United States Court of Appeals

For the First Circuit

Nos. 09-1470

09-1494

09-1589

VICOR CORPORATION,

Plaintiff, Appellee/Cross-Appellant,

v.

VIGILANT INSURANCE COMPANY; FEDERAL INSURANCE COMPANY;

CONTINENTAL CASUALTY COMPANY,

Defendants, Appellants/Cross-Appellees.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

 Lipez, Circuit Judge,

Souter, Associate Justice, *

and Howard, Circuit Judge.

Bruce E. Falby, with whom Bruce S. Barnett and DLA Piper LLP

were on brief, for appellants, Vigilant Insurance Company & Federal

Insurance Company.

Matthew J. Lodge, with whom Christopher R. Carroll and Carroll

McNulty & Kull LLC were on brief, for appellant, Continental

Casualty Company.

Kevin J. O'Connor, with whom Peter C. Netburn, Matthew C.

Kalin, and Hermes, Netburn, O'Connor & Spearing, P.C. were on brief

for appellee.

The Hon. David H. Souter, Associate Justice (Ret.) of the *

Supreme Court of the United States, sitting by designation.
March 16, 2012
HOWARD, Circuit Judge. This insurance coverage dispute

concerning the scope of a "loss of use" provision stems from

wireless communication network outages in 2003. The outages were

traced to the failure of a component part, known as a power

converter, manufactured by appellee/cross-appellant Vicor

Corporation and sold to Ericsson Wireless Communications, which

incorporated the power converter into radio base stations ("RBS")

critical to Ericsson's customers' wireless networks. In May 2004,

as a result of the network failures, Ericsson sued Vicor in

California state court. They settled this suit ("the Ericsson

litigation") in 2007 for $50 million. Appellant/cross-appellees

Vigilant Insurance Company and Federal Insurance Company, two of

Vicor's liability insurers, paid $13 million of the settlement. 

Vicor contributed the remaining $37 million.

Vicor subsequently initiated this litigation, seeking

indemnification from its insurers for the $37 million of its own

funds that it paid to Ericsson. In addition to Federal and

Vigilant, Vicor also sued an excess carrier, appellant/crossappellee Continental Casualty Company (collectively "the

insurers"). After eight days of trial, a jury awarded Vicor $17.3

million. The district court granted the insurers partial posttrial relief, reducing the verdict by $4 million and entering

judgment for Vicor in the amount of $13.3 million plus interest. 

All parties filed timely appeals and cross-appeals raising multiple

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issues. For the reasons that follow, we believe that the judgment

cannot withstand appellate scrutiny, and we remand the case.

I. Background Facts1

A. Equipment and Failure

Vicor is a manufacturer of electronic equipment. The

Vicor power converters at issue in this litigation break down input

power supplies into power levels needed by various other component

parts. Ericsson's business includes the design, manufacture and

sale of electronic equipment, including radio base stations, which

are used to set up and operate cellular telephone towers and

networks. Ericsson purchased Vicor power converters for use in

Ericsson RBSs, which Ericsson sold to wireless communication

providers worldwide. These providers included Cricket

Communications, which operated in North America, and China Unicom

("CU") which operated in several Chinese provinces.

Trial testimony suggested that power converters that

Vicor had sold to Ericsson began failing in October 2002 and that

Vicor became aware in May 2003 that some of these failures were

related to a manufacturing change in a component computer chip. In

October 2003, severe outages occurred in the Cricket network.2

Later in 2003, similar problems arose in CU's network in China.

The facts set forth in this opinion are undisputed unless 1

otherwise noted.

Testimony placed the outages in Idaho, Oregon and Washington. 2

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B. Ericsson's Payments

As a result of the network outages triggered by the RBS

failures, Ericsson provided compensation to both Cricket and CU. 

The record reflects that Ericsson paid approximately $9.3 million

to Cricket pursuant to a settlement agreement. Additionally,

Ericsson spent $5 to $6 million to repair the Vicor products

purchased by CU and provided CU with $3.3 million in free

equipment.

C. The Ericsson Lawsuit

In May 2004, Ericsson sued Vicor on several theories of

liability, including breach of contract, breach of warranty,

negligence, unfair competition, misrepresentation and fraud. In a

February 7, 2007 memo, Vicor's defense counsel summarized

Ericsson's damage claim, as set forth in its interrogatory answers. 

The claim totaled approximately $1.1 billion, including the

following: $1 billion in lost profits; $33 million to retrofit and

replace Vicor power converters worldwide; $10 million of inventory

provided to Cricket; $9.5 million settlement paid to Cricket; $7.5

million paid to CU; $3.3 million of inventory provided to CU; $5

million in costs for engineers and technicians to address failures

and retrofit components; $2-3 million to diagnose defects and

redesign RBS components to eliminate the Vicor product.

Vicor and Ericsson successfully resolved their

differences through mediation, settling the Ericsson litigation for

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$50 million. Vigilant and Federal contributed almost $13 million

towards the settlement under two different types of policies. 

