claims.
Trigger of Coverage
Shook attorneys have been pioneers in developing and presenting the issue of trigger of coverage—the requirement that the insured establish that the bodily injury or property damage occurred during a policy period in order to be entitled to coverage under that policy. For more than two decades, we have located and worked with appropriate experts to establish that bodily injury or property damage does not immediately trigger coverage in cases involving building materials, groundwater contamination, asbestos and silica. The outcome on this issue can have impact beyond trigger, including issues involving non-products and allocation.
- Keasbey – In the landmark Keasbey decision, the New York Appellate Division adopted our client’s arguments that bodily injury did not occur until after the insured’s typical asbestos installation operations were completed or until after possession of the insured’s asbestos products were relinquished. Applying this holding, the court found that no further coverage was available because the claimants could not show that bodily injury occurred before the completion of an operation or before relinquishment of a product, as was required by the policy.
- Viking Pump – In this closely watched case involving coverage for asbestos claims, we took the lead on the trigger of coverage issue at trial and obtained a ruling that the policies were triggered only in years of significant exposure, a ruling that the policyholders asserted had a nine-figure financial impact on their coverage.
We have also won important trigger rulings in other cases, including cases involving:
- The use of resin to produce gas pipelines;
- The flow of DBCP and EDB pesticides through soil and groundwater; and
- Disposal of hazardous waste and its flow through soil to groundwater.
Bad Faith/Extra-Contractual Liability
- Advantage Buildings & Exteriors, Inc. Appeal – We obtained reversal of a $5-million bad-faith jury verdict against an insurer after another firm tried the case.
- Reynolds and Spencer Litigation – Shook represented an insurer in an equitable garnishment and bad-faith lawsuit seeking to recover a $10.8-million underlying judgment, reaching a favorable resolution prior to trial.
- Hayes Litigation – We obtained summary judgment for an insurer on multimillion-dollar bad-faith claims, becoming involved after an underlying declaratory judgment action resulted in a finding of partial coverage under a policy’s TPDLL provision.
- Bellco Litigation – Shook favorably resolved a $27-million bad-faith claim against an insurer involving four separate lawsuits arising from a catastrophic injury.
- Aon Corporation – We obtained dismissal for Lloyd’s syndicates subscribing to a D&O policy of bad faith and coverage claims for over $200 million in losses arising from a class action relating to contingent commissions as well as myriad subsequent derivative actions, securities lawsuits and attorneys general investigations.
- Plant Insulation Co. Litigation – Our opponent asserted that our client had issued primary CGL policies that provided unlimited coverage for asbestos liabilities from 1942 to 1952. Following an extensive two-month trial, the San Francisco Superior Court issued a 120-page decision, ruling for our client on every issue of significance and finding that the existence of the allegedly missing policies had not been proven and that our opponents’ claims were barred by laches in any event.
- Niemi Oil Litigation – We represented an insurer in a contribution action against another insurer under Oregon’s statutory scheme for environmental claims. After a successful Ninth Circuit appeal on an interim issue and a bench trial in Portland, Oregon, the court ruled that the opponents’ missing policies covered all sites in question and awarded all damages plus interest. After appeal, the case was resolved by settlement.
- Electronic Reseller Coverage Litigation – We have represented a major insurer in several matters involving claims arising out of the resale of electronic equipment. One hotly contested case involved issues implicating the “personal and advertising injury” coverage, various exclusions relating to intentional conduct and criminal acts, and late notice. In that case, we aggressively pursued discovery into the events leading to the insured’s reporting of the claim as well as a criminal investigation of the insured’s activities. The case was resolved at the close of discovery just as summary judgment briefing was to begin. In another case with similar underlying allegations, we obtained summary judgment on the insured’s claim that our client had a duty to defend.
- TCPA Coverage Matters – We have represented insurers in connection with coverage issues arising from several privacy-related underlying class actions, including those involving alleged violations of the Telephone Consumer Protection Act and related state statutes.
- Aspen Way – We obtained a ruling from the Ninth Circuit Court of Appeals affirming summary judgment for an insurer in declaratory judgment litigation against a business operating rent-to-own stores. Underlying plaintiffs sued this business in multiple actions, alleging that the rent-to-own business rented laptops preloaded with spying devices or software in violation of the Electronic Communications Privacy Act and state law privacy and consumer protection statutes. Along with obtaining summary judgment, the Court awarded our client reimbursement of its defense costs and prior underlying settlement payments. The Ninth Circuit affirmed on all issues.
- Specialty lines data breach issue – We also advised an excess insurer, and served as monitoring counsel, on a high profile data breach. The excess insurer had issued a manuscript specialty lines policy that potentially covered both first- and third-party claims arising out of the breach. We analyzed the policy language and made coverage recommendations, and also suggested potential adjustments to the language for the insurer to consider in the future.
- Kmart – We recently obtained a favorable ruling on behalf of an insurer in a Seventh Circuit appeal relating to a claim of coverage by a purported “additional insured.” The case involved issues of contractual indemnity, the scope of additional insured coverage, and late notice, as well as allegations of bad faith, which Kmart made a central focus of its case. The Seventh Circuit reversed the trial court in favor of our client on both the contractual indemnity and additional insured issues, and affirmed the trial court’s ruling that the insurer did not act in bad faith.
- U.S. Filter Litigation – The Indiana Supreme Court ruled for our client in connection with claims involving alleged coverage under policies issued to previous owners of businesses whose activities gave rise to third-party silica claims. The decision was a significant victory for the insurance industry, and established important precedent protecting insurers’ rights to choose their insureds and their ability to protect against risks due to corporate transactions occurring after policy issuance.
- Continental Insurance Co. v. Wheelabrator Technologies, Inc. – The Indiana Supreme Court unanimously denied our opponents’ petition for further review of a successful result we obtained before the Court of Appeals of Indiana. The Court of Appeals held that our clients, several insurance companies, were not obligated to pay certain asbestos related insurance claims arising out of large air pollution control systems called “baghouses.” The court agreed with our argument that the plaintiffs had no rights under the insurance policies at issue, because they had failed to comply with consent to assignment provisions in the policies.
- We represent a reinsurer in an arbitration over responsibility under a loss portfolio transfer agreement for an arbitration award against our client’s cedant.
- Bristol Hotel Management Corporation – Shook successfully defended Hartford Insurance in a class action suit against dozens of insurance companies. The plaintiffs alleged a widespread conspiracy on the part of numerous insurance companies to charge illegally high prices for workers’ compensation insurance policies in Florida. Shook helped negotiate favorable early settlement for Hartford, the only insurer to have settled this action.
- Financial Reporting Dispute – We served as class counsel for a putative class of more than 500 insurance companies in a case involving allegations of decades-long financial reporting fraud by another insurer on other insurers participating in workers’ compensation state residual markets. We worked with economics, statistics and insurance industry experts to develop a damages model showing over $2 billion in compensatory damages. The case settled before summary judgment motions for a $450-million recovery on behalf of a settlement class.
- Snyder – Shook obtained dismissal on the pleadings for several insurers included in an industry-wide class action with claims ranging from breach of contract to RICO, antitrust and fraud allegations.