Œ Following oral argument, Circuit Judge Kenneth F. Ripple

disqualified himself as a member of the panel and had no role

in the preparation of this decision. Circuit Judge Terence T.

Evans was appointed as the third member of the panel, and

was furnished with a transcript and audio recording of oral

argument, as well as the briefs and the record on appeal.

In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 06-3938, 06-3962, 06-3978, 06-4156, 06-4244 & 06-4257

BASF AG,

Plaintiff-Appellee,

v.

GREAT AMERICAN ASSURANCE CO.,

FEDERAL INSURANCE CO., and

WESTCHESTER FIRE INSURANCE CO.,

Defendants-Appellants.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 04 C 6969—Samuel Der-Yeghiayan, Judge.

____________

ARGUED NOVEMBER 30, 2007—DECIDED APRIL 14, 2008

____________

Before BAUER, KANNE, and EVANS, Circuit Judges.

Œ
2 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

KANNE, Circuit Judge. This insurance-coverage action

represents the third case in a series of lawsuits

stemming from the marketing of Synthroid, a synthetic

thyroid drug. See In re Synthroid Mktg. Litig., 264 F.3d 712

(7th Cir. 2001); Knoll Pharm. Co. v. Auto. Ins. Co., 152 F.

Supp. 2d 1026 (N.D. Ill. 2001). The first case—a multidistrict litigation—consolidated numerous class actions

filed by consumers and health insurers that sought damages for the alleged monopolization, racketeering, fraud,

and deceptive business practices of Synthroid’s producers.

See Synthroid, 264 F.3d at 714. After the multi-district

litigation settled, the Synthroid defendants filed the second case; that insurance-coverage suit sought damages

from the Synthroid defendants’ primary-insurance providers for the insurers’ alleged failure to defend them in,

and indemnify them for, the settlement of the multi-district

litigation. See Knoll Pharm. Co., 152 F. Supp. 2d at 1031.

While it was pending on appeal, the second case also

settled.

German corporation BASF AG (“BASF”) then filed this

third suit, seeking to recover damages from its umbrella

insurers for their failure to defend and indemnify

BASF, and its related corporate entities, in the initial

Synthroid litigation. The district court in this case decided that the umbrella-insurance policies required the

insurers to defend BASF in the Synthroid litigation, and

granted summary judgment to BASF on the insurers’

liability for breach of contract. We disagree. The terms of

the umbrella policies, as a matter of law, did not obligate

the insurers to defend or indemnify BASF. We therefore

reverse, and remand to the district court for the entry of

summary judgment in favor of the insurers.
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 3

1 In March 1995, BASF acquired Boots and its related entities

and completely merged the companies into a new BASF subsidiary, Knoll Pharmaceutical Company (“Knoll”). Incident

to this transaction, Knoll and BASF assumed the benefits of the

liability-insurance policies previously obtained and held by

Boots. BASF sold Knoll to Abbott Laboratories (“Abbott”) in

March 2001. However, pursuant to the Purchase Agreement,

BASF retained its right to recover any damages from Boots’s

insurers for the Synthroid litigation. For clarity, we will refer

to BASF and Knoll collectively as BASF throughout this opinion.

I. HISTORY

Between 1989 and 1995, BASF’s predecessor in interest,

Boots Pharmaceuticals, Inc. (“Boots”), purchased two

layers of liability insurance: primary insurance and umbrella insurance.1

 The primary-insurance policies all

contained similar provisions, which stated that the

insurers would indemnify Boots for lawsuits seeking

damages “arising out of” claims for a “personal injury” or

an “advertising injury.” The primary policies uniformly

defined an “advertising injury” as, among other things,

an “injury arising out of . . . oral or written publication of

material that slanders or libels a person or organization or

disparages a person’s or organization’s goods, products,

or services.” Moreover, the primary policies each outlined the insurer’s duty to defend: each primary policy

required the insurer to pay all costs that Boots incurred in

defense of any suit for which the insurer would be obligated to indemnify Boots.