Vicor supplied the remaining funds.

D. Vicor's Lawsuit

After settling with Ericsson, Vicor filed this action

against the insurers in Massachusetts federal district court,

seeking reimbursement of the $37 million it had paid to Ericsson. 

Vicor sought a declaratory judgment that its payments were covered

losses under the policies, as well as seeking damages for breach of

contract.

II. The Insurance Policies

A. Vigilant and Federal

As relevant to this litigation, Vigilant issued two

primary general liability policies to Vicor, spanning the terms

October 1, 2002 to October 1, 2003, and October 1, 2003 to October

1, 2004. Each policy was subject to general liability limits of $1

million per occurrence and $2 million aggregate. In addition to

the general liability coverage, the Vigilant policies insured

against Information and Network Technology Errors or Omissions

("E&O coverage"), providing liability coverage for "financial

injury" caused by a "wrongful act," as defined by the policy. The

E&O coverage was subject to a $10 million policy limit.

Federal issued two excess and umbrella general liability

policies covering the same policy periods. The 2002-2003 policy

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contained a general liability limit of $20 million per occurrence

and in the aggregate. The 2003-2004 policy contained a $12 million

limit per occurrence and in the aggregate.

B. Continental

Continental issued an excess liability policy with an $8

million limit to Vicor covering October 1, 2003 to October 1, 2004. 

The Continental policy is excess to the $13 million dollars in

coverage provided by the Vigilant and Federal policies covering the

same time period. As an excess policy, the Continental policy only

provides coverage if a covered loss during the policy period

exceeds the combined Vigilant-Federal limit.

C. Policy Provisions

The Federal and Continental policies incorporate by

reference many of the relevant policy provisions contained in the 

Vigilant policy, which provides, in relevant part:

Subject to all the terms and conditions of

this insurance, we will pay damages that the

insured becomes legally obligated to pay by

reason of liability:

• imposed by law . . .

for bodily injury or property damage caused by

an occurrence to which this coverage applies.

This coverage applies only to such bodily

injury or property damage that occurs during

the policy period . . . .

. . . .

Occurrence means an accident, including

continuous or repeated exposure to

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substantially the same general harmful

conditions.

Property damage means:

• physical injury to tangible property,

including resulting loss of use of that

property . . .

• loss of use of tangible property that

is not physically injured. All such

loss of use shall be deemed to occur at

the time of the occurrence that caused

it.

III. Trial

The crux of the dispute in this case concerns the policy

language addressing coverage for "loss of use of property that is

not physically injured." Of the money contributed by Vigilant and

Federal to the Ericsson settlement, $3.14 million was considered to

be for "physical injury to tangible property." Vicor claimed at 3

trial that the insurers owed it the remaining $37 million because

Vicor had paid that sum to Ericsson as a result of such "loss of

use" damages. This total consisted of: 1)cash settlements of $7.5

million to CU; 2) free equipment to CU worth at least $6.6 million;

3) cash settlements to Cricket of $9.5 million; 4) free equipment

to Cricket worth at least $10.1 million; and 5) emergency response

costs of at least $6 million related to restoring failed customer

networks.

The insurers' remaining $9.8 million contribution was made 3

pursuant to the policies' errors and omissions coverage, which is

not part of this litigation.

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The insurers' position is that repair costs, including

emergency response costs, do not constitute loss of use damages.

The issue came to a head during arguments over jury instructions. 

The insurers wanted loss of use damages to be defined to include "a

recognized measure of loss of use, such as the rental value of

substitute property, lost profits, lost sales, or a comparable,

quantifiable measure representing extra costs incurred or the value

of losing the benefit of using that property for the time

reasonably necessary to repair and replace it."

The district court did not completely accept the

insurers' argument. While a preliminary instruction noted that the

case did not involve a claim for "actual repairs" to return damaged

equipment back to its original condition, the trial judge informed

counsel at the close of evidence of his view that "emergency steps

to restore the network . . . seem to be the mirror image of loss of

use. They are the steps to get the network up and running. . . .

Beyond that, repairs are not covered."

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Over the insurers' objections, the district court ruled 4

that three of Vicor's specific damage claims could go to the jury

under the loss of use rubric:

•emergency repair costs in the amount of $5 to

$6 million;

•the $9.5 million settlement between Cricket

and Ericsson;

•$3.3 million in the delivery of emergency

equipment to China Unicom.

Consistent with this ruling, the court instructed the

jury, in relevant part, as follows on the loss of use issue: 

Vicor argues that the insurers' objections to the district 4

court's instructions were not preserved because they did not raise

the objections again after the judge issued a supplementary

instruction in response to those objections. We disagree. 

Objections to the loss of use instruction were lodged after the

district court announced its intention, prior to the charging

conference at which the district court ultimately rejected the

insurers' objections. We are satisfied that by bringing their

objections to the court's attention, the insurers complied with

Fed. R. Civ. P. 51. See Suprenant v. Rivas, 424 F.3d 5, 15 (1st

Cir. 2005). Vicor focuses on a subsequent colloquy that took place

after the charging conference, in which the court reiterated its

earlier ruling. In response, the insurers asked that a "reasonable

time" limitation be added to the "emergency repair" instruction. 

