Recoupment Revisited: Why the Majority Should Adopt the Minority Position
June 27, 2005
In its April 2005 issue, <i>ICLB</i> published an article discussing the varying approaches courts have taken when addressing whether an insurer may conditionally defend its insured and later obtain reimbursement of defense costs if it is determined that a claim is outside the scope of coverage. <i>See</i> Pastor, Sherilyn: Insurers' Rights to Recoup Defense Costs, <i>Insurance Coverage Law Bulletin</i>, Vol. 4, No. 3 at p. 1 (Apr. 2005). As the issue was going to press, the Illinois Supreme Court issued an opinion rejecting the purported right of recoupment. <i>See General Agents Ins. Co. of Am., Inc. v. Midwest Sporting Goods Co.</i>, No. 98814, 2005 WL 674685 (Ill. March 24, 2005). Noting that its position was the "minority" view, the court in <i>General Agents</i> declined to recognize the so-called "right of recoupment" both as a matter of contract law and a matter of policy. (For an in-depth review of the <i>General Agents</i> decision, <i>see</i> Case Notes at p. 7.) The court was right on both counts.
Case Briefs
June 27, 2005
Highlights of the latest insurance cases from around the country.
Current Guidance on Rescission Standards
June 27, 2005
In light of the numerous high-profile securities fraud scandals over the last few years, insurers have more frequently sought to rescind insurance policies on the basis that the insureds supplied false information in applying for such policies, just as they did in misleading their investors, regulators and others. For example, insurers have pursued rescission of policies issued to WorldCom, HealthSouth, Adelphia, Tyco and Xerox. As a result, courts across the country have had more opportunities to clarify the law in this area. Although the law varies somewhat from state to state, judicial opinions on this subject have addressed issues that are fundamentally important to insurers.
Case Notes
June 27, 2005
Highlights of the latest product liability cases from around the country.
West Virginia Supreme Court Strikes Blow Against 'Drive-By' Class Action Certifications
June 27, 2005
Recently, the West Virginia Supreme Court of Appeals dealt a severe blow to class actions in that state. In laying the groundwork for a more stringent approach to class certification in West Virginia, the court in <i>State v. Madden</i>, 2004 WL 2750996 (W.Va. 2004), held that it was impermissible for a court in West Virginia, a state that was widely reputed to have the most liberal medical monitoring standards in the country, to include class members from states that have not adopted such liberal theories of recovery. The decision is also important for the court's admonition that classes should only be certified where all class members meet the criteria necessary for certification and its rejection of "drive-by" certifications.
Federal Pre-emption of Failure to Warn Claims in Recent Drug Cases
June 27, 2005
In 2004, four drug cases, which were decided in different jurisdictions, effectively split on the issue of whether FDA labeling regulations pre-empt state common law failure to warn claims. <i>Fisher v. Professional Compounding Centers of America, Inc.</i>, 311 F. Supp. 2d 1008 (D. Nev. 2004) and <i>Kurer v. Parke, Davis & Co.</i>, 272 Wis. 2d 390, 679 N.W.2d 867 (Wis. Ct. App. 2004) endorsed the view that FDA labeling regulations did not pre-empt common law failure to warn claims in drug cases, while <i>Dusek v. Pfizer Inc.</i>, 2004 WL 2191804 (S.D. Tex., Feb. 20, 2004) and <i>Needleman v. Pfizer Inc.</i>, 2004 WL 1773697 (N.D.Tex., Aug. 6, 2004) held that FDA regulations do pre-empt failure to warn claims, at least in certain circumstances.
Inadvertent Disclosure of Privileged Material: Complex Ethical Issues for the Recipient
June 27, 2005
Courts typically do not treat an inadvertent disclosure of documents protected by the attorney-client privilege as a waiver. When, however, a lawyer receives documents from the opposition that appear privileged, the issues quickly become complex. Questions arise as to the appropriate response. Unlike challenging a claim of privilege asserted in a privilege log, when the full substance of the communication is revealed through an inadvertent production, there is often a powerful incentive to challenge the applicability or scope of the privilege.
Practice Tip: Never Overlook 'Motive' When Trying Product Liability Cases
June 27, 2005
The poor trial lawyer sat dejected as he watched the mock jury deliberating his product liability case. He and his colleagues had spent the better part of 2 days presenting their evidence to a group especially chosen by a jury consultant to reflect the demographics of the actual jurors before whom the real dispute would shortly be tried.
Back to the Drawing Board for Asbestos Pre-Packs? The Third Circuit's Opinion in Combustion Engineering
June 27, 2005
The decision by the Third Circuit Court of Appeals overturning confirmation of a Chapter 11 plan in the Combustion Engineering ("CE") bankruptcy case has significant consequences for mass tort bankruptcies, and especially for asbestos "pre-packaged" or "pre-pack" cases. While courts have traditionally given mass tort debtors some leeway and flexibility in applying the provisions of the Bankruptcy Code, this court was clearly troubled by the particular design of the CE pre-pack, a model that has been subsequently used in other asbestos pre-pack cases. In a lengthy and far-reaching opinion issued in December 2004, the Third Circuit's ruling in the CE case may have fundamentally changed the strategy, negotiation dynamic, and structure of pre-pack asbestos bankruptcy cases.
Decision Excluding Causation Theory in Rezulin MDL Impacts Other Cases
June 27, 2005
In an important recent <i>Daubert</i> decision, Judge Lewis A. Kaplan of the Southern District of New York ruled that plaintiffs in the Rezulin multidistrict litigation may not rely on proposed expert opinion testimony that the medication can cause liver injury to a patient who did not experience markedly abnormal liver enzymes while on therapy. <i>In Re Rezulin Products Liability Litigation</i>, MDL 1348, 2005 U.S. Dist. LEXIS 3790 (SDNY Mar. 14, 2005), hereinafter ("<i>In Re Rezulin</i>"). Apart from its profound implications for the Rezulin litigation, the decision has far-reaching significance for pharmaceutical and toxic tort product liability cases.