The umbrella-insurance policies provided two additional

types of insurance coverage to Boots: excess coverage and

gap-filling coverage. All of the umbrella policies contained excess-insurance provisions, which required the
4 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

2 Great American changed its name from Agricultural Insurance

Company (“Agricultural”) sometime after Agricultural originally issued one umbrella policy to Boots. Westchester holds

three of the six umbrella policies, which were initially provided to Boots by International Insurance Company and

subsequently novated to Westchester. Federal issued, and

continues to hold, the other two umbrella policies.

umbrella insurers to indemnify Boots for sums Boots

became liable for that exceeded the coverage limits of

its primary-insurance policies. Some of the umbrella

policies also included gap-filling-insurance provisions,

which obligated the umbrella insurers to defend Boots

for any loss covered by the terms and conditions of the

umbrella policy, and “not covered as warranted” by the

primary insurers. Other umbrella policies described

this gap-filling coverage as the obligation to defend any

suit or any claim potentially covered by the umbrella

policies to which the primary policies did not apply.

The defendants in this action—Great American Assurance Company (“Great American”), Federal Insurance

Company (“Federal”), and Westchester Fire Insurance

Company (“Westchester”)—hold six of these umbrellainsurance policies.2

 Like the primary-insurance policies,

the umbrella policies covered only lawsuits that sought

damages “arising out of” or “because of” a “personal

injury” or an “advertising injury.” The umbrella policies

all defined personal injury and advertising injury in a

manner that was substantively identical to the primary

policies’ definitions of those terms. Put another way,

exclusions aside, the primary policies’ and umbrella

policies’ coverage of personal injury and advertising

injury was coextensive, and a suit or claim that did not
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 5

arise out of, or because of, a personal injury or an advertising injury would not be covered under either the

primary or the umbrella policies.

In 1987, Boots began to manufacture, market, and sell

Synthroid, a synthetic thyroid medication used to treat

various thyroid diseases. In an attempt to prove that

Synthroid was superior to competing synthetic thyroid

hormones on the market, in the late 1980s Boots commissioned a study by Dr. Betty Dong of the University

of California-San Francisco (“UCSF”). Boots hoped the

study would prove that Synthroid and its competitors

(among them, cheaper generic hormones) were not

“bioequivalents”—drugs that have the same effect on a

patient in terms of potency and absorption rate when

equal doses are administered. See Synthroid, 264 F.3d

at 714. However, in 1990, Dr. Dong discovered that

Synthroid and its competitors were, in fact, bioequivalents, and that all of the compared synthetic hormones,

including the cheaper generics, were as effective as

Synthroid at treating thyroid diseases.

When provided with these results, Boots immediately

sought to discredit Dr. Dong and her findings. Boots’s

scientists sent letters to Dr. Dong that questioned her

methods and conclusions, and Boots asked UCSF to

terminate the study. UCSF did not comply and in 1994,

Dr. Dong provided her final report to Boots, which stated

that Synthroid and its competitors were bioequivalents.

Even after Boots learned of Dr. Dong’s results, Boots

continued to publicly maintain that Synthroid had no

known bioequivalents, and Boots continued to advertise

and market the drug as such. In early 1995, Boots exercised

its rights under its contract with Dr. Dong to block the

publication of her study.
6 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

In 1996, the Wall Street Journal learned of Dr. Dong’s

study and Boots’s response, and it published an exposé

on Boots and Synthroid. The article revealed to the public

that there were cheaper alternatives to Synthroid, and

that Boots had prevented the publication of Dr. Dong’s

study, which had confirmed that the cheaper alternatives

were equally effective. Dr. Dong’s study was eventually

published in 1997. See Synthroid, 264 F.3d at 714. On the

heels of the Wall Street Journal article and the publication of

Dr. Dong’s study, over 70 lawsuits (mostly class actions)

were filed against BASF and its employees. These suits,

filed by consumers and health insurers, alleged a potpourri

of antitrust, racketeering, fraud, misrepresentation,

deceptive-business-practices, and unjust-enrichment

claims all based on the fact that Boots had deceived

consumers into purchasing Synthroid, which occupied 70%

of the $600 million market for thyroid drugs at the time. In

1997, the lawsuits were consolidated into a multi-district

litigation in the Northern District of Illinois, under

28 U.S.C. § 1407. See In re Synthroid Mktg. Litig., 188 F.R.D.

295 (N.D. Ill. 1999) (certifying Synthroid consumer class);

