Reinsurance Focus

Reinsurance communications were held not discoverable in a commercial coverage dispute. By way of background, PBM Products, LLC sued its competitors, Mead Johnson Nutrition Company and Mead Johnson & Company, for allegedly engaging in a false advertising campaign against formulas manufactured by PBM. On November 10, 2009, PBM won a $13.5 million judgment. Mead Johnson had a commercial general liability policy issued by National Union Fire Insurance Company and a commercial umbrella liability policy issued by Lexington Insurance Company. After the verdict, National Union filed a declaratory judgment action based on untimely notice and because the damages imposed by the jury were not covered under the policy. Mead Johnson counterclaimed against National Union and Lexington for breach of contract and seeking a declaration that Mead Johnson was entitled to coverage. The Court entered summary judgment on the issue of late notice in favor of the Insurers. Mead Johnson appealed and the Seventh Circuit reversed summary judgment because there had been no factual development concerning the issue of harm.

On remand, the district court revisited a pending discovery dispute. The magistrate judge had earlier granted Mead Johnson’s request with respect to: (1) the underwriting files; (2) communications between the insurers’ reinsurers; (3) the number of times Paul Hastings was retained by the insurers to defend “personal and advertising injury” claims during the relevant time period; and (4) the insurers’ manuals or marketing materials. Specifically with regard to the reinsurance communications, the court found that because the term “personal and advertising injury” was not ambiguous, communications with reinsurers regarding the meaning of claim terms were irrelevant. National Union Fire Insurance Co. of Pittsburgh, PA. v. Mead Johnson & Co., Case No. 3:11-CV-00015-RLY-WGH (USDC S.D. Ind. Mar. 10, 2014).