NOT RE CO M M E NDE D F OR F UL L
- T E XT P UB L I CA T I ON Fi l e N ame: 10a0152n. 06 N o. 09- 3096 UNI TED S TATES CO URT O F AP PEALS F O R T H E S IX T H C IR C U IT
A B E R C R O M B IE & F IT C H C O ., Pl ai nt i ff- A ppel l ee,
v. F E DE RA L I NS UR ANC E CO M P ANY, D e f e n d a n t-A p p e llan t. O n A ppeal fr om t he U ni t ed St at es D i s t r i ctC our tfort he Sout hern D i s t r i ctof O hi o at C ol um bus

/ B e f o r e : GU Y, CL AY , a n d KE T HL E DG E , C i rcui tJudg es. R A L P H B . G U Y , J R ., C ir c u it J u d g e . T hi s i s a di ver s i t ybr eac h of contr actact i on i n w hi ch pl ai nt i ff A ber cr om bi e & Fi t ch C o. cl ai m s defe ndantFeder al I ns ur ance C om pany i m p r o p e r l y r e f

u s e d t o p a y l e g a l d e f

e n s e c o s t s u n d e ra n e x e c u t i v e p r o t e c t i o n i n s u r a n c e p o l i c y. O n s um m aryj udgm ent , t he di s t r i ctco u rt rul ed i n favorof A ber cr om bi e, i nt erpr et i ng t he
co n tr ac t t o re q u ir e co v era g e o f it s d ef en se c o sts. F ind ing n o erro r i n the d istri ct co u rt ’s i n t e rp r e t a t i o n , we a f

f i r m. I
. Pl ai nt i ff A ber cr om bi e & Fi t ch ( A ber cr om bi e) cont es t s defe ndantFeder al I ns ur ance C om pany ’ s ( Feder al ) r efus al t o paydefe ns e cos t s of s ecur i t i es cl as s act i ons , s har ehol derNo. 09-3096 2

The securities class actions and shareho lder deriv ativ e suits, filed in the So uthern District of O hio, 1 were con s ol i da t e d i n the district court as Rossv. Ab ercrom bie &Fitch C o. , N o. 2:05- cv - 819 and In re: Abercrom bie &Fitch C o. Derivative L itigation , L ea d C as e N o. 2 :0 5- cv - 00 819-EAS- TPK , and are collectiv ely

referred to as “th e Ross c laim s.” In May 20 07 , Ab er cr om

bi e fi le d an

am en de d co m

pl ai nt , addin ga count

of ba d fa ith fo r F ed er al ’s 2 refusal to pay

defe nse costs. While this m otion was pending , Abe rcrom bie filed a m otion for partial sum m ary judgm ent, seeking 3 the district court’s determination that it was entitled to adv ancement o f certain defense costs. The district court’s order on Fede ral’s m otion for sum m ary j udgm ent indicated that it had taken Abercrom bie’s motion “und er a dvis ement” and

w ou ld r ul e on it in as ep ar at e op in io n an d or de r. der i vat i ve s ui t s , and SE C i nves t i gat i on i ni t i at ed aga i ns tA ber cr om bi e begi nni ng i n 2005. 1 A ber cr om bi e had $10 mi l l i on i n cover age f ors uch cl ai m s un d er a F ed er al pol i cy , w i t h an eff ect i ve per i od cover i ng t he dat es t he cl ai m s agai ns tA ber cr om bi e w er e fi l ed. A ft erFeder al
r efus ed t o payA ber cr om bi e’ s i ns u ran ce cl ai m , A ber cr om bi e fi l ed a f i ve- countfede r al diver si t yact i on i n 2 00 6, seeki ng a declar at i on of F ederal ’s ob l i gati on t o p aycert ai n d efen se
c o sts u n d e r th e F e d e ra l P o licy , an d d a m a g e s f o r its b re a c h o f c o n tra c t. F e d e ra l’s an sw e r to 2 th e c o m p la in t in c lu d e d a th ir d -p a rt y c o m p la in t a g a in s t N a tio n a l U n io n F ir e In s u ra n c e C o ., i ssuerof a sep arat e i nsurance p o licy t o A bercr om bie, and a cou nter cl ai m against A ber cr om bi e. I n t he cou n tercla i m , Feder al as s er t ed A ber cr om bi e’ s br eac h of t he Feder al Pol i cy , and s ought decl ar at or y j udgm ent t hat i t w as notobl i gat ed t o pr ovi de cove r age f ort he R o ss claim s an d S E C inv esti g ati o n . In F eb rua ry2 0 0 8 , F ed era l fi led a m o ti o n fo r sum m ary j udgm ent , w hi ch w as deni ed byt he di s t r i ctcour ti n Sept ember 2008. 3 N eit h er p artyco n test s the fa cts an d seq u en ce o f e v en ts set ou t i n the d istri ct co u rt ’s Op i n i o n a n d Or d e rd e n y i n g F e d e r a l ’ s mo t i o n f o rs u mm a r yj u d g me n t , r e p e a t e d b e l o w: Feder al i s s ued Execut i ve Pr ot ect i on P or t fol i o Pol i cyN o. 8159- 6213 ( t he “Feder al Pol i cy ”) t o A ber cr om bi e for t he Pol i cy Per i od of Sept ember 1, 2004No. 09-3096 3

T hi s pr e mium wa s tw i c e th e pr e mium f orth e or i gin a l on e - year

po l i c y. 4 The a gre ement w as ne g ot iate d be tw ee n re pr es entati v es fo r Abe rc ro m bi e an d N at io na l Uni on

in late 5 Septem ber 2 005, prior to Abercrom bie’s e lection of the F e de r a l E RP
. How ev er, the ac tual issu ance of End orsem ent N o. 17 to the Nation al Unio n policy did not occur until Nov em ber. In ex chang e for electing th e F ed er alE RP , Abe rc ro m bi e re ce iv ed

b en ef it s fr om N at io na l Uni on

in th e fo rm o f a re du ce d de du ct ib le and the p otential for no increa se in premium for subseq

uent policy

y ears. t o Sept ember 1, 2005. T he F eder al Pol i cy i ncl udes an Execut i ve Li abi l i t yand E nt i t y Secur i t i es L i abi l i t y C over age Sect i on, w hi ch provi des up t o $10 m i l l i on of cove r age f

orA ber cr om bi e, i t s offi ce rs a n d di r ect or s , for“l os s . . . on acc ount of any C l ai m fi r s t m ade
. . . agai ns t [an i ns ur ed] dur i ng the P ol i cy Per i od or , i f exer ci s ed, dur i ng t he Ext ended Repor t i ng Per i od, fora W r ongful A ct comm i t t ed, at t empt ed or al l egedl ycomm i t t ed orat t empt ed by[an i ns ur ed] befor e ordur i ng t he Pol i cyPer i od. ” A s t he end of t he Feder al Pol i cyPer i od appr oache d, A ber cr om bi e pur chas ed a ne w cl ai m s - m ade pol i cy fr om N at i onal U n io n F ire In su ra n c e C o m p a n yo f P itt sb u rg h (“ N a tio n a l U n io n ” ), w ith cover age e ffe ct i ve fr om Sept ember 1, 2005 t o Sept ember 1, 2006. O n Sept ember 2, 2005, on e d ay aft ert he expi r at i on of t he Feder al P oli cy , A bercr om bie w as sued, al on g w i t h s everal of i t s off i cers and dir ect ors, i n a clas s act i on co m p lai nt al l eging viol at i on s of fed eral securi t i es l aw s. C ert ai n A bercr om bie shareholders subsequ entl y fi l ed several deri vati ve suit s, and t he Secur i t i es and E x ch ange Com m i s s i on comm ence d a form al i nves t i gat i on on N ovember 30, 2005. T he Feder al Pol i cyper m i t t ed A ber cr om bi e t o pur chas e a one-y ear ext ended r epor t i ng per i od ( t he “ER P”) that w oul d covercl ai m s ar i s i ng aft er t he end of the i ni t i al Pol i cyPer i od, buti nvol vi ng conductt hatoccurr ed dur i ng t he Pol i cy Per i od. A ber cr om bi e exer ci s ed t he opt i on t o pur chas e the ER P and pai d t he $820, 000 pr emi um [ ] on Sept ember 30, 2005 , w i t hi n t he 30- day 4 w i ndow pr ovi ded byt he Feder al Pol i cy . A ber cr om bi e form al l ynot i fi ed Feder al of t he R os s C l ai m s byl et t erdat ed O ct ober5, 2005. T h ere is no d ispu te t h at af ter th e R o ss claim s w ere file d , a n d b ef o re p u rc h a s in g th e E R P , A b e rc ro m b ie re n e g o tia te d th e N a tio n a l U n io n P o l i c y, p rov idi ng t hatthe new cover age w oul d be exc es s t o Feder al ’ s pr i m ary cover age unde rt he ER P. T he agr eementbetw een N at i onal U ni on and A ber cr om bi e w as l at er m emori al i zed i n an Endors ement t o t he N at i onal U ni on P oli cy . [ ] En do rs em ent N o. 17 reads as fol l ow s:

5No. 09-3096 4 I n t he eve nta C l ai m i s m ade a gai ns tan I ns ur ed undert he pol i cy a n d a l s o u n d e rPo l i c yNo. 8 1 5 9
- 6 2 1 3 i s s u e d b yFe der al I ns ur ance C om pany( her ei naft er“Feder al Pol i cy ”) , al l egi ng any W ro n g f u l A c t co m m itt e d o r a lleg e d lyc o m m itt e d p rio r to 9/ 01/ 2005, t hen s uch i ns ur ance as i s pr ovi ded by t hi s p ol i cy s hal l appl y onl y as exce s s overanyL os s pai d unders uch Feder al P o l i c y. T he part i es agr ee that , had A b erc r om bi e pur chas ed the ER P and not w r i t t en the N at i onal U ni on Pol i cy t o be exces s , t he N at i onal U ni on and Feder al pol i ci es w oul d bot h be pr i m ary . Feder al m ai nt ai ns t hat , bys hi ft i ng t he bur den o f pri m ary cov erage t o Fed eral , A bercr om bie prej ud i ced Fed eral ’s ri gh t to r ecove rfr om N at i onal U ni on, and thats uch conduc t co n sti tut es a mat er i al br eac h of t he i ns ur ance contr act and a bar t o cover age. Speci fi cal l y , Feder al cl ai m s t hat A bercr om bie br eache d S ect i on 16 (d) of the P oli cy , w hich st at es: T h e In su re d s a g re e to p ro v id e th e C o m p a n y[ F e d e ra l] w ith a ll i nfor m at i o n, as s i s t ance and coope r at i on w hi ch the C om pany m a yre a so n a b lyre q u ire a n d a g re e th a t in th e e v e n t o f a C laim the In su red s w il l d o n o thing that co u ld p rejud ice the C o m p an y ’s p o s i t i o n o ri t s p o t e n t i a l o ra c tu a l r i g h t s o f r e c o v e r y. A b er cr om bi e cont ends t hatt he Feder al Pol i cyexpr es s l yper m i t t ed A b e rc ro m b ie to stru c tu re a d d iti o n a l o r su b se q u e n t co v e r a g e a s e x c e ss to Feder al ’ s pr i m ar ycover age. Speci fi cal l y , t he Feder al Pol i cys t at es , i n Sect i on 18: I f a n y Lo s s u n d e r t h i s c o v e r a g e s e c t i o n i s i n s u r e d u n d e rany o th e r v a lid in su ra n c e p o licy (ie s), th en thi s cov e ra g e se c tio n sh a ll covers uch Loss , s ubj ectt o i t s l i mi t at i ons , condi t i ons , pr ovi s i ons and othert erm s, on l yt o the ext ent that t he am ou nt of such L oss is in e x c e ss o f

th e a p p lica b le r e ten tio n (o r d e d u c tib le) a n d lim it of l i abi l i t yunder s uch otheri ns ur ance , w hethers uch other in su ranc e i s st at ed to be p ri m ary , con t ri bu t ory , excess, cont i ngentorot herw i s e, unl es s s uch otheri ns ur ance i s w r itt en o n lya s s p e c if

ic e x c e ss in su ra n c e o v e r th e L im its o f L iab ili ty pr ovi ded i n t hi s cover age s ect i on [t he Ex ec u ti ve Li abi l i t yand E n ti tyS ec u ri ti es L iabili tyC o v era g e se cti o n ]. (F ed era l Po li cy , D o c. #8 5 -2).No. 09-3096 5 T he part i es di ffe rovert he m eani ng of t hi s pr ovi s i on. Feder al m ai nt ai ns t hat th e provis i on app l i es onlyt o co verage thati s excl usi velyexcess; A b erc rom b ie co n tend s tha t th is se cti o n g ives it the ri g h t to p u rch ase p ri m ary c ov e r a ge t ha tw ou l d b e e xc e s s on l ya s t o the Fe de r a l ER P. Im p o rta n tly , the p a rties d o n o t d isa g re e o n se v e ra l k e yf a c ts re latin g to cover age. For exampl e, t her e i s no di s put e t hat t he R os s C l ai m s fal l w i t hi n t he cover age pr ovi ded byt he ER P, as t heyal l ege w r ongful conductoccurr i ng dur i ng t he i ni t i al Pol i cyPer i od. A l s o, Feder al does n otal l ege that A ber cr om bi e fa i l ed t o exer ci s e t he E R P opt i on i n acc or dance w i t h Sect i on12 of t he Pol i cy , ort o pr ovi de t i m el ynot i ce of t he R os s C l ai m s underSect i on 15. Feder al now s eeks j udgm entas a m att erof l aw and a de cl ar at i on t hat t he F e d e ra l P oli cydo es not pr ov i de co verage to A bercr om bie for the R oss C l ai m s , bas ed s ol el yon A ber cr om bi e’ s conducti n w r i t i ng t he N at i onal U ni on Pol i cyt o be exc es s t o t hatof Feder al , al l egedl ycut t i ng off Fede r al ’ s r i ghtof c o n t r i b u t i o n i n p u rp o r t e d b r e a c h o f S e c t i o n 1 6 ( d ) o f

t h e F e d e r a l P o l i c y. (F o o tno te om itted). A p p ly ing O h io law to the interpre ta tio n o f th e F ed era l Po li cy , the d istri ct co u rt det er m i ned t hatthe sec ti ons of t he i ns ur ance contr acti n di s put e coul d r eas onabl ybe in te rp re te d “ in s u c h a m a n n e r t h a t r e q u ir e s F e d e ra l to p ro v id e c o v e ra g e f o r th e R o s s c la im s .” T h e d istric t co u rt a lso f o u n d it co u ld n o t d is m is s th e b a d f a ith c laim c o n tain e d in A ber cr om bi e’ s amended compl ai nt . A ccor di ngl y , t he di s t r i ctcour tdeni ed Feder al ’ s m ot i on f o r su m m a ryju d g m e n t. F o ll o w ing it s ruling o n F ed era l’ s m o ti o n fo r sum m aryjud g m en t, the d istri ct co u rt
re q u e ste d m e m o ra n d a f ro m th e p a rties b rie f

in g a n yiss u e s re m a in in g in c o n n e c tio n w ith A ber cr om bi e’ s pendi ng m ot i on forpar t i al s um m ary j udgm ent . I n J anuary2009, t he di s t r i ct
cour tgr ant ed A ber cr om bi e’ s m ot i on, ent er i ng i t s decl ar at i on t hat A ber cr om bi e w as ent i t l edNo. 09-3096 6

The order states: 6 Sub j ect to the $ 1 million retention and the $ 10 million limit in Federal Policy No. 8159
- 62- 13 , F e de r a l is he r e by ORDERED to a dv an ce p ay m ent f or th e fo ll ow in gcat eg orie s of c os ts that P laintiff has incurred an d w ill incur in the future : 1 ) A ll reason able costs in curred by Abe rcrom

bie o r its current o r former office rs or directors to de fend R oss v. A be rc ro m bi e , No. 2:05
- cv - 819 (S.D . O hio); 2 ) A ll reason able c osts incurred by Abercrom

bie o r its current or former office rs or directors to de fend In re Abercrom bie &Fitch C o. Derivative Litigation , Lead Case No. 2:05- cv - 819 (S. D. O hio); and 3) A ll reason able c osts in curred by Abe rc ro m

bi e to inv es ti g at e or

e v aluate whe th er

it is in Abe rc ro m

bie ’s b est int er es t t o prosecute the claim s raised in the sh arehold er de riv ativ e su its, u p to the P olicy ’s $2 50, 000 l i m it(seeF ed er alP ol ic y , p p. 1 and 1 2) ; 4 ) A llr ea so na

bl e co st s in curr ed

b y Abe rc ro m

bi e inco nn e c t i o nw i thth e O r d e r D i r e c t i n gP r i v at e Inv e s t i g at i o nan d D e s i gn at i n gO f

f i c e r s to Take Tes ti m ony , S E C F il e N o. P
- 13 05 , af te r N ov em

be r 30 , 20 05 , th e date of th e O rd er , to the ex t e ntsu c h c os t s we r e in c urr e d wi th r e s pe c tto a Cl a i m, as de f i ne d b y th e Fe de r a l Po l i c y. (Citation omitted.) The final judgm ent ru le, c odified at 28 U .S. C. § 1291 , g enerally limits federa l courts of appea ls’ 7 j urisdiction

to final d ecisions of the district courts; in the next section, certain i nterlocutory decisions o f the di s tr i c tco urt s ar e ex c e pt e d f r om th e ru l e , g i vin g us j ur i s di c t i onove r or de r s “gr ant i ng, co nt i nu i ng, mod i f yin g, refusingor dissolv inginjunctions, or refusingto dissolv e or m odify injunctions
. . . .” 28 U .S. C. § 12 92 (a )( 1)
. t o advanc ement of fourcat egor i es of cos t s fr om Feder al
. Feder al fi l ed i t s t i m el ynot i ce of 6 appea l fr om t he di s t r i ct cour t ’ s J anuary or der and “al l i nt er l ocut or yor der s l eadi ng t her et o, i ncl udi ng butnotl i m i t ed t o t he O r der dat ed S ept ember 30, 2008, deny i ng Feder al ’ s m ot i on f o r s u m m a ry ju d g m e n t.” II
. A . Juri s di ct i on A pr el i m i naryi s s ue ra i s ed by t hi s appea l i s our j ur i s di ct i on over i t . A ft erFeder al fi l ed t hi s appea l , A ber cr om bi e moved t o di s m i s s , as s er t i ng t hatt he di s t r i ctcour t ’ s J anuary2009 interl o cu toryo rde r w as n o t an a p p ea lable inju n cti o n u n d er 2 8 U
. S
. C
. § 1 2 9 2 (a)(1). 7 A m o t i o n s p a n e l f

i r s tc o n s i d e r e d t h i s i s s u e a n d i n J u n e 2 0 0 9 d e n i e d t h e mot i on
w i t houtpr ej udi ce, n o ti n g d eci s i ons fr om the N i nt h and El eventh C i r cui t s al l ow i ng t heNo. 09-3096 7