188 F.R.D. 287 (N.D. Ill. 1999) (certifying Synthroid thirdparty payor class).

The gravamen of the consolidated complaints was that

Boots, BASF, and their employees had wrongfully asserted

monopoly control over the market for thyroid medication,

which resulted in consumers and health insurers paying

higher prices for Synthroid rather than purchasing lowercost, equally effective alternatives. Both complaints claimed

that the defendants had exercised monopoly control by

suppressing Dr. Dong’s study and criticizing her methodology and results, by concealing known facts about

Synthroid, and by marketing Synthroid as a uniquely
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 7

superior drug despite knowledge to the contrary. Both

complaints sought economic damages for the class members (consumers and health insurers) who overpaid for

Synthroid. Neither complaint sought damages on behalf

of Dr. Dong or on behalf of the competing thyroid manufacturers, and neither complaint alleged defamation,

libel, disparagement, or slander.

In April 1997, BASF tendered the Synthroid complaints

to its primary insurers. The primary insurers each separately refused to defend BASF, claiming that they had

no obligation to do so under the primary-insurance policies’ definitions of personal injury and advertising injury. In late June 1997, BASF notified its umbrella insurers

about the Synthroid litigation, shortly before beginning

formal settlement negotiations with the class-action

plaintiffs. On August 1, 1997, before any of the umbrella

insurers had responded with coverage determinations,

BASF entered into a settlement agreement with the

Synthroid plaintiffs. In 2000, the Synthroid court approved

a settlement that required BASF to pay approximately

$88 million to the consumers and $46 million to the thirdparty payors in exchange for a release of all claims. See In

re Synthroid Mktg. Litig., 110 F. Supp. 2d 676, 679-86 (N.D.

Ill. 2000), aff’d in part, rev’d in part, 264 F.3d 712. BASF

spent approximately $39.4 million in defending and

negotiating a settlement to the Synthroid litigation. See

In re Synthroid Mktg. Litig., 325 F.3d 974, 976-80 (7th Cir.

2003) (adjusting attorneys’ fee award after remand).

After settling with the class-action plaintiffs, BASF filed

an insurance-coverage suit against its primary insurers

seeking to recover damages for the insurers’ failure to

defend and indemnify BASF in the Synthroid litigation. See

Knoll Pharm. Co., 152 F. Supp. 2d at 1031. The district court
8 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

in Knoll agreed that the primary insurers should have

defended BASF because the consolidated complaints

had alleged an advertising injury. Id. at 1038-39. Consequently, the Knoll court ordered the primary insurers to

indemnify BASF up to their respective policy limits (a total

of $12 million) and to pay the $39.4 million in defense

costs that BASF incurred from the Synthroid litigation; the

court also added prejudgment interest to both awards.

Knoll Pharm. Co. v. Auto. Ins. Co., 210 F. Supp. 2d 1017, 1025-

28 (N.D. Ill. 2002). The primary insurers appealed the

Knoll decision, which was briefed and argued before our

court, but the parties settled before we could reach a

disposition, for $18 million—just over one-third of the

Knoll court’s total judgment.

After settling the Knoll case with its primary insurers,

BASF filed this diversity lawsuit, see 28 U.S.C. § 1332,

against the umbrella insurers. The complaint alleged that

the umbrella insurers owed BASF over $110 million for

BASF’s unrecovered costs from the Synthroid litigation. The

complaint sought $90 million for BASF’s settlement costs

and $21.4 million in defense costs—BASF arrived at

these amounts by deducting the sums it received in its

settlement of Knoll with the primary insurers from its

total expenditure on the settlement and defense of

Synthroid.