The district court complied. Vicor argues that the insurers'

acquiescence to the supplemental "emergency repair" instruction 

waives the previously raised objection. However, Vicor omitted

from its brief the question to which the insurers responded: "As

a supplementary charge, saving your rights as to earlier matters,

supplementary charge satisfactory . . .?" (emphasis added). Given

this context, we find the jury instruction issue was neither waived

nor forfeited when the insurers answered in the affirmative. 

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And the only damages, the only damages that

Vicor can recover in this case are loss-of-use

damages. And it appears undisputed that there

was this settlement with Ericsson for $50

million. The insurance company -- not

Casualty, the insurance companies, the Chubb

companies, they kicked in 13, whatever it was,

but something that didn't become clear to me

until yesterday was none of that was for loss

of use.

• • •

In car insurance, if you have loss-of-use

damages and you get into an accident and your

car's towed away, the loss-of-use damages

cover renting another car so you can get on

the road and have the benefit of a car and go

to work and where you want to go with your

car. They do not cover repairing your car.

So we have to take that -- and there's lots of

cases on it, what judges look at. Lawyers all

know them. Now we have to take that language

and that concept and we have to fit it to this

case. And here's how we're going to do that.

In this case the loss of use is the loss of

use of that consumer person out there in

Seattle or the provinces of China, I won't

just confine it to Seattle, wherever Cricket

towers were up who goes to make a call and

they can't make a call. Or goes, has a call,

and it goes down because that 120-degree

sector is out because the power converter on

that sector on that tower failed. That's a

loss of use.

And, you know, the lawyers said no one -- we

haven't got any evidence here that these

people, their call was dropped so they sued.

But that's not the point. The point is that

Cricket and China Unicom, who are in the

business of running these networks and

advertise, one imagines, that their network is

up and running and is a good network, when

that loss of use occurs they have a problem.

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So when they expend money, sort of in the

nature --I won't say in the nature. Let me

get right to it. When they take emergency

response costs to bring their network back

online, Cricket, China Unicom are entitled to

come back against Ericsson, and Ericsson is

entitled to come back against Vicor once it's

understood that it's Vicor's product that has

failed and caused this. Those are the lossof-use damages that we're talking about; the

emergency response costs to get the system up

and running.

Now, those aren't rental costs, but we're not

talking about rental costs in this type of

situation. They are those reasonably

understood emergency response costs to get the

system up and running.

Well, given the mechanics here, one of the

things that means is repairs. You pull out a

defective power converter and you put in

another power converter, you've repaired it. 

And I told you, well, repairs aren't covered. 

Here's how you're going to resolve that.

You have to ask yourself what was Cricket

doing, what did Cricket think it was doing?

What was China Unicom doing, on the evidence?

What was Ericsson doing to back them up? What

was Vicor doing to back up Ericsson? These

are not the monies, the settlements, the --

I'll go through a list. These are the things

that are taken because you've got an

emergency. And people in good faith jump into

action and spend money.

If Cricket jumps into action and spends money,

if China Unicom jumps into action and spends

money, if Ericsson spends money without regard

to what their contract was, and Vicor, the

same thing, if they jump into action and spend

money to get the systems up and running, one,

that's what we want responsible companies to

do. And they're doing that, even if it

constitutes repairs, they're doing that to get

the system up and running. That's loss of

use. 

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And if Cricket and China Unicom, in fact, did

that and charged it back against Ericsson, and

Ericsson, in fact, paid that, and then as part

of the settlement charged it back against

Vicor, then in this lawsuit Vicor can recover

that from the insurance companies at least for

these two years, if you find that there was

such losses in the 2002/2003 year as well as

2003/2004.

Well, now, let me go through a litany of what

is covered, and since it's all been mentioned

in this case, what's not covered. Loss-of-use

damages is covered. And that would cover

these emergency response costs even if they

include repairs, if those were the emergency

repairs and everyone's saying let's get the

system up and running. That's covered.

And if the Ericsson/Cricket settlement, if

that paid Cricket for emergency response

costs, then that's something that Ericsson

incurred and they can charge that back against

Vicor. But that does not include increased

operating and maintenance costs and it doesn't

include system upgrades, making it better than

it was before.

• • •

Ericsson claimed [fraud] against Vicor. So

much of the settlement, the Ericsson/Vicor

settlement, if it included money for fraud,

not covered. If it included money for repairs

other than emergency response costs, not

covered. Retrofit, going out to cell phone

towers where there's nothing wrong but

replacing the power converters, not covered.

Goodwill. Ericsson's loss of goodwill, if any

there was, not covered. Loss of business

opportunity, Ericsson's ability to get new

customers and the like because now the

Ericsson product in these various places has

failed, not covered. Ericsson's lost profits,

not covered. Ericsson sues Vicor and says,

Well, wait a minute, we paid this much for

your power converters, give us our money back. 