See Pac. Ins. C

o. v. Gen . D ev. Cor

p. , 2 8 F
. 3d

1 09 3, 10 96 (1 1th C ir
. 1 99 4) ; Gon v. Firs t State Ins. 8 Co. , 8 71 F
. 2d

8 63 , 8 75 ( 9th C ir
. 1 98 9)
. i m m ediat e app eal s of i nter l ocu t ory orders dir ect i ng i nsurer s t o advan ce l i t i gati on exp enses. 8 A ber cr om bi e m ai nt ai ns i n i t s m er i t s br i ef t hat t he Janua r y 2009, non- fi nal or derof t he di s t r i ct
cour ti s nei t heri nj unct i ve norm eet s t he r equi r ement s of C ars on v. A m er i can Brands , I nc ., 4 5 0 U
. S
. 7 9 (19 8 1 ) f

o r o ther n o n -fina l o rde rs: that a d istri ct co u rt ’s ap p ea lable interloc u tory
o rd e r h a v e a “ s e rio u s, p e rh a p s irre p a ra b le c o n se q u e n c e ,” a n d c a n o n lyb e “ e f f e c tu a lly
c h a lle n g e d ” b yim m e d ia te a p p e a l. I d. at84 ( quot i ng B al t i m or e C ontr act ors v. B odi nger , 348 U
. S
. 1 7 6 , 1 8 1 (19 5 5 )). I n P aci f i c I ns ur ance Co. v. G ener alD eve l opm ent C or p. , 2 8 F .3 d 1 0 9 3 , 1 0 9 6 ( 1 1 th C ir
. 1 9 9 4 ), the E leve n th C ir cu itco n side red w h ethe r a n in terl o cu toryp arti al su m m ary jud g m en t ord er d ir ec ti n g insu ran ce p ay m en ts to insu red s, p en d ing reso luti o n o f th e ins u rer’s cl ai m for r es ci s s i on of t he pol i cy , w as appea l abl e under§ 1292( a) ( 1)
. I n i t s s um m aryrul i ng t hati thad j ur i s di ct i on overt he appe al , t he courtr el i ed on N at i onalU

ni on F i r e I

ns ur ance Co.

v. Sahl en , 9 9 9 F
. 2 d 1 5 3 2 (11 th C ir
. 1 9 9 3 ). Sahl en i s a ca s e i n w hi ch the pl ai nt i ff i ns ur erfi led a co m p la i ntforr es ci s s i on of an i ns ur ance contr actbas ed on t he defe ndant s ’ al l eged m i s r epr es ent at i ons i n t he appl i cat i on for insu ran ce , w h ich w as u lt im atelyreso lved in the insu rer’s fa v o r on it s m o ti o n fo r sum m ary j udgm ent . A l t hough i tent er ed j udgm ent , t he di s t r i ctcour tr es er ved j ur i s di ct i on overt he i ns ur er ’ s cl ai m forr ei m bur s ement of paym ent s for defe ns e cos t s i t had m ade pr i ort o fi l i ng it s su it for r eci s s i on. O n appea l , conce r ned thatt hi s r es er vat i on of j ur i s di ct i on overt he
r ei m bur s ement i s s ue pre cl uded appel l at e j ur i s di ct i on, t he El eventh C i r cui ts ubm i t t ed a s uaNo. 09-3096 8

Additionally , in Medcom H olding C o. v. Baxte r T

raven ol L aboratories, Inc. , 9 84 F.2 d 2 23, 22 4- 25 9 (7th C ir. 1 993), the court held that it had j urisdiction ov er a non- final o rder req uiringspe cific pe rform ance of a contract prov ision, but s ee S aber v. Fina nceA meric a C redit C orp ., 843 F.2 d 6 97 , 702 (3d Cir. 1988 ) (holdin gan order to pay

money under a settlem ent w as a “leg al remedy ” an d n ot an injunction within

sco pe of § 1 29 2( a) (1 ))
. s pont e ques t i on of j ur i s di ct i on t o t he l i t i gant s . C i t i ng G on v. F i rs tSt at e I ns . C o. , 871 F. 2d 8 6 3 (9 th C ir. 1 9 8 9 ), th e p a n e l d e ter m in e d th a t th e d istric t c o u rt’s r u lin g s in c o n n e c tio n w ith th e in su r e d s ’ m o tio n f

o r p a rtial s u m m a ryju d g m e n t re q u e stin g p a y m e n t o f d e f e n se c o sts pendi ng a dec i s i on on t he com pl ai nt for r es ci s s i on cons t i tut ed gr ant s of orm odi fi cat i ons of
a n in ju n c tio n , o v e r w h ic h it h a d ju ri s d ic tio n u n d e r § 1 2 9 2 (a )( 1 ). G on sim ilarlyh e ld th a t a di s t r i ctcour t ’ s or derm odi fy i ng i t s ow n ear l i er di r ect i on t o an i ns ur er t o paydefe ns e expe ns es i n cert ai n l i t i gat i on as t hey w er e i ncurr ed w as an appeal abl e orde r under§ 1292( a) ( 1)
. See G on , 871 F. 2d at866. 9 A s ar guedb yFe d e r a l , th e r e l i e f s o u g h tb yA ber cr om bi e’ s amended compl ai nti ncl udes
a ju d g m e n t “ enj oi ni ngF ederal from fai l i ng and refusi ng t o p a y ” cert ai n d efen se cost s. (E m p h a sis a d d e d .) A d d iti o n a lly , the o rd e r a p p e a rs to f it th e re q u ire m e n ts s e t f o rth in G on
— c itin g 1 6 C
. W r i g h t , A
. M ille r, E . C o o p e r, & E . G re s s m a n , Feder alP r act i ce & P r o ce d ur e: Jur is di ct i on § 3 9 2 2 a t 2 9 (1 9 7 7 )— th a t itis e n f o rc e a b le b yc o n tem p t, an d is

“ d e sig n e d to a c c o rd o r pr o tec t so m e o r all o f th e su b sta n tiv e re lief so u g h t b ya c o m p lain t in
m o re tha n t empora r yfas hi on. ” G on , 871 F. 2d at865. I n l i ne w i t h G on and Sa hl en , we d eterm ine th at t h e d istri ct co u rt ’s gra n t of p arti al s u m m ary jud g m en t w as an injun cti v e o rde r,
o v er w h ich w e h av e jurisdicti o n u n d er 2 8 U
. S
. C
. § 1 2 9 2 (a)(1). B . B reac h of

C ont ractNo. 09-3096 9

Altho ugh F ederal filed its appea l follow ing the district court’s decision on Abe rcrom bie’s motion 10 for partial s um

m ary ju d gm e nt , i t s ar gum e nt s a d dr e s s th e S e p t e m b e r 2 0 0 8 d e c i s i o no f

th e d i s tr i c tc o urton F ed er al ’s mot io n fo r sum

m ar y jud gm ent. F ed er aln ot es th at th e S ep te m

be r or de r w as n ei th er

f in aln or ti m el y appea led, but c onced es that “an appellate court, in its discretion , [m ay ] exercise j urisdiction ov er issues that are n ot ind epend ently

app ealable whe n tho se issu es are ‘ inextricab ly intertwined’ with m atters ov er which the ap pe l l at e co urtpr op e r l y an d i nd e pe nd e nt l y ha s j ur i s di c t i on ,” qu ot i ng Had ix v. Joh nson , 2 28 F.3 d 6 62, 66 9 (6 thC ir
. 2 00 0)
. B ec au se w e hav e de te rmin ed w e hav e juri sdic ti on

o v er th is appe al , a nd th e January 2009 ord er inco rporates ruling s made in the Septem ber 2 008 order, w e find

w e may con sider th e issu es presente d as “inextricably intertw ined. ” W e n ex t tu rn to th e m erit s o f th e a p p ea l. U n d er F ed
. R
. C iv. P. 56 (c), su m m ary j udgm enti s appr opr i at e w her e t her e ar e no genui ne i s s ues of m at er i al fac tand the movi ng par t yi s ent i t l ed t o j udgm ent as a m at t er of l aw . See C e lo tex C o rp . v. C a tre tt , 477 U
. S. 317, 322- 23 ( 1986)
. O urr evi ew of bot h t he di s t r i ctcour t ’ s i nt erpr et at i on of t he i ns ur ance contr act and i t s sum m ary j ud gm ent det erm i nati on s i s de novo
. See D uane M gm t
. C o. v. P r udent i al 10 I ns . C o. , 29 F. 3d 245, 248 ( 6t h C i r . 1994)
. T her e i s no di s put e her e thatO hi o l aw governs the i n terpretati o n o f t h e F ed era l P o li cy . A s q u o ted by the distr ict co u rt , u n d er O h io l aw , “[ i] n
or dert o defe atcover age, t he i ns ur er m us t es t abl i s h not m er el y t hat t he pol i cyi s capa bl e of th e c o n stru c tio n it f

a v o rs, b u t ra th e r th a t su c h a n in ter p re tatio n is th e o n lyo n e th a t ca n f a irly be pl ace d on t he l anguage i n ques t i on. ” A nders en v. Highl and H ous e C o. , 757 N
. E
. 2d 329, 3 3 2 (O h io 2 0 0 1 ) (i n terna l qu o tat ion m ark s an d cit ati o n o m itted). F ed era l r eli es o n F ed era l Po li cyp rov isi o n 1 6 (d) f o r i ts c la im that the d istri ct co u rt
err ed i n fi ndi ng t hat A ber cr om bi e di d not comm i t a br eac h of t he Feder al Pol i cy . F eder al
r epea t edl yi nvokes t he l anguage i n § 16( d) t hat“i n t he eve ntof a Cl ai m t he I ns ur eds w i l l do
n o th in g th a t c o u ld p re