The parties completed discovery and then filed crossmotions for summary judgment. The district court evaluated the voluminous summary judgment record and held

that Federal, Westchester, and Great American had

breached their respective contractual duties to defend

BASF during the Synthroid litigation. The district court

relied heavily on the Knoll decision, and adopted its

reasoning that the Synthroid class plaintiffs’ claims “may
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 9

have had their origin in slander, libel, or disparagement,”

which fell under the umbrella policies’ definitions of

advertising injury. The district court explained that while

the Synthroid complaints did not allege libel, slander, or

disparagement, the Synthroid litigation “grew out of

various disparaging, defamatory, and libelous statements,” such as Boots’s claims that Synthroid was

superior to other thyroid drugs and Boots’s criticism of

Dr. Dong’s study.

After granting summary judgment to BASF on its breachof-contract claims, the district court held that the breach

estopped the umbrella insurers from contesting coverage; the court then allowed the case to proceed to trial

on the amount of damages. After a two-day trial, a jury

set damages at $90 million for BASF’s unrecovered costs

of the Synthroid settlement; it allocated $50 million of the

damages to Federal, $30 million to Westchester, and

$10 million to Great American. The jury also held the

umbrella insurers jointly and severally liable for the

remaining $21.4 million of defense costs. The district

court then added over $45 million in prejudgment interest to the amounts awarded by the jury. The umbrella

insurers timely filed this appeal.

II. ANALYSIS

On appeal, Great American, Federal, and Westchester

claim that the district court erred when it granted summary judgment to BASF on its breach-of-contract claims.

Specifically, the umbrella insurers argue that the classaction complaints in the consolidated Synthroid litigation

advanced claims that did not fall under the umbrellainsurance policies’ definitions of personal injury or adver-
10 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

tising injury. The umbrella insurers maintain that, as a

result, their duties to defend and indemnify BASF were

never triggered by the Synthroid litigation, and that the

district court should have entered summary judgment

in their favor. The umbrella insurers raise numerous

additional challenges to the district court’s decisions to

limit discovery, exclude certain evidence at the damages

trial, assess prejudgment interest, and deny the insurers’

post-trial motions.

We review the district court’s decision on cross-motions

for summary judgment de novo. Premcor USA, Inc. v. Am.

Home Assurance Co., 400 F.3d 523, 526 (7th Cir. 2005). “With

cross-motions, we construe the evidence and all reasonable inferences in favor of the party against whom the

motion under consideration is made.” Id. Summary

judgment is appropriate “if the pleadings, the discovery

and disclosure materials on file, and any affidavits

show that there is no genuine issue as to any material

fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see also Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986).

The parties all concede that the substantive law of Illinois governs this diversity action. Under Illinois law, the

interpretation of an insurance policy is a question of law

that is properly decided by way of summary judgment.

Crum & Forster Managers Corp. v. Resolution Trust Corp.,

620 N.E.2d 1073, 1077 (Ill. 1993); see also Conn. Indem. Co. v.

DER Travel Serv., Inc., 328 F.3d 347, 349 (7th Cir. 2003). We

review the district court’s construction of an insurance

policy de novo. See Valley Forge Ins. Co. v. Swiderski Elecs.,

Inc., 860 N.E. 2d 307, 313 (Ill. 2006).

“A court’s primary objective in construing the language

of an insurance policy is to ascertain and give effect to the
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 11

intentions of the parties as expressed by the language of the

policy.” Id. at 314; see also Cent. Ill. Light Co. v. Home Ins.