Not covered. Investigation costs to figure

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out what was the problem here. Not covered.

Moving the units from the top of the pole down

to the bottom of the pole so you could get at

them easier, not covered. Cost of product

replacement, not covered. I already said

increased operating and maintenance costs, not

covered. System upgrades not covered. 

Emergency response costs, covered. That's

loss of use. Whether that's -- whether that's

proved by shipping immediately replacement

parts in an emergency, whether it's paying as

part of a settlement somebody else's,

Cricket's emergency response costs, that is

covered.

The jury returned a verdict the next day awarding Vicor

$8 million in loss of use damages for the 2002-2003 policy period,

and $9.3 million for the 2003-2004 policy period. The parties

agree that this total consists of $8 million from the EricssonCricket settlement, $3.3 million in emergency equipment provided to 

China Unicom, and $6 million for emergency response costs to

restore customer networks.

In addressing the insurers' post-trial motions, the court

cited certain provisions of the Ericsson-Cricket settlement

agreement as the foundation of the verdict. Those terms required

Ericsson to pay Cricket $8 million in two, $4 million dollar

installments. One of these installments was made to Cricket to

offset increased operating and maintenance expenses incurred by

Cricket.

The court then recalled its jury instruction that

increased operating and maintenance costs were specifically

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excluded as loss of use damages. As a result, the district court 

granted the insurers partial relief, reducing the verdict by $4

million. The court, however, rejected the insurers' claims that

the loss of use instruction erroneously included emergency response

costs, and entered judgment in favor of Vicor for $13.3 million,

plus interest.

All four parties appealed. Vicor argues that the

district court should not have disturbed the jury's $17.3 million

verdict. The insurers argue that the district court committed

legal error when it allowed the jury to include emergency repair

costs as loss of use damages. In addition, they argue that even if

the instruction was correct, the record evidence did not, in any

event, support the award. Also, the insurers argue that they were

erroneously denied access to Vicor's counsel's underlying defense

file from the Ericsson litigation. Separately, Continental asserts

that judgment should have been entered in its favor because the

verdict did not exhaust the underlying policy limits, and thus its

excess policies were not implicated. Additionally, Vigilant and

Federal argue that all damages should have been allocated to the

2003-04 policy period, limiting their exposure and bringing

Continental's policy into play. As resolution of the loss of use

issue determines the course of this appeal, we address it first.

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IV. Discussion

A. Loss of Use Damages

The insurers argue that the district court erred by

including emergency response costs within the definition of loss of

use damages. Vigilant and Federal raise the issue in the context

of claiming that the trial court incorrectly instructed the jury. 

Raising the same issue, Continental further asserts that the

district court erred in denying its motion for judgment as a matter

of law. Regardless of the procedural posture in which the issue

was raised, we review the relevant district court rulings regarding

the loss of use instruction under a de novo standard. See Latin

Am. Music Co. v. Am. Soc. of Composers, Authors & Publishers, 593

F.3d 95, 99 (1st Cir. 2010) (claim of instructional error reviewed

de novo); Butynski v. Springfield Terminal Ry. Co., 592 F.3d 272,

276 (1st Cir. 2010) (denial of motion for judgment as a matter of

law reviewed de novo).

Under Massachusetts law, the interpretation of an

insurance policy is a question of law for the court. Cody v. Conn.

Gen. Life Ins. Co., 439 N.E.2d 234, 237 (Mass. 1982). Where, as 5

here, the relevant policy provisions are plainly expressed, those

provisions must be enforced according to their terms and

interpreted in a manner consistent with what an objectively

The parties agree that Massachusetts law governs the dispute 5

insofar as interpretation of the subject insurance policies is

concerned.

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reasonable insured would expect to be covered. City Fuel Corp. v. 

Nat'l Fire Ins. Co. of Hartford, 846 N.E.2d 775, 778-79 (Mass.

2006). Also, absent Massachusetts precedent, we may seek guidance 6

from other courts' interpretations of standard policy provisions. 

Am. Home Assurance Co. v. AGM Marine Contractors, Inc., 467 F.3d

810, 812 (1st Cir. 2006).

As previously noted, the provision at issue here is that

which defines covered property damage to include "loss of use of

tangible property that is not physically injured." Vicor urges an

expansive interpretation based on the above language and the

policies' more general provision that the insurers are responsible

to "pay damages . . . for . . . property damage caused by an

occurrence." Focusing on a dictionary definition of the word

"for," Vicor argues that damages are covered if they "are a result

of" loss of use of uninjured tangible property. In other words,

Vicor claims that it was required only to establish a nexus between

Ericsson's customers' (Cricket and CU) loss and the claimed

damages. At oral argument, Vicor's counsel did not dispute that

this formulation essentially amounts to but-for causation.

The insurers' position is premised on the idea that loss

of use damages are subject to an implied temporal limitation that

confines coverage to damages incurred due to the inability to use

None of the parties argue that the definition of property 6

damage is ambiguous.