ju d ic e [ F e d e ra l’ s ] p o s itio n o r its p o te n tia l o r a c tu a l rig h ts o f re c o v e ry,”
a ss e rtin g th a t A b e rc ro m b ie’ s a c tio n s in e lec tin g th e e x ten sio n o f c o v e ra g e f

ro m F e d e ra l,
w hi l e al s o negot i at i ng w i t h N at i onal U n ion tha tFeder al ’ s l i abi l i t yforcover age w oul d beNo. 09-3096 10

p rim a ry , v io late d th a t p ro v isio n . F e d e ra l as se rts th a t ith a d a “ w e ll
- s e ttl e d rig h t to
c o n trib u tio n ” f

ro m N a tio n a l U n io n a t th e tim e A b e rc ro m b ie le a rn e d o f th e c laim s a g a in st it,
as w i t houtamendm entt o t he N at i onal U ni on pol i cy , the t w o i ns ur er s w oul d have be en
e q u a lly lia b le f

o r c o v e ra g e . See B ucke ye U ni on I ns . C o. v. St at e Auto. Mut
. I ns . C o. , 361 N
. E
. 2d 1052, 1055 ( O hi o 1977)
. Feder al cont ends t hatA ber cr om bi e “a br ogat ed” i t s r i ght t o contr i but i on, byr etr oact i vel y“col l udi ng” w i t h N at i onal U ni on t o m ake Fede r al
re sp o n sib le f

o r p rim a ryc o v e r a g e o f d e f e n se c o sts . F e d e ra l sta tes th a t “S e c tio n 1 6 (d ), in
s hor t , t akes a s naps hot of Feder al ’ s r i ght s on t he daya C la im i s m ade; A ber cr om bi e i s fr om th a t p o in t o b lig a te d n o t to d o a n y th in g th a t c o u ld u n d e rm in e th o s e ri g h ts .” A ber cr om bi e ar gues t hat Feder al has s el ect i vel y quot ed fr om t he p o li cy , taki ng t he cl aus e i tr el i es on outof cont ex t. P rov isi on ( d) i s t he four t h of fi ve part s of Sect i on 16, lab e led “ D e f

e n se a n d S e ttl e m e n t:” D efe ns e and Sett l ement 16. ( a) I ts hal l be t he dut y of t he I ns ur eds and not t he dutyof t he C om pany t o d efen d C l ai m s m ade ag ai nstt he Insureds. ( b) T he I ns ur eds agr ee nott o s et t l e oroffe rt o s et t l e any C l ai m , i ncur a n yD e f e n se C o sts o r o th e r w is e a ss u m e a n yc o n tra c tu a l o b lig a tio n o r a d m it any li abi l i t yw i t h r es pectt o anyC l ai m w i t houtt he C om pany ’ s pr i orw r i t t en cons ent . T he C om panys hal l notbe l i abl e foranyel emen t o f L o s s i ncurr ed, for any obl i gat i on as s um ed, or for any admi s s i on m ade, by any I ns ur ed w i t hout th e C o m p a n y ’s p rio r w ritten c o n se n t. P ro v id e d th e In su re d s c o m p lyw ith S u b se c tio n s 1 6 (c ) a n d (d ) b e lo w , th e C o m p a n ysh a ll n o t u n re a so n a b ly w ith h o ld a n ysu c h c o n se n t. ( c) W i t h r es pectt o anyC l ai m t hatappea r s r eas onably li kel yt o be c o v e re d in w h o le o r i n p a rt u n d e r th is co v e ra g e se c tio n , th e C o m p a n y s h a ll h a v e th e rig h t an d sh a ll b e g iv e n th e o p p o rtu n ity to e f f e c tiv e lya ss o c iate w ith t he I ns ur eds , and s hal l be cons ul t ed i n advanc e byt he I ns ur eds , r egar di ng t heNo. 09-3096 11

Abe rcrom

bie als o h ighlights th e “d eeming clause” languag e of § 12 of the F ederal Policy , which 11 states th at claim s fallingw ithin th e extended cov erag e ar e d e e medmad e duringthe orig inal p eriod of the Fede ral Po licy

(i.e. duringSeptem

ber 1 , 2 004
- Septem

ber 1 , 2 005). Abercrom

bie as serts that beca

use the Nation al Union Policy

w as n ot in effect d

uringthe 2004
- 05 tim e period, Nation al Union wou ld hav e no oblig ation to co v er a claim deem ed m ade duringthat period, and Fe deral is sole p rim ary

insurer of the Ross claim s. i nves t i gat i on, defe ns e and s et t l ement of s uch C l ai m , i ncl udi ng butnotl i m i t ed to se lec tin g a p p ro p ria te d e f e n se c o u n se l an d n e g o tiatin g a n yse ttl e m e n t. ( d) T he I ns ur eds agr ee t o pr ovi de the C om panyw i t h al l i nfor m at i on, as s i s t ance and coope r at i on w hi ch t h e C om panym ayr eas onabl yr equi r e and a g re e th a t in th e e v e n t o f a C laim th e In su re d s w ill d o n o th in g th a t co u ld p r e j u d i c e t h e C o m p a n y’ s p o s i t i o n o r i t s p o t e n t i a l o ra c tu a l r i g h t s o f r e c o v e r y. ( e) A ny advanc ement of D efe ns e C os t s s hal l be r epai d t o t he C om pany byt he I ns ur eds , s ever al l yacc or di ng t o t hei rr es pect i ve i nt er es t s , i f and t o t he e x ten t itis d e ter m in e d th a t su c h D e f e n se C o sts a r e n o t in su re d u n d e r th is cover age s ect i on. Feder al P o li cy , § 16. A ber cr om bi e i ns i s t s t hatt hi s s ect i on of t he pol i cycover s i t s and F e d e r a l ’ s r i g h t s a n d o b l i g a t i o n s o n l y i n c o n n e c t i o n wi t h t h e d e f e n s e a n d s e t t l e me n to f

c l a i ms
m ade a gai ns t A b erc r om bi e, and notA ber cr om bi e’ s negot i at i ons oragr eement s r egar di ng i nsurance co ntr act s and ca rr i ers . 11 I n i t s opi ni on, t he di s t r i ctcour tagr eed w i t h A ber cr om bi e that§ 16 of t he Feder al Pol i cyr el at ed onl yt o t h e d ef en se and set t l ement of cl ai m s , and w as notvi ol at ed by A b e rc ro m b ie’ s a c tio n s in a m e n d in g th e N a tio n a l U n io n p o licy . T h e d istric t co u rt sim ilarly f o u n d n o b a r to A b e rc ro m b ie’ s a c ti o n s in § 1 8 , d e ter m in in g th a t th e se c tio n ’s “ p lain l anguage ” al l ow ed t he amendm ent . Poi nt i ng outt hat§ 7 of t he Feder al Pol i cy( ent i t l ed

“ S u b ro g a tio n ” ) g o v e rn e d F e d e ra l’s rig h ts o f re c o v e ry“ in th e e v e n t o f p a y m e n t u n d e r th is p o licy ,” th e d istric t co u rt d e ter m in e d th a t “ S e c ti o n 1 6 (d ) c a n re a so n a b lyb e in ter p re ted toNo. 09-3096 12

The district c ourt c ited Storer v. Ocea n Accid ent & Gua rantee Cor

p . , 8 0 F
. 2d

4 70 , 4 72 ( 6th C ir
. 12 1935 ), an ac tion b rought un der O hio law on an insuran ce co ntract, for the purposes of a coop eration clause: “( 1) To r eq

ui re th e in sure d to a id

in p re pari ngth e ca se f

or tria l and in makin gp ro pe r de fe ns e; and ( 2) to prev ent collusion betw een the in sured and a friendly claimant.” See also Lee R. Russ and Thom as F . S eg alla, 14 Cou ch o n Insuran ce § 199:4 (3d ed.) (“T he m ain purpose of a cooperation clause is to pre v ent co llusion whi le makin git

p os sibl e fo r th e in sure r to make a pr op er inv es ti g at io n. ”)
. Fede ral cites Cha mpio n Spar k Plug Co. v. Fidelity &C asua lty C o. , 6 87 N
. E
. 2d