Co., 821 N.E.2d 206, 213 (Ill. 2004). “In performing that

task, the court must construe the policy as a whole, taking

into account the type of insurance purchased, the nature

of the risks involved, and the overall purpose of the

contract.” Nicor, Inc. v. Associated Elec. & Gas Ins. Servs. Ltd.,

860 N.E.2d 280, 286 (Ill. 2006). Where the terms of an

insurance policy are clear and unambiguous, they must

be applied as written; but where ambiguity exists, the

terms will be strictly construed against the drafter. Id. at

286; Valley Forge Ins. Co., 860 N.E.2d at 314. Policy terms

“are ambiguous if they are reasonably susceptible to more

than one interpretation, not simply if the parties can

suggest creative possibilities for their meaning, and a

court will not search for ambiguity where there is none.”

Valley Forge Ins. Co., 860 N.E.2d at 314 (internal citations

omitted).

“An insurer’s duty to defend is much broader than its

duty to indemnify its insured.” Gen. Agents Ins. Co. of Am.,

Inc. v. Midwest Sporting Goods Co., 828 N.E.2d 1092, 1098

(Ill. 2005); see also Crum & Forster, 620 N.E.2d at 1079. In

order to determine whether the umbrella insurers had a

duty to defend BASF under Illinois law, we must compare the facts alleged in the consolidated Synthroid complaints to the relevant provisions of the umbrella-insurance

policies. See Valley Forge Ins. Co., 860 N.E.2d at 314. In

making this comparison, we construe the allegations

liberally in favor of the insured. Id.; Employers Ins. of

Wausau v. Ehlco Liquidating Trust, 708 N.E.2d 1122, 1136

(Ill. 1999). If the facts alleged in the Synthroid complaints

fell within, or potentially within, the umbrella policies’

coverage, then the umbrella insurers were obligated to
12 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

defend BASF. See Valley Forge Ins. Co., 860 N.E.2d at 314-15;

Gen. Agents Ins., 828 N.E.2d at 1098. This is true even if

the Synthroid complaints contained groundless, false, or

fraudulent allegations, and even if only one of several

theories of recovery fell within the potential coverage of

the umbrella policies. See Valley Forge Ins. Co., 860 N.E.2d

at 315; Gen. Agents Ins. Co., 828 N.E.2d at 1098. The umbrella insurers’ refusal to defend BASF was only justified if it was clear from the face of the Synthroid complaints that the allegations failed to state facts that brought

the case within, or potentially within, the coverage of

the umbrella policies. See Valley Forge Ins. Co., 860 N.E.2d

at 315; Gen. Agents Ins. Co., 828 N.E.2d at 1098.

The parties all agree that the only policy definitions that

BASF’s claims could fall (or potentially fall) within are

the umbrella-insurance policies’ coverage of “injury arising

out of” the “offenses” of “[o]ral or written publication of

material that slanders or libels a person or organization

or disparages a person’s or organization’s goods, products,

or services.” The parties also all concede that the Synthroid

class plaintiffs did not plead slander, libel, or disparagement as causes of action in the consolidated complaints.

If Illinois law required that the plaintiff specifically

plead a covered cause of action to trigger an insurer’s

duty to defend, we could end our analysis here. However,

it does not. See, e.g., Cincinnati Ins. v. E. Atl. Ins. Co., 260

F.3d 742, 745 (7th Cir. 2001) (“[T]he insured is covered

against particular conduct alleged against it regardless of

the label placed on that conduct by the pleader.”); W. Cas.

& Surety Co. v. Adams County, 534 N.E.2d 1066, 1068 (Ill.

App. Ct. 1989) (“[T]he question of coverage should not

hinge exclusively on the draftsmanship skills or whims of

the plaintiff in the underlying action.”). Therefore, we
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 13

must determine whether the factual allegations of the

complaint could tacitly “sketch a claim that is within

the scope of the policy.” W. States Ins. Co. v. Wis. Wholesale

Tire, Inc., 184 F.3d 699, 702 (7th Cir. 1999); see also Valley

Forge Ins. Co., 860 N.E.2d at 315. So, in this case, we

must ask whether the Synthroid complaints sketched a

claim for the offenses of slander, libel, or disparagement,

which are covered by the umbrella policies.