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the failed equipment until it is replaced or repaired. In other

words, because repair costs represent the cost of ending the loss

of use period, such costs are not themselves damages for loss of

use.

The district court attempted to strike a middle ground, 

explicitly instructing the jury that "repairs aren't covered"

except those repairs that were part of an "emergency response" to

the RBS failures, in order to "get the system up and running." 

While the trial court's effort is a laudable response to a thorny

question, we conclude that it misses the mark.7

As recognized by the district court, the archetypal

example of loss of use damages comes in the context of a damaged

automobile. Simply put, the cost to rent a replacement vehicle

while the damaged vehicle is being repaired would represent loss of

use damages; the actual cost of repairs would not. See Urico v.

Parnell Oil Co., 708 F.2d 852, 855 (1st Cir. 1983) (citing Antokol

v. Barber, 143 N.E. 350, 352 (Mass. 1924)); Collin v. Am. Empire

Ins. Co., 21 Cal. App. 4th 787, 818 (1994).

While the automobile analogy may be the most facile

analytic tool, it is not the exclusive one. See Atmel Corp. v. St.

Paul Fire & Marine Ins. Co., 430 F. Supp. 2d 989, 994 (N.D. Cal.

The parties agree that there are no reported cases using the 7

"emergency repair" formulation in the context presented here. At

the same time, however, we note that no cases have explicitly found

the temporal limitation suggested by the insurers.

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2006) ("The Court does not hold . . . that loss of use damages can

only consist of rental value or its equivalent."); see also

Continental Cas. Co., v. Gilbane Bldg. Co., 461 N.E.2d 209, 214

(Mass. 1984) (holding that where street was closed due to glass

falling from nearby high-rise, restaurant rendered inaccessible to

public could state claim for coverage by contractor's liability

insurer for loss of use damages).

As discussed earlier, both sides of this dispute claim

reliance on the plain language of the policy -- Vicor focusing on

the term "for," and the insurers on a literal meaning of "loss of

use." In the absence of definitive Massachusetts case law, the

parties turn their attention to various California cases for

guidance. As the facts of Atmel most closely resemble those

present here, we turn to that case first. Atmel, an electronic

chip manufacturer, sold faulty computer chips to its customer,

Seagate, for use in disk drives that Seagate later sold. 430 F.

Supp. 2d at 991. The defective chips eventually caused the Seagate

drives to fail, although the failure did not cause physical damage

to the drives. Id. Seagate customers who returned drives to

Seagate were provided with a new drives or refurbished drives

without the Atmel chip. Id. at 991-92. The Atmel chip was

replaced in a significant number of drives that had not failed. 

Id. at 992.

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Seagate subsequently sued Atmel, with the matter being

settled by Atmel's $5.9 million payment to Seagate. Id. Discovery

indicated that Seagate was seeking damages for: repair and

replacement of drives with the defective chip; costs of shipping

repaired drives to customers; the screening of drives at customer

locations for Atmel chips; employee expenses related to

investigation of the chip failure; maintenance of a reserve fund to

cover potential liability to its customers due to drive problems;

and various accommodations to Seagate customers, including credit

toward future purchases and the free provision of new or

refurbished replacement drives. Id.

Atmel sought coverage from its insurer, St. Paul, under

a loss of use provision identical to the one at issue here. Atmel

argued that because the failure of the Atmel chips caused Seagate

customers to lose use of the disk drives, Seagate's damages were,

therefore, loss of use damages. Id. at 994. The court rejected

Atmel's argument, finding that the damages were not for loss of

use, but were instead the costs of repairing and replacing the

chips and drives. Id. Although the court agreed with Atmel's

assertion that the damages would not have occurred absent the chip

failure, it rejected the but-for analysis, stating, "Atmel's

expansive definition of 'loss of use' damages includes any and all

damages related to the failure of the Atmel chips in the Seagate

drives, and does not require a nexus with Seagate's (or its

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customers') inability to use the drives." Id. (emphasis in

original). While rejecting St. Paul's argument that rental cost is

the only proxy for loss of use damages, the court held that "the

damages alleged by Seagate . . . were too attenuated from a 'loss

of use,' and there must be a more direct connection between the

damages and the loss of use of the property in order to establish

coverage . . . ." Id. at 994-95.

The insurers urge the same result here. For its part,

Vicor argues that Atmel's holding is limited to disclaiming costs

to repair and replace the insured's (Atmel's or Vicor's) own

product. But Atmel is not so limited. Seagate's claimed damages

explicitly included repair and replacement of the drives

themselves, and not just Atmel's chip. Atmel, 430 F. Supp. 2d at

994. Moreover, Vicor's argument ignores Atmel's overarching

requirement of a "more direct connection" than simply but-for

causation between the damages claimed and the loss of use of the

property. Id. at 995.

Vicor advocates reliance on Anthem Electronics, Inc. v.