7 85 , 7 93 ( O hi o C t. 13 App . 1996) for th e ho ldingthat an in sured who brea ches a co nsent- to- settle pro v ision is auto m atically barred from cov erag e, m akingthe unco nv incingana logy that Abe rcrom bie’s alleg ed b reach of § 16 (d) bars it fro m cov erag e for the Ross c l a im s an d relate d inv estig ation. H owe v er, as sh own by Abercrom

bie, the ca se o f Ferra ndo v. Auto -Owners Mut. In s. Co. , 7 81 N. E.2 d 9 27 (Ohio 20 02) a dded the required

element o f pr ejudic e to an in sure r’ s de fe ns e ba se d on th e co op er at io n cl au se . Abe rc ro m bi e argue s, and

the d is tr ic t c ourt found , Abercro m

bie’s actions did n ot pre

j udice Fede ral’s “ab ilityto defend the Ros s C laim s on

the m erits.” Giv en o ur d etermination that Abercrom bie did n ot bre ach the F ederal Policy , w e ne ed n ot furth er ad dress this issu e. r equi r e t he cooper at i on of A ber cr om bi e i n connec t i on w i t h t he def ens e of a C l ai m , and no
m o re .” 12 Feder al ar gues t hatt he di s t r i ctcour t ’ s deci s i on, i n agr eei ng w i t h A ber cr om bi e, di d not gi ve ef fec tt o t he Feder al Pol i cyas a w hol e, b u ti m pr oper l yi nt erpr et ed § 18 i n i s ol at i on,
w i t houtt he l i m i t at i on i tar gues i s i m pos ed by§ 16. Feder al ci t es t o O hi o l aw s t andi ng for t he pr opos i t ion that court s m us tappl yt he t er m s of a c ont r actas w r i t t en, and ca nnot“r ead in to a c o n tr a c t” m e a n in g n o t g iv e n to th e d o c u m e n t b y th e p a rt ie s . See Motorist s Mut. Ins. C o. v. Tom ans ki , 271 N
. E
. 2d 924, 927 ( O hi o 1971)
. Feder al cont ends t hatt he amendm ent of an exis t i ng po l i cy(the N at i on al U nion po l i cy ), t hat w as not or i ginal l y“speci fi cal l yexcess t o t he Feder al Pol i cy , ” w hi l e not vi ol at i ve of § 18 di d br eac h § 16’ s pr os cr i pt i on of ac t i ons
w hi ch coul d “pr ej udi ce” Feder al ’ s “pot ent i al oractual r i ght s of r ecove r y . ” W e di s agr ee. 13 U n d er O h io l aw , w e m u st “g ive t h e w o rds in th e p o lic y th e ir p la in a n d o rdin ary
m eani ng. ” Mi norv. A l l s t at e I ns . C o. , I nc . , 6 7 5 N
. E
. 2 d 5 5 0 , 5 5 3 ( O h i o C t . A p p . 1 9 9 6 )
. We
r ead the p o li cyas a w hol e, gi vi ng eff ectt o al l of i t s pr ovi s i ons , and noti nt erpr et i ng anyNo. 09-3096 13

s e c tio n in is o la tio n . Fos t erW heel erE nvi r es

pons e, I nc. v. Fr ankl i n C ount

y C o n vent i on Faci l i ti es A uth. , 6 7 8 N .E . 2 d 5 1 9 , 5 2 6 (O h io 1 9 9 7 ). S e c tio n 1 6 o f th e F e d e ra l P o licyse ts for t h ( a) w hos e dut y i ti s t o defe nd C l ai m s ; ( b) t hatA ber cr om bi e ca nnotoffe rt o s et t l e any C l ai m w i t houtFeder al ’ s co n sen t; ( c) Feder al ’ s i nvol vement i n i nves t i gat i ng and s et t l i ng C l a i m s ; ( d ) t h a tA b e r c r o m b i e w i l l f u l l y as sis tw i th s uch i nves t igat i on , i ncl udi ng doi ng “nothi ng t hatcoul d pr ej udi ce [ Feder al ’s] pos i t i on ori t s pot ent i al oractual r i ght s of
re c o v e ry ;” a n d (e ) th a t A b e rc ro m b ie w ill re p a yd e f e n se c o s ts a d v a n c e d b yF e d e ra l if it is det er m i ned th ere w as no cover age. I ti s cl eart hatt he purpos e of §16 i s t o enumer at e t he par t i es ’ r es pect i ve r i ght s and obl i gat i ons w hen a c l ai m i s m ade agai ns tan i ns ur ed, and t he i ns ur ed i s cover ed by t he pol i cy . I t does not addr es s t he par t i es ’ r i ght s and obl i gat i ons w hen
a pol i cy has el aps ed, a cl ai m has been br oughtagai ns ta ( for m er l y ) i ns ur ed, and the i ns ur ed i s deci di ng w hethert o el ect

— and how bes tt o s t ructur e— ext ended i ns ur ance cover age. A s A ber cr om bi e hi ghl i ght s i n i t s br i efi ng, Feder al ’ s pos i t i on t hat§16( d) pr os cr i bes i t s act i ons i n amendi ng t he i ns uran ce pol i cyw i t h N at i onal U ni on m akes l i t t l e s ens e w hen vi ew ed in the cont extof A ber cr om bi e’ s i ni t i al deci s i on t o el ectt he ER P cover age. A tt he tim e t he R oss cl ai m s w ere fi l ed, F ederal had no cov erage res po nsi bil i t y w hats oev e r, as its pol i cy had j us t expi r ed. T he deci s i on by A ber cr om bi e t o el ectt he ER P aft ercl ai m s had bee n
m ade c oul d cert ai nl ybe s ai d t o “pr ej udi ce” Feder al ’ s “p o sit ion, ” undert he i nt erpr et at i on advanc ed by Feder al , but Feder al m akes no s uch ar gum ent . T he i dea t h at t h e § 1 6 ( d) lan gu age should app l y t o A bercr om bie’ s neg oti at i on w i t h N at i on al U nion, bu t n o t toNo. 09-3096 14

A b e rc ro m b ie’ s e lec tio n o f th e E R P , u n d e rm in e s F e d e ra l’s a rg u m e n t th a t § 1 6 (d ) a p p lies to th e situ a tio n a t all. T her e i s no ques t i on t hatt he interpre t at i on advanc ed byFeder al i s nott he onl yone t hat can “fa i r l y be pl ace d on t he l anguage i n ques t i on. ” A nders en, 7 5 7 N
. E
. 2 d a t3 3 2
. We fi nd t hat t he di s t r i ctcour t ’ s i nt erpr et at i on of §16, l i m i t i ng t he pr ovi s i on’ s appl i cat i on t o t he defe ns e and s et t l ement of cl ai m s , t o be ent i r el yr eas onabl e and s uppor t ed by t he l anguage of th e c o n tra c t. T h e re is n o th in g a b o u t § 1 6 th a t p re v e n ts A b e rc ro m b ie f ro m m a k in g f

isc a lly d riv e n b u sin e ss d e c isio n s a b o u t it s in s u ra n c e c o v e ra g e , ev e n if su c h a d e c isio n is
unan t i c i p a t e d b ya n e x i s t i n g o rp a s ti n s u r e r . Ce r t a i n l y§ 1 2 o f t h e Fe d e r a l Po l i c y , g i v i ng A ber cr om bi e a 30- day w ind o w in w hi ch t o el ectt he ext ended c over age f ol l ow i ng t he
e x p ira tio n o f its 2 0 0 4 -2 0 0 5 p o licy , c o n tain e d n o lan g u a g e lim iti n g A b e rc ro m b ie’ s ab ili tyto el ect t hat cov erage i n the event t hat cl ai m s w ere m ade duri ng t he w i nd ow peri od
. W e al so
n o te th a t th e p re m iu m
— d o u b le th e p re m iu m f o r th e f irs t ye a r
— lik e lyto o k th is risk in to
a c c o u n t. A s n o ted a b o v e , F e d e ra l n o w h e re c o n ten d s tha t A b e rc ro m b ie w a s n o t allo w e d to elec t th e E R P u n d er th o se circum stan ce s. M o reo v er, as arg u ed b yA b erc rom b ie, a c o n tr ac t’ s
s peci fi c pr ovi s i ons , s uch as § 12 of t he Feder al Pol i cy , contr ol overa more gener al pr ovi s i on
s u c h a s § 1 6
. See M

ons l erv. C i nci nnat i C as . C o. , 598 N
. E
. 2d 1203, 12 0 9 (O h io C t . A pp. 1 9 9 1 ). W e not e fur t hert hatw hi l e Feder al dat es E ndor s ement 17 as occurr i ng i n N ovember 2 0 0 5 , e n t i r e l y af

t erA ber cr om bi e’ s pur chas e of t he ext ended Feder al cover age, i ti s cl eart hat negot i at i on of t he amendm entoccurr ed as a partof the dec i s i on t o el ectt he ER P. S uch aNo. 09-3096 15

W e ar e a l s o no tp e r s ua de d b y Fe de r a l ’ s ar gumen t , c i t i ng Moskow itz v. Progress ive Ins . C o. , 8 11 14 N. E.2 d 174, 183 (Ohio Com . Pl. 2004), that these busine ss de cisions constitute d a breachof the d uty of g ood faith and fair dealing
. Moreov er, Fede ral has w aiv ed th is argum ent, as it did n ot brin git b efore th e district court. See St. Marys F

ound ry, Inc. v. Em

ployersIns. of W

ausa u , 3 32 F
. 3d

9 89 , 9 95 ( 6th C ir
. 2 00 3)
. bus i nes s negot i at i on w as notpr ohi bi t ed byt he Feder al Pol i cy . A s t he di s t r i ctcour ts t at ed, 14 i n r ej ect i ng Feder al ’ s ar gum ent s about§ 16, “[i ] ti s an unr eas onabl e i nt erpr et at i on of Sect i on 1 6 (d ) to f

in d th a t itre q u ire s A b e rc ro m b ie to stru c tu re its in su ra n c e n e e d s b a se d n o t o n its
ow n needs and i n i t s ow n bes ti nt er es t s , butr at h er to m ini m i ze i t s i ns ur er ’ s pot ent i al
ex p o su re.” In a n yev en t, ev en if w e w ere to determ ine t h at § 1 6 (d) w as su sce p ti b le t o m o re t han one i nt erpr et at i on, s t r i ctcons t ruct i on of t he l anguage agai ns t t he i ns ur er i s m andat ed by O h io la w . See L an e v. G rang e Mut. C os. , 5 4 3 N
. E
. 2 d 4 8 8 , 4 9 0 (O h io 1 9 8 9 ). B eca us e t he Feder al Pol i cydoes n o t im pos e l i m i t at i ons on al l ow abl e t er m s of i ns ur ance agr eed t o betw een A ber cr om bi e and a ddi t i onal i ns ur er s , w e fi nd n o err ori n t he d i s t r i c tc o u r t ’ s i n t e rp r e t a t i o n o f t h e F e d e r a l P o l i c y. T he d i stri ctcou rti s AFF I RM ED
.No. 09-3096 16