We believe that the facts in the Synthroid complaints are

simply insufficient to sketch a claim for the common-law

offenses of libel, slander, or disparagement, which in

Illinois all require that a false statement be made about the

plaintiff. See Solaia Tech., LLC v. Specialty Pub. Co., 852

N.E.2d 825, 839 (Ill. 2006) (“To state a defamation claim, a

plaintiff must present facts showing that the defendant

made a false statement about the plaintiff . . . .”); Imperial

Apparel, Ltd. v. Cosmo’s Designer Direct, Inc., 853 N.E.2d 770,

782 (Ill. App. Ct. 2006) (“[A]n action for commercial

disparagement lies when the quality of [a business’s] goods

is demeaned.”), rev’d on other grounds, 227 Ill.2d 381 (Ill.

Feb. 7, 2008); Thomas v. Fuerst, 803 N.E.2d 619, 623 (Ill.

App. Ct. 2004) (“To establish either slander or libel, plaintiff must show that: (1) defendant made a false statement

concerning plaintiff . . . . ”); see also Ptasznik v. St. Joseph

Hospital, 464 F.3d 691, 698 (7th Cir. 2006). Neither the

consumer class-action complaint nor the third-party payor

complaint claimed that Boots or its related entities made

defamatory, libelous, slanderous, or disparaging statements about the class members or their products. And the

Synthroid complaints’ omission of a claim for common-law

libel, slander, or disparagement makes sense because the

only allegedly actionable statements did not “disparage”

thyroid patients or health-insurance providers—
14 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

they targeted Dr. Dong’s study as unreliable, and other

thyroid drugs as unsuitable bioequivalents of Synthroid.

In addition to the requirements of the Illinois common

law, the Synthroid class plaintiffs would have faced a

further obstacle to sketching a claim for libel, slander, or

disparagement based on the statements about Dr. Dong

and Synthroid’s competitors—the class plaintiffs would

not have had standing to do so. See Elk Grove Unified

School Dist. v. Newdow, 542 U.S. 1, 11 (2004) (“In every

federal case, the party bringing the suit must establish

standing to prosecute the action.”). Part of the Article III

standing inquiry is whether the plaintiff has asserted an

injury-in-fact that is particularized to him. See, e.g., id. at 12;

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (“First,

the plaintiff must have suffered an ‘injury in fact’—an

invasion of a legally protected interest which is . . . concrete

and particularized . . . .”); Warth v. Seldin, 422 U.S. 490, 499

(1975) (“The Art. III judicial power exists only to redress

or otherwise to protect against injury to the complaining

party . . . .” (emphasis added)). But the parties injured by

the allegedly disparaging statements—Dr. Dong, her

research affiliates, and the producers of competing

thyroid drugs—were not part of the Synthroid plaintiff

classes.

Despite the Synthroid complaints’ failure to sketch a

common-law claim for libel, slander, or disparagement,

BASF argues that the umbrella insurers still had a duty

to defend it in the Synthroid litigation because the consumer plaintiff class implicitly advanced a disparagement claim by pleading that Boots violated the Illinois

Consumer Fraud and Deceptive Business Practices Act

(“CFA”), 815 ILCS 505/1, et seq. To advance this contention, BASF relies on the Illinois Supreme Court’s recent
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 15

decision, Valley Forge Insurance Co. v. Swiderski Electronics

Inc., which interpreted an insurance policy that defined

an advertising injury as: “Oral, written, televised or

videotaped publication of material that violates a person’s

right of privacy.” See 860 N.E.2d at 315. The underlying

complaint in Valley Forge did not assert a common-law

tort for violation of privacy; it only asserted a claim under

the federal Telephone Consumer Protection Act (“TCPA”),

47 U.S.C. § 227 (2000). See Valley Forge Ins., 860

N.E.2d at 315. Notwithstanding the plaintiffs’ failure to

assert a common-law privacy tort in the complaint, the

Illinois Supreme Court required the insurer to defend the

TCPA suit under the policy’s definition of advertising

injury because the statutory claim under the TCPA vindicated the same injuries as a common law action for violation of privacy: “[t]he receipt of an unsolicited fax

advertisement implicates a person’s right of privacy insofar as it violates a person’s seclusion, and such a violation is one of the injuries that a TCPA fax-ad claim is

intended to vindicate.” Id. The Illinois Supreme Court

stated that though the complaint made “no mention of

the right of privacy,” it was “unproblematic, as a violation of privacy in the sense of a violation of seclusion is

implicit in a TCPA fax-ad claim.” Id. at 316.