Pacific Employers Insurance. Co., 302 F.3d 1049 (9th Cir. 2002), a

case unsuccessfully relied upon by the insured in Atmel, which

construed certain expenses as loss of use damages but whose outcome

the Atmel court distinguished. We agree that the case is

distinguishable both from Atmel and this case in ways that do not

support Vicor's claim. In Anthem, the insured supplied defective

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circuit boards to a manufacturer, KLA, which incorporated the

circuit boards into scanners it sold. Id. at 1052. When some of

the scanners failed, the manufacturer was forced to replace them

and ultimately sued Anthem. Id. KLA identified among its damages:

depreciation of loaner scanners provided to its customers while the

defective ones were being repaired; inventory costs for scanners

made unshippable due to the defect; and lost revenue due to

customers failing to timely pay bills because of defective

scanners. Id. at 1052.

Each of Anthem's insurers refused to defend the KLA

lawsuit on the ground that the claimed losses were not covered. 

Id. at 1052-53. The Ninth Circuit reversed a grant of summary

judgment to the insurers, holding that the insurers had a duty to

defend Anthem because KLA's complaint "raise[d] the possibility

that KLA suffered loss of use of the systems into which Anthem's

circuit boards had been installed." Id. at 1058. "KLA's customers

lost the use of tangible property (their scanners), and as a result

KLA suffered losses due to loaner scanners and diminished

receivables. KLA itself lost the use of unshippable scanners

sitting in inventory, and as a result incurred unexpected inventory

costs." Id. at 1057.

The Atmel court distinguished Anthem on two points.

First, Anthem was a duty-to-defend case, in which the underlying

complaint was examined only to see if a covered loss was a

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possibility. Atmel, by contrast, followed a settlement in which

the insured was seeking indemnity based on an existing factual

record. Atmel, 430 F. Supp. 2d at 995; see Anthem, 302 F.3d at

1054 ("An insurer has a very broad duty to defend under California

law."). Second, the Atmel court found that the insured in Anthem

"actually alleged damages suffered as a result of the loss of use

of the scanners . . ." Atmel, 430 F. Supp. 2d at 995.

Vicor argues that the costs for which Ericsson held Vicor

liable were similar to those sought by Anthem, and the fact that

Ericsson incurred them while making emergency repairs -- as opposed

to in connection with "loaners" -- is of no moment, as they were

incurred as a result of the unavailability of the inoperable RBSs. 

We disagree. The common thread between Atmel and Anthem is that

damages ascribed to loss of use in Anthem were accrued pending

repair of the out-of-service scanners, while those excluded in

Atmel were for the repair or replacement of the disk drives. In

this case, the "emergency repairs" allowed by the district court

fall into the same category as the repairs in Atmel. They are

therefore not loss of use damages. It is not enough to

demonstrate, as Vicor attempts to do, that there was a "loss of

use" of certain property (the power converters or the wireless

networks) and that Vicor subsequently paid damages. The claimed

damages must be tied to the actual period during which the use of

the non-physically injured property was lost and to the loss of use

-23-
itself. See Urico, 708 F.2d at 855 (in context of damaged vehicle,

loss of use damages compensates plaintiff for "finite period in

which the vehicle is simply unavailable for use").

A third California case strengthens the insurers'

position. In F & H Construction v. ITT Hartford Insurance Company

of the Midwest, 118 Cal. App. 4th 364 (2004), the insured, a

subcontractor, installed steel pile caps of inadequate strength in

a building. Id. at 367. The contractor later remedied the problem

by welding additional support to the caps and sued the

subcontractor's insurer for the costs related to the modification. 

Id. The court agreed with the insurer that the additional costs

did not constitute loss of use damages, noting that the contractor

was not seeking damages for "rental value (or its equivalent)" and

was not claiming damages "for the loss of use of the [facility

under construction] during the time period modifications were made

to the caps." Id. at 377. "[T]he only costs claimed by F & H are

the costs for repairing and modifying the defective caps and for

loss of the early completion bonus. Those costs are unrelated to

rental value." Id. 

As particularly relevant here, the court concluded, "[a]

contrary conclusion would allow contractors and developers to

obtain liability insurance for inferior or defective workmanship,

a risk not covered by commercial liability insurance." Id.

(citations omitted). This view is consistent with that of

-24-
Massachusetts's highest court, that "the goal of [liability

insurance] is to protect the insured from claims of injury or

damage to others, but not to insure against economic loss sustained

by the insured due to repairing or replacing its own defective work

or products . . . ." Commerce Ins. Co. v. Betty Caplette Builders,

Inc., 647 N.E.2d 1211, 1213-14 (Mass. 1995) (citation omitted).8

Vicor's final assertion on this subject is that the

district court properly instructed the jury that costs to repair or

replace Vicor's power converters -- its own property -- were not

covered, and therefore the jury necessarily awarded only costs

related to the repair or replacement of Ericsson's RBSs, of which

the Vicor power converter was only a small part. Putting aside the

question of whether Atmel's holding is limited to cases of repairs

to the insured's own product -- an interpretation we do not accept

-- we conclude that the district court made no such distinction. 