K E T H L E D G E , C ir c u it J u d g e , d is s e n tin g . In c o n stru in g a c o n tra c t, th e w o r d s m a tter. T h e w o rd s o f § 1 6 (d ) m a k e c lea r th a t it i s n o t me r e l y a “ c o o p e r a t i o n c l a u s e . ” To r e a d t h e p r o v i s i o n t h a t way
— w hi ch i s how A ber cr om bi e r eads i t

— i s t o r ender near l y hal f t he w or ds of § 16( d) m eani ngl es s . Such an i n t e rp r e t a t i o n i s n e i t h e rr e a s o n a b l e n o rp e r mi s s i b l e u n d e rOh i o l a w. In ste a d , in p lain a n d sim p le te rm s, § 1 6 (d ) im p o se s o n A b e rc ro m b ie a se p a ra te d u ty
n o t to p rej ud i ce Federal ’s po si t i on aft er a cl ai m i s fi l ed. A bercr om bie breached t hat du ty h e re . I th in k w e o u g h t to e n f o rc e th e c o n tra c t to w h ich A b e rc ro m b ie f re e lya g re e d . I w o u ld th e re f o re re v e rse th e o rd e rs a t issu e in th is a p p e a l. A. T he chr onol ogyi n t hi s cas e i s i m p o rt an t. In 2004, Feder al i s s ued A ber cr om bi e an i ns ur ance pol i cy w i t h $10 m i l l i on i n cover age f orcl ai m s as s er t ed w i t hi n t he pol i cyper i od. T hatper i od expi r ed on Sept ember 1, 2005. A ber cr om bi e chos e nott o r enew t he pol i cyfor t h e f o l l o wi n g y e a r , b u t i n s t e a d p u r c h a s e d a $ 1 0 mi l l i o n p o l i c yf r o m a d i f f e r e n ti n s u r e r , AI G. T hatpol i cy ’ s cover age began on Sept ember 1, 2005. T he verynextday

— byhappens t ance , a p p a re n tly

— th e R o ss c laim s w e re f iled a g a in st A b e rc ro m b ie in f e d e ra l d istric t co u rt. It is u n d isp u ted th a t th e A IG p o licy , as o rig in a llyw ritten , af f o rd e d A b e rc ro m b ie p rim a ryc o v e ra g e f

o r th o se c la im s. P re d icta b ly , the n , A b e rc ro m b ie r e p o rte d th e c laim s to A IG . B u t w h a t h a p p e n e d n e x t w a s les s p re d icta b le. O n S e p tem b e r 2 9 , 2 0 0 5 , A b e rc ro m b ie el ect ed, under§ 12 of t he Feder al Pol i cy , t o pur chas e E R P cover age f r om Feder al
. T hat el ect i on w as A ber cr om bi e’ s r i ght ; and i t ext ended t he Feder al Pol i cyper i od t o Sept ember 30,No. 09-3096 17

2 0 0 5 , the re b ye n c o m p a ss in g th e R o ss c laim s. T h e e lec tio n c o st A b e rc ro m b ie $ 8 2 0 , 0 0 0

— tw ice the co st of the o ri g inal F ed era l po li cy
— an d se e m ed m ere lyto af fo rd Ab e r c r o mb i e d u p l i c a t i v e c o v e r a g e f o rc l a i ms a l r e a d yc o v e r e d u n d e ri t s n e w p o l i c ywi th AI G. So t he el ect i on s eemed a s t r ange thi ng t o do. B eh ind the sce n es, h o w ev er, A b erc rom b ie w as ne g o ti ati n g w ith A IG to r ev ise it s A IG pol i cy
— w hi ch agai n by i t s t er m s w as pr i m ary as t o t he R os s cl ai m s
— t o be exc es s as t o any cl ai m cove red byt he now
- ext ended Fede r al pol i cy . T he r ecor d m akes cl eart hat A ber c rom bie w ent t o co nsi derabl e l eng t hs t o h i de from F ederal t he fa ctof those neg oti at i on s. Fi nal l y , on N ovember 22, 2005

— n ea rl yt hr ee mont hs aft ert he A I G pol i cyt ook
e f f e c t

— A b e r c r o m b i e a n d A I G e x e c u t e d E n d o r s e m e n t s 1 7 a n d 1 8 t o t h e A I G p o l i c y. En d o r s e me n t1 7 r e t r o a c t i v e l yma d e t h e AI G p o l i c ye x c e s s a s t o a s i n g l e s p e c i e s o f c l a i m: namel y , cl ai m s m ade “ undert hi s pol i cyand al s o underPol i cyN o. 8 1 5 9 -62 1 3 i s s ued by Feder al I ns ur ance C om pany . ” Those c l ai m s , of cour s e, w er e the R os s cl ai m s ; and the ef fec t of t hatchange w as retroac t i vel yt o foi s ton Feder al t he ent i r e bur den of c over age f ort he cl ai m s , up t o t he $10 mi l l i on pol i cyl i m i t . A bs entthatchange , Feder al and A I G w oul d have
s har ed thatbur den equ al l y . T he endor s ement t her ebys aved A I G up t o $5 m i l l i on. B ut A b erc rom b ie benef

i t t ed fr om t he dea l as w el l : i n E ndor s ement s 17 and 18, A I G w ai ved A bercr om bie’ s $2 m i l l i on ret enti on for t he R oss cl ai m s and p rom i sed no t to i ncrease A ber cr om bi e’ s pr emi um s fora r enew al pol i cyt he fol l ow i ng y ear . I t appea r s t hos e cha nges eff ect i vel yr epai d A ber crom b ie th e cos tof i t s $820, 000 E R P el ect i on, l i kel ys ever al t i m esNo. 09-3096 18

o v e r . T h e c o s to f

a l l t h i s l a r g e s s e , o f

c o u r s e , f

e l l t o t h e p a r t y n o ti n t h e r o o m
— n a m e l y, F e d e ra l. B. Feder al s a y s th a tAbe r c r o mbi e’ s par t i ci pat i on i n thi s s cheme— t he pej or at i ve i s earned here— viol at ed § 16 (d) of F ederal ’s po l i cy . T hat s ect i on provides: T he Insureds [ i.e ., A b e r c r o m b i e ] a g r e e t o p r o v i d e t h e C o m p a n y [ i
. e. , F e d e ra l] w i t h al l i nfor m at i on, as s i s t ance and coope r at i on w hi ch the C om panym ay r eas onabl yr equi r e and a gr ee thati n t he eve nt of a Cl ai m t he I ns ur eds w i l l do not hi ng t hat coul d pr ej udi ce t he C om pany ’ s pos i t i on or i t s pot ent i al oractual r i g h t s o f r e c o v e r y. As s h o wn a b o v e , t h e AI G p o l i c yt o o k e f f e c to n S e p t e mb e r1 , 2 0 0 5 ; t h e Ro s s c l a i ms
we r e f i l e d o n S e p t e mb e r2 ; a n d Ab e r c r o mb i e ma d e i t s E RP e l e c t i o n o n S e p t e mb e r 2 9
. As of the l at t er dat e, t hen , F ederal w as ob l i gated t o pay on l y 50 % of the cost s of t he R oss cl ai m s,
w ith A IG , p er the e x p re s s term s o f it s p o li cy , o n the h o o k fo r oth er h alf. M o reo v er, A b erc rom b ie do es n o t dispu te t h at, h ad A IG there af ter not bo rne i t s share of t ho se c o sts, Feder al coul d have a s s er t ed a cont r i but i on cl ai m agai ns tA I G foranyamount s t hatFeder al p a id a b o v e 5 0 %
. See B ucke ye U ni on I ns . C o. v. St at e Aut o. Mut
. I ns . C o. , 361 N
. E
. 2d 1052, 1055 ( O hi o 1 9 7 7 )
. Th a t was t h e s t a tu s q u o o n Se p t e mbe r 2 9 ; a n d a t t h a t p o i n t i tw as A b erc rom b ie’s un d ispu ted o b li g ati o n to “do nothi ngth a tc o u l d pr ej udi ce [ Feder al ’ s ] pos i t i on
o r i ts po tential o r ac tual ri g h ts of rec o v ery . ” F ed era l Po li cy§ 1 6 (d) (em p h asis ad d ed ). B u t A b e rc ro m b ie th e n d id so m e th in g
— in th e f o r m o f E n d o rse m e n t 1 7

— th a t b o th
o b li g ated F ed era l t o p ay1 0 0 % o f th e c o sts of the R o ss claim s an d ex ti n g u ish ed F ed era l’ s p o tential ri g h t of rec o v ery ag ains t A IG
. T h e ef fe ct o f that ac ti o n w as to p rejud ice F ed era l’ sNo. 09-3096 19

po si t i on t o the ext ent of $5 m i l l i on , w hich A bercr om bie and A IG t hen spread am on gst them selv es. T h at see m s to m e a p aten t violati o n o f th e term s o f § 1 6 (d). A b e r c r o m b i e d i s a g r e e s w i t h t h a t c o n c l u s i o n . I n i t s v i e w , § 1 6 ( d ) i s m e r e l y a