BASF argues that similarly, coverage is warranted under

the umbrella-insurance policies at issue here because a

claim for disparagement is implicit in the Synthroid plaintiffs’ statutory claim under the CFA. But we do not believe

that this case is analogous to Valley Forge. The CFA seeks to

vindicate the rights of consumers by creating a cause of

action that protects consumers from deceptive trade

practices, fraud, and other abusive acts by businesses that

market products to the public. See,e.g., Pappas v. Pella Corp.,
16 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

844 N.E.2d 995, 1000 (Ill. App. Ct. 2006) (“ ’The Act was

intended to protect consumers against fraud, unfair

methods of competition, and unfair or deceptive acts or

practices in the conduct of trade or commerce.’ ” (quoting

Elson v. State Farm Fire & Cas. Co., 691 N.E.2d 807, 816 (Ill.

App. Ct. 1998))). In other words, the CFA allows consumers to recover damages for the economic injuries

they suffer. It does not directly advance the interest another business has in preserving the reputation of its

products that a disparagement action protects. Thus, the

CFA does not expand a common-law disparagement

plaintiff’s avenues for legal relief in the manner that the

TCPA bolsters the right to privacy. Instead, the CFA

fortifies the economic interests of consumers, who would

not have standing to pursue relief for the libel, slander,

or disparagement injury of a third party.

Nevertheless, BASF urges us to adopt the expansive

position of the district court—that the Synthroid complaints

did not need to assert every element of an offense delineated by the umbrella-insurance policies in order to trigger the umbrella insurers’ duty to defend, because the

language in the umbrella policies required the umbrella

insurers to cover claims that “may have had their origin

in” the offenses of libel, slander, or disparagement. However, following this approach would unmoor coverage

determinations from the factual allegations of the

complaint—something that Illinois law will not permit

us to do. See, e.g., Gen. Agents Ins. Co., 828 N.E.2d at 1098;

William J. Templeman Co. v. Liberty Mut. Ins. Co., 735 N.E.2d

669, 676 (Ill. App. Ct. 2000) (“[I]t must be demonstrated

that the facts alleged were sufficient to permit recovery for

the potentially covered cause of action in the same proceeding. . . . ” (emphasis added)); see also Del Monte Fresh
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 17

Produce N.A. Inc. v. Transp. Ins. Co., 500 F.3d 640, 644

(7th Cir. 2007) (“In conducting this analysis [under Illinois law], ‘it is the actual complaint, not some hypothetical

version, that must be considered.’ ” (quoting Conn. Indem.

Co., 328 F.3d at 350-51); Hurst-Rosche Eng’rs v. Commercial

Union Ins. Co., 51 F.3d 1336, 1342 (7th Cir. 1995) (“[The

court] must focus on the allegedly tortious conduct on

which the lawsuit is based.”).

Abandoning focus on the complaint would mean that

the breadth of insurance coverage “could be extended

indefinitely.” See Great Am. Ins. Co. v. Riso, Inc., 479 F.3d

158, 162 (1st Cir. 2007). The consumer and third-party

payor class complaints pursued only economic damages

for the injuries they suffered from the artificially high

prices for Synthroid, which stemmed from the monopolization and fraudulent concealment of Boots and others—this

is a paradigmatic antitrust injury. See Serfecz v. Jewel Food

Stores, 67 F.3d 591, 597 (7th Cir. 1995); see also Brunswick

Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977).