While the instruction used the example of replacing a defective

power converter with a new one as a non-covered "repair," it then

went on to carve out an "emergency repairs" exception to the

proscription on indemnity for general repair costs. In so doing,

court did not differentiate between the power converters and the

RBSs.

While the holding in Betty Caplette Builders was dependent on 8

certain policy exclusions that the insurers do not press here, its

comment on the general purpose of liability insurance remains

applicable.

-25-
As a result, the district court's jury instruction

referencing "emergency repairs" was erroneous. See Davignon v.

Clemmey, 322 F.3d 1, 9 (1st Cir. 2003) (stating that a jury

instruction is erroneous if it is incorrect as a matter of law). 

Moreover, given that the emergency repair costs were, pursuant to

the jury instructions, a centerpiece of the putative loss of use

damages considered by the jury, the error was prejudicial, and

therefore the judgment must be vacated and a new trial held. See

Costa-Urena v. Segarra, 590 F.3d 18, 24 (1st Cir. 2009).

As the insurers concede, however, an insured might be

able to recover any extra expenses above the ordinary cost of

repairs that reduce the eventual loss of use damages. This

possibility, which we suspect the district court had in mind when

formulating its jury instructions, is a corollary of the

traditional requirement that a party must take reasonable measures

to mitigate its damages. See Urico, 708 F.2d at 855. The catch is

that an insured seeking to capitalize on this possibility must show

that the mitigation measures (1) somehow differed from ordinary

repairs and (2) resulted in a net savings, meaning that the added

expense of the mitigation measures was less than the savings

generated by the decreased loss of use damages. The first showing

could be satisfied if, for example, overtime work hastened the pace

of repairs to damaged property or the installation of a temporary

mechanical fix preserved some degree of functionality for the

-26-
property until repairs could be completed. The second showing

demands a reasonable degree of certainty as to the amount the

insured's loss of use damages would have been had the mitigation

measures not been implemented. Cf. Allens Mfg. Co. v. Napco, Inc.,

3 F.3d 502, 505 (1st Cir. 1993) (explaining that a plaintiff cannot

rely on speculation to prove damages). In no case, of course,

could an insured recover more than this amount, in keeping with the

purpose of mitigation.

This possibility may be worth exploring on remand, if the

evidence provides a justification for doing so. Therefore, on

remand, the district court should fashion jury instructions making

clear that classic loss of use damages (such as lost profits or the

rental value of substitute property) that are incurred while

repairs are pending may be recovered by an insured, but the actual

costs of repairs may not. The district court also may instruct the

jury regarding the duty to mitigate loss of use damages and may

explain that the costs of reasonable mitigation measures are

recoverable, provided that the mitigation measures are

distinguishable from ordinary repairs and result in a net savings.9

Given our decision on this issue, we decline to address the 9

insurers' other arguments premised on a finding that the jury

instruction was correct.

-27-
B. Other issues raised by the insurers

1. Other evidence of loss of use

Beyond the jury instruction issue, the insurers assert,

without much elaboration, that they are entitled to judgment in

their favor because the record lacks any evidence of loss of use

damages under the "correct" definition. The testimony and other

evidence adduced over eight trial days constitutes something of a

mixed bag, especially with respect to the precise contours of

Ericsson's payments to Cricket and CU. Thus, given the district

court's erroneous definition of loss of use damages, we believe

this is an issue best resolved by the district court upon remand,

with due consideration given to the appropriate measure of damages. 

2. Insurers' Joint Motion to Compel 

During the course of discovery, the insurers served

various written requests for production of documents related to the

Ericsson litigation and settlement. In addition to substantial

document production , Vicor also produced a privilege log, in which 10

it justified the withholding of documents related to the defense of

the Ericsson litigation on the basis of the attorney-client and

work product privileges. The district court denied the insurers'

subsequent motion to compel without comment. Continental appeals

The insurers describe the production as consisting of over 10

6,500 documents; Vicor tallies the production at over 1 million

pages. 

-28-
that denial. Because this issue was fully joined, and stands a

strong likelihood of re-emerging after remand, we address it here.

At the heart of this dispute is the allocation of

settlement monies Vicor paid to Ericsson between covered and

uncovered claims. We sketch the background of the parties'

relationship before addressing the legal issue.

As previously described, Ericsson sued Vicor in

California state court in May 2004. Vicor promptly notified

Vigilant and Federal of the suit. Subject to a reservation of 11

rights because of potential coverage issues, the insurers agreed to

provide defense and indemnity pursuant to the grant of coverage for

information and network technology liability contained in

Vigilant's errors and omission policy. They declined coverage

under their general liability policies because, in their view,

Ericsson's complaint did not allege third-party property damage.12

When Ericsson amended its complaint, however, the insurers agreed

to provide coverage under the general liability policy. While

Vicor, with the insurers' blessing, chose its own defense counsel,

the insurers required counsel to comply with their billing

Continental, as an excess carrier, was not involved in these 11

early skirmishes.