“ c o o p e ra tio n c lau se ” ; an d , A b e rc ro m b ie s a y s, “ th e re is c o n s id e ra b le le g a l au th o rity demonst r at i ng t hatt he purpos es of coope r at i on cl aus es ar e t o pr eventcol l us i on betw een the i ns ur ed and the cl ai m ant ”— as oppos ed, appar ent l y , t o col l us i on betw een the i ns ur ed and anotheri ns ur ance company
— “and t o per m i tt he i ns ur ert o par t i ci pate in the defens e and
s et t l ement of cl ai m s . ” A ber
. B r . at28. T he shor t ans w er t o t hi s ar gum ent i s t hat w e do notcons t rue contr actual pr ovi s i ons in g ro ss . T h a t o n e p ro v isio n c o n tain s th e w o rd “ c o o p e ra tio n ” d o e s n o t m e a n th a t w e tre a t it as i den t i cal t o ev eryothercon t ractual pr ov i si on t hat cont ai ns t hat w ord. A nd i ti s point l ess, th e re f o re , to ta lk a b o u t “c o o p e ra tio n c lau se s” c a teg o ric a lly , w ith o u t d isc u ss in g th e sp e c if ic lang u ag e in e ac h o f t h em . A b erc rom b ie do es n o t m en ti o n , m u ch less d iscu ss, a si n g le w o rd of t he “c ooper at i on cl aus es ” w hos e meani ng i tw oul d gr aftont o § 16( d) her e. B u t A b ercr om bi e makes a more s er i ous om i s s i on as w el l
. A ber cr om bi e does not expl ai n— anyw her e i n it s b ri ef

— w hatm eani ng, exac t l y , i tat t ache s t o t he l anguage t hat Feder al r el i es upon i n t hi s appea l
. T he l aw r equi r es A ber cr om bi e t o do s o. “I n cons t rui ng a contr act , ” w e “must gi ve m eani ng t o every par agr aph, cl aus e, phr as e and w or d, om i t t i ng not hi ng as m eani ngl es s , ors urpl us age[
. ] ” A f f i l i at ed FM

I ns . C o. v. O w ens - C or ni ng F i berglas C orp . , 16 F. 3d 684, 686 ( 6t h C ir
. 1 9 9 4) ( appl y i ng O hi o l aw )
. A gai n, § 16( d) provides:No. 09-3096 20

T he Insureds [ i.e ., A b e r c r o m b i e ] a g r e e t o p r o v i d e t h e C o m p a n y [ i
. e. , F e d e ra l] w i t h al l i nfor m at i on, as s i s t an ce a nd cooper at i on w hi ch the C om panym ay r eas onabl yr equi r e and agr ee that i n the ev ent of a C l ai m the I

ns ur eds w i l ldo nothi ng thatcould pr ej udi ce t he C om pany’s pos i t i on ori t

s pot ent i aloract ual ri gh t s of recovery . (E m p h a s is a d d e d .) T he r eal i t yi s t hat A ber cr om bi e does not gi ve any m eani ng t o t he l anguage i t al i ci zed ab o v e. R athe r, itsay s o n lythat § 1 6 (d) a s a w h o le “c an rea so n ab ly b e interp reted to req u ir e the c o o p era ti o n o f A b erc rom b ie i n co n n ec ti o n w ith the d ef en se o f a C lai m , an d n o m o re[
. ]” A ber
. B r . at 19 ( i nt ernal quot at i on m ar ks om i t t ed)
. T hat i nt erpr et at ion is no t r eas onabl e, how ever , beca us e i tvi ol at es t he rul e l ai d dow n i n O w ens - C or ni ng . S t and i ng al on e, t he fir st par tof § 16( d)

— “[t ] he I ns ur eds agr ee t o pr ovi de the C om pany w ith al l i nfor m at i on,
as s i s t ance and cooper at i on w hi ch t he C om pany m ayr eas onabl yr equi r e”— al r eady r equi r es A b erc rom b ie t o co o p era te “in c o n n ec ti o n w ith the d ef en se o f a C lai m , an d n o m o re .” A b e rc ro m b ie re a d s § 1 6 (d ) a s if it e n d e d th e re , w ith a p e ri o d a f te r “ re a s o n a b ly re q u ir e .” B u t t h e p r o v i s i o n d o e s n o te n d t h e r e . I tg o e s o n t o s a y “ and [t he I ns ur eds ] agr ee that in the ev en t of

a C lai m the In su red s w il l do n o thing that co u ld p rejud ice the C o m p a n y ’s pos i t i on or i t s pot ent i al or actual r i ght s of re covery . ” T hatl anguage des cr i bes an obl i gat i on, i n addi t i on t o cooper at i on, t o w hi ch A ber cr om bi e fr eel yagr eed. T he l aw s ay s t hatobl i gat i on
m ustm ean som et hing. O ur t ask i s t o d et erm i ne w hat i ti s. U po n ex am i nati on , t he tw o p art s of § 1 6(d) di ffer i n fund am ental res pects . T he fir st i s a coope r at i on pr ovi s i on; t he s econd i s , forl ack of a b ett er te r m , an ant i
- pr ej udi ce pr ovi s i on. T o cooper at e i s “[t ] o w or k or actt ogethert ow ar d a comm on end orpurpos e. ” TheNo. 09-3096 21

A m eri can Heri t ag e D i ct i on ary 414 ( 3d E d. )
. T o pr ej udi ce i s “[t ]o affec ti nj ur i ous l yor detr i m ent al l ybya j udgm entoran ac t . ” Id

. at1428. T hu s one funda m ent al di ffe r ence , s i m pl y stat ed , is tha tt he fi r s tpar tof § 16( d) i m pos es an obl i gat i on t o hel p; t he s econd, an obl i gat i on nott o hur t . T he fi r s tobl i gat i on, m o reo v er, i s one t o t ake cert ai n act i on; t he
s econd, an obl i gat i on t o r efr ai n fr om cert ai n act i on. N ei t hert he l aw , norgood gr amm ar , nor enfor cementof t he obl i gat i ons t hat t hes e s ophi s t i cat ed par t i es have c hos en t o as s um e, al l ow
u s to c o n c lu d e th a t § 1 6 (d ) i m p o s e s o n ly th e f ir s t o b lig a tio n , “ a n d n o m o re .” S o I su b m it th a t § 1 6 (d ) im p o se s o n A b e rc ro m b ie a n o b lig a tio n to “ d o n o th in g ” to p rejud ice F ed era l’ s p o sit ion , an d that A b erc rom b ie ’s p o st- claim ac ti o n s— w h o se v ery pur pos e was t o i n c r e a s e Fe d e r a l ’ s l i a b i l i t yb y$ 5 mi l l i o n a n d t o e x t i n g u i s h i t s c o n t r i b u t i on cl ai m fort hatam o u n t— w ere i n vi ol at i on of t hatobl i gat i on. A nd I s ee nothi ng i n t he
r emai nderof § 16( d) t o di s pl ace t hatcomm on- s ens e conc l us i on. A ber cr om bi e ci t es t he headi ng of § 16— “D efe ns e and Sett l ement ”— as pr oof t hatthe pr ej udi ce a t i s s ue her e w as
no tof t he sor t con t em plat ed by t he sect i on . B ut t hat argum ent s ho uld go n ow here i n a case
w her e A ber cr om bi e expr es s l y s ought , and obt ai ned, an i nj unct i on r equi r i ng Feder al t o pay A bercr om bie’ s d e

fen se c o sts

— so f

a r, $ 8 m ill io n o f

th e m . M o re o v e r, co n tra ryto A ber cr om b ie’s suggest i on, t her e i s not hi ng i n § 16 gener al l y , or§ 16( d) s peci fi cal l y , t hat
c re a tes a sa f

e h a rb o r f

o r pr e ju d icia l ac tio n s ta k e n “ w ith a n o th e r in su ra n c e c a rrie r.” T h e re is nota w or d of t extt hats o l i m i t s A ber cr om bi e’ s no- pr ej udi ce obl i gat i on. T o t he contr ar y , t he t extt hati s ther e— t hatA ber cr om bi e s hal l “do nothi ngthat co u ld p rejud ice F ed era l’ s pos i t i on”— coul d har dl ybe br oader
. T he s ame i s t rue of A ber cr om bi e’ s obl i gat i on t o “doNo. 09-3096 22

not hi ng” thatcoul d pr ej udi ce Fede r al ’ s “pot ent i al oractual r igh ts of r ecove r y . ” That obl i gat i on ext ends notj us tt o r ecove r yagai ns tcert ai n par t i es , butt o “pot ent i al oractual
r i ght s of r ecove r y ”— per i od. “Pl ai n m eani ng” i s an overus ed t er m . I bel i eve, how ever , t hati tfai r l yappl i es her e. Sect i on 16( d) ’ s no- pr ej udi ce obl i gat i on i s s t at ed i n t er m s t hatar e s i m pl e, br oad, and comm on to th e la w . T h e p a rt ie s b e f o re u s a re s o p h is tic a te d , a n d th e y f re e ly a g re e d to th o s e te rm s . I
s u b mi tt h a twe s h o u l d e n f o r c e t h e m. C. Ab e r c r o mb i e a l s o p r e s e n t s s e v e r a l a r g u me n t s e x t e r n a l t o § 1 6 ( d )
. T h e f i r s ti s t h a tt wo ot her s ect i ons of t he Feder al Pol i cy
— §§ 12 and 18— demonst r at e that§ 16( d) coul d notbar th e sc h e m e a t iss u e h e re . S e c tio n 1 2 o f th e P o licy a f f o rd s A b e rc ro m b ie a 3 0 -d a yw in d o w to el ectE R P cover age. A nd t her e i s no di s put i ng t hatA ber cr om bi e’ s E R P el ect i on— w hi ch
cam e aft er fi l i ng of the R oss cl ai m s— chan ged F ederal ’s po si t i on for t he w orse. T hu s, A ber cr om bi e s ay s , § 16( d) ’ s i nj unct i on t o “do nothing ” cannotm ean w hati ts ay s , w hi ch
m eans i n tur n ( and her e t he ar gum entfai l s even on i t s ow n t er m s ) t hatE ndor s ement 17 w as per m i s s i bl e. Sect i on 18, for i t s par t , does notgr antr i ght s t o A ber cr om bi e atal l , buti ns t ead di m i ni s hes t hem, byl i m i t i ng t he i ns t ance s i n w hi ch Feder al ’ s cover age i s pr i m ary . B ut § 18 does i m pl i ci t l ycont e mpl a t e th a tAbe r cr om bi e mi ghthave a ddi t i onal cover age f ora part i cul ar cl ai m . So A ber cr om bi e s ay s thats ect i on t oo s how s t hatE ndor s ement 17 w as fai rgame. A ber cr om bi e’ s cont ent i on as t o § 12 i s s cyt hed dow n byan el ement aryrul e. T he exi s t ence of t hi s rul e, and thati t appl i es her e, ar e poi nt s on w hi ch the maj or i t yand I agr ee.No. 09-3096 23