If we allow BASF to shoehorn these collateral claims

into the umbrella policies’ coverage of slander, libel, or

disparagement, then an insured could easily transform

a run-of-the-mill antitrust or securities action into a suit

seeking redress of libel, slander, or disparagement. As our

sister circuit has noted in a factually similar case: it

would not be far-fetched to “[i]magine a securities fraud

action in which the false boosting of the seller’s stock

involved (or implied) disparagement of a competing

stock that the buyer was considering.” Riso, 479 F.3d at

162. Reading an insurance policy’s coverage provisions as

expansively as BASF desires would be a precarious proposition: it might sweep within the breadth of the policy risks

that the insurer did not and would not contract to
18 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

cover—risks that were not considered when setting the

premiums for the policy. See Nicor, Inc., 860 N.E.2d at 286.

This, in turn, would make insurance contracts less predictable and more costly for insurers, who would rationally

pass the additional cost onto their insureds, making

insurance more expensive for everyone.

Insurance is a creature of contract, and as such, Illinois

law is sensitive to the parties’ intentions. Valley Forge Ins.

Co., 860 N.E.2d at 314; Cent. Ill. Light Co., 821 N.E.2d at

213; Crum & Forster, 620 N.E.2d at 1078. It seems extremely

unlikely to us that the parties intended antitrust and

racketeering claims to be covered—or even potentially

covered—by a policy definition that sounds in libel,

slander, and disparagement. See Riso, 479 F.3d at 162.

BASF’s interpretation of the umbrella-insurance policies

could not have been reasonably contemplated by the

parties when they entered into these insurance contracts. See Crum & Forster, 620 N.E.2d at 1079 (“In our

judgment, to construe these . . . policies to cover the claims

made in [the] complaint, as the insureds urge us to do,

would expand the coverage beyond what was contracted for by the parties.”). While we recognize that

umbrella insurance is designed to act as a safety-valve

for deficiencies in primary insurance, that does not mean

that umbrella insurance necessarily covers every risk under

the sun. See Cincinnati Ins. Co., 260 F.3d at 744-45 (“The

discrepancy between the basic and umbrella coverage

may seem disquieting, since most individuals buy an

umbrella policy believing that it provides uniformly

larger limits; this umbrella has holes in it. But the purchasers here are not individuals; they are companies that may

want greater coverage for some risks but not all.”). And it

is true here that certain risks—those not arising from
Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al. 19

personal injury or advertising injury—were not insured

under either the primary or umbrella policies. Boots

bargained for and paid for coverage (and BASF inherited

coverage) only for personal and advertising injuries

arising out of the offenses of slander, libel, or disparagement; had it desired more expansive coverage, it

could have sought it. We therefore decline to adopt the

sweeping definition of “arising out of” that the district

court employed.

In concluding that the Synthroid complaints fell within

the coverage of the umbrella-insurance policies, the district court relied almost exclusively on the decision

against the primary insurers in Knoll. See 152 F. Supp. 2d at

1031, 1039. Because it appears that the primary-insurance

policies and umbrella policies utilized the same definitions of personal injury and advertising injury, we are not

certain that the Synthroid complaints alleged claims

within the scope of the primary policies either. But the

appeal of that case settled before we had the opportunity

to adjudicate its merits. Therefore, the district court’s

reliance on the Knoll decision was understandable, if

regrettable.

Because we hold that the umbrella insurers had no

duty to defend BASF from the Synthroid litigation, it

necessarily follows that the umbrella insurers also did

not have a duty to indemnify BASF for the settlement. See

Cent. Ill. Light Co., 821 N.E.2d at 216; Crum & Forster, 620

N.E.2d at 1081. The umbrella insurers were entitled to

judgment as a matter of law and summary judgment

should have been entered for the umbrella insurers on

BASF’s breach-of-contract claims. We, therefore, need not

reach the other issues that the umbrella insurers have

raised in this appeal.
20 Nos. 06-3938, 06-3962, 06-3978, 06-4156, et al.

III. CONCLUSION

We REVERSE the judgment of the district court and

REMAND this case for the entry of summary judgment in

favor of the defendants.

USCA-02-C-0072—4-14-08