“[ A ] co n tr ac t’ s sp ec ifi c p rov isi o n s, su ch as § 12 o f t h e F ed era l P o li cy , co n tr o l o v er a m o re gener al pr ovi s i on s uch as § 16. ” M aj
. O p. at14 ( ci t i ng Mons l erv. C i nci nnat i C as . C o. , 598 N
. E
. 2d 1203, 1209 ( O hi o C t . A pp. 1991) )
. T he rul e’ s eff ect i s t o har m oni ze pr ovi s i ons t hat
a t f irst se e m to c o n f

lict, ra th e r th a n h a v in g o n e o f th e m c a n c e l th e o th e r o u t. W hen w e harm oni ze the tw o pr ovi s i ons her e, § 16( d) r emai ns a bar to co n d u ct l i ke E ndor s ement 17. I compl et el yagr ee w i t h t he maj or i t yt hat§ 12 i s m or e s peci fi c than § 16( d)
a s t o wh e t h e r Ab e r c r o mb i e wa s f r e e t o e x t e n d i t s c o v e r a g e wi t h i n t h e 3 0
- d a yE RP wi n d o w,
a n d t h a t § 1 2 t h e r e f

o r e c o n t r o l s t h a t i s s u e . B u t t h a t o n l y m e a n s t h a t Ab e r c r o m b i e ’ s ERP el ect i on w as l egal , not t hat E ndor s ement 17 w as . T hat § 12 pr es cr i bes a hi ghl y s peci fi c r i ght t o el ectE R P cover age, t o w hi ch § 16( d) m us ty i el d, does n o tm ean that§ 16( d) ’ s “do not hi ng” l anguage i t s el f m eans not hi ng atal l
. T hat , i n t rut h, i s w hatA ber cr om bi e i nt i m at es her e . Butt h e l a w i s o t h e r wi s e : Su b j e c to n l yt o t h e r i g h tt o e l e c tERP c o v e r age, A ber cr om bi e’ s no- pr ej udi ce obl i gat i on r emai ns enfor cea bl e, t o t he ful l ext ent of it s pl ai n, b ro a d ter m s, e x c e p t to th e e x ten t itc o n f licts w ith so m e o th e r p ro v isio n th a t m o re sp e c if ica lly gover ns conductl i ke Endors ement 17. T h ere is n o s uch pr ovi s i on. A ber cr om bi e ci t es § 18, butt hats ect i on— apartfr om bei ng one t hatgr ant s r i ght s t o Feder al , notA b erc rom bi e— cont empl at es deci s i ons by A b e r c r o m b i e a s t o h o w t o l a ye ri t s c o v e r a g e o n l y bef or e a cl ai m i s fi l ed. Sect i on 18 pr ovi des in re lev a n t p a rt: If a n yL o ss u n d e r th is c o v e r a g e se c tio n is in su re d u n d e r a n yo th e r v a lid i ns ur ance pol i cy ( i es ) , t hen t hi s cover age s ect i on s hal l cover s uch L os s , s ubj ect t o i t s l i m i t at i ons , condi t i ons , pr ovi s i ons and ot her t er m s , onl yt o t he ext entt hat t he amount of s uch L os s i s i n exce s s of t he appl i cabl e r et ent i on ( ordeduct i bl e)No. 09-3096 24

and l i m i tof l i abi l i t yunders uch otheri ns ur ance , w hether s uch ot heri ns ur ance is s ta te d to b e p ri m a ry, c o n tr ib u to ry, e x c e s s , c o n tin g e n t, o r o th e rw is e [ .] T hi s s ect i on confi r m s r ather t han re fut es Feder al ’ s i nt erpr et at i on of § 16( d)
. Sect i on 18 s ay s t hat , i f another company ’ s pol i cy pr ovi des cover age fora cl ai m t hati s al s o cover ed byFeder al ’ s pol icy , the F eder al cover age i s exce s s ( r athert han pr i m ary ) unl es s t he other po l i cyi s byi t s t erm s ex c lu siv e ly e x c e ss . T h is p ro v is io n w o u ld b e a n e x e rc ise in stult i fi cat i on , ho w ever, i f t he insur ed cou l d am end t he other po l i cy t o b e exclusi velyexcess aft er a cl ai m i s fi l ed. T hat , of cour s e, i s w hatA ber cr om bi e di d in exec ut i ng E ndor s ement 17. Sect i on 18 t hus i m pl i es onl y t hat A ber cr om bi e can s t ructur e i t s ot heri ns ur ance before
a c laim is file d
. It h a s n o th in g to im p ly a b o u t a f ter w a rd s. T o r e a d § 1 8 a s A b e rc ro m b ie d o e s— a s a f

f irm a tiv e ly , if im p licitly , au th o riz in g c o n d u c t th a t m a k e s § 1 8 itse lf unenfor cea bl e— i s bey ond i r oni c. I ti s t o i nt erpret § 1 8 as m eani ngl es s , as a pr ovi s i on
w i t houteff

ect , exce ptt o t he ext ent§ 18 r ender s § 16( d) m eani ngl es s as w el l
. T he l aw does notper m i tt hati nt erpr et at i on. O nl yt w o ar gum ent s of s i gni fi canc e r emai n. Fi r s t , that A b erc rom bi e pai d a l otof
m oneyt o obt ai n E R P cover age does notm ean i tw as ent i t l ed t o do w hati tdi d her e. A s an i ni t i al m at t er , t hi s ar gum entr equi r es a ce r t ai n s us pens i on of di s bel i ef, s i nce Endor s ement 17 eff ect i vel yr epai d A ber cr om bi e i t s m oneys ever al t i m es over . B ut even i f one di s r egar ds t hat
r eal i t y : W hatA ber cr om bi e bought , under§ 12, w as a r i ghtof adve r s e s el ect i on— t he r i ght t o obt ai n co v er age f

r om Feder al aft era cl ai m i s fi l ed aga i ns tA ber cr om bi e, r athert hanNo. 09-3096 25

b e f o r e . T h a tr i g h ti s v a l u a b l e , a n d w a s p r i c e d a c c o r d i n g l y. W h a t A b e r c r o m b i e d i d n o tb u y, how ever , w as a r i ght of pos t - cl ai m col l us i on. Sect i on 16( d) s ay s t hatr i ghtw as notfors al e. Second, t he rul e that ambi gui t i es ar e re s ol ved agai ns t t he i ns ur er does notappl yher e. T h a t § 1 6 (d )’ s te rm s a re b ro a d , d o e s n o t m e a n th e ya re a m b ig u o u s . S e e N a ti o n w id e Mu t. F i r e I ns . C o. v. W

i t t eki nd , 730 N
. E
. 2d 1054, 1058 ( O hi o C t . A pp. 1999 ) (“a term is not
am b igu o u s sim p lyb ec au se itinclu d es a w ide v arietyo f o b jects or c o n ce p ts i n it s d ef init ion ”). A n d th a t a c o n tr a c t is c o m p lic a te d , d o e s n o t m e a n it is u n c l e a r . See Val ue C i t y, I nc. v. I n t e g r i t y I n s . Co
. , 508 N
. E
. 2d 184, 189 ( O hi o C t . A pp. 1986) ( “[a ] contr acti s notambi guous
m er el ybeca us e i ti s compl ex ordi ffi cul tt o r ead a s a w hol e”)
. I t hi nk t he t er m s of t he par t i es ’ agr eement , w hen exa m i ned cl os el y , pr ovi de a c l earans w er t o t he ques t i on pr es ent ed her e. I ti s w i t h no s m al l i r ony , m or eover , t hat A ber cr om bi e ci t es t he rul e thatambi gui t i es
s houl d be r es ol ved aga i ns t t he i ns ur er . T he pol i ci es behi nd t hat rul e, pr es um abl y , i ncl ude the
r el at i ve bar gai ni ng pow erand s ophi s t i cat i on of i ns ur erand i ns ur ed. I ti s har d t o i m agi ne a
c a se in w h ich th o se p o licie s a re les s a p p o site th a n th e ya re h e re . If th e re w a s a w o lf

in th is sto ry , itw a s n o t F e d e ra l. * * * A l t hough I w r i t e al one, I t hi nk i tfai rt o s ayt hatt he maj or i t y ’ s deci s i on does notl end t o t hi s s cheme t he i m pr i m aturof t hi s cour t . W hati s l egal i s s om et i m es di ffe r entfr om w hat i s r i ght
. T odayA ber cr om bi e i s t he bene fi ci aryof t hatdi s t i nct i on. I re sp e c tf

u llyd iss e n t.