The errors and omissions policy had lower limits and a

12

narrower scope of coverage than the general liability policy.

-29-
guidelines and to provide periodic reports and evaluations as

conditions for payment.13

Although Vicor and Ericsson settled the underlying suit

for $50 million in March 2007, they created no formal allocation of

the payments between covered and uncovered claims. Based on their

own investigation, primary insurers Vigilant and Federal determined

that the failure of the Vicor power converters caused slightly more

than $3 million in third-party property damage that would be

covered under the general liability policies. They also paid the

remaining $9.7 million remaining on the technology liability

coverage, with Vicor supplying $37 million to fulfill the terms of

the settlement.

Fast-forwarding to the present litigation, exploration of

the Ericsson-Vicor settlement eventually led to the deposition of 

Vicor official Richard Zengilowski, who could fairly be described

as Vicor's "point man" with respect to negotiations with Ericsson.

Zengilowski testified at his deposition that none of the $50

million paid to Ericsson was for non-covered claims. He described

a process by which Ericsson's original claimed damages of $1-$3

billion morphed into negotiations in the $135-$200 million range,

before the parties agreed on a settlement of $50 million. The

insurers were skeptical of Zengilowski's assertion, primarily

The insurers paid Vicor's counsel approximately $5 million. 13

A dispute over whether this amount fully satisfied their obligation

to pay for Vicor's defense is addressed, infra.

-30-
because Zengilowski also agreed during his deposition that various

categories of Ericsson's claimed damages that Vicor's defense

counsel had listed in a report it prepared prior to the mediation

were not covered. In light of this perceived discrepancy, the

insurers requested that Vicor produce all documents withheld on

privilege grounds that were part of the Vicor-Ericsson lawsuit. As

noted, the district court let Vicor's refusal stand. We review 14

the district court's ruling for abuse of discretion. Dennis v.

Osram Sylvania, Inc. 549 F.3d 851, 859 (1st Cir. 2008).

The party asserting the attorney-client or work product

privilege bears the burden of showing that the privilege applies. 

Hanover Ins. Co. v. Rapo & Jensen Ins. Servs., Inc., 870 N.E.2d

1105, 1114 (Mass. 2007). If the privilege is established, the 15

After the motion to compel was denied, the insurers issued 14

trial subpoenas seeking a subset of the underlying defense

documents for purposes of cross examination. The district court,

while granting Vicor's motion to quash, ordered Vicor to bring the

withheld documents to court during trial, should he "rethink it as

we go along," in which case he would order production. Vicor

argues on appeal that the insurers' failure to raise the issue

later during trial constitutes waiver. We disagree. In addition

to the trial court stating that its decision on the motion to

compel might be "law of the case" on the issue, the import of the

judge's comment suggests that he would re-consider the issue, if at

all, on his own initiative. These factors lead us to conclude that

the insurers did not "intentional[ly] relinquish[] . . . a known

right." United States v. Carrasco-De-Jesus, 589 F.3d 22, 26 (1st

Cir. 2009). 

State law undergirds our analysis of the attorney-client 15

privilege in this diversity case. See FDIC v. Ogden Corp., 202 

F.3d 454, 460 (1st Cir. 2000); Fed. R. Evid. 501.

-31-
burden of proving any exception falls to its proponent. Ogden, 202

F.3d at 460.

The attorney client privilege "extends to all

communications made to an attorney or counsellor . . . and applied

to by the party in that capacity, with a view to obtain his advice

and opinion in matters of law, in relation to his legal rights,

duties and obligations, whether with a view to the prosecution or

defence of a suit or other lawful object." Hanover Ins. Co., 870

N.E.2d at 1111 (quoting Hatton v. Robinson, 31 Mass. 416, 421

(1834)). The privilege attaches to any communication between

attorney and client in confidentiality for the purpose of seeking,

obtaining or providing legal advice or assistance. In Re

Reorganization of Elec. Mut. Ins. Co., Ltd. (Bermuda), 681 N.E.2d

838, 840 (Mass. 1997).

"While the attorney-client privilege shields

communications between attorney and client (and in some cases third

parties), the work product doctrine protects an attorney's written

materials and 'mental impressions.'" Comm'r of Revenue v. Comcast

Corp., 901 N.E.2d 1185, 1200 (Mass. 2009) (citing Hickman v.

Taylor, 329 U.S. 495, 510 (1947)). Codified in Mass. R. Civ. P.

26(b)(3), the doctrine protects from discovery documents prepared

by a party's representative "in anticipation of litigation." Id.

-32-
at 314. The protection can be overcome if the party seeking 16

discovery demonstrates "substantial need of the materials" and

cannot obtain the "substantial equivalent" by other means without

undue hardship. Id. Finally, an attorney or other

representative's "mental impressions, conclusions, opinions, or

legal theories" are afforded greater protection than "fact" work

product, id., which includes "everything else that is eligible for

protection as work product . . . ." In Re Grand Jury Subpoena, 220

F.R.D. 130, 145 (D. Mass. 2004).

The insurers do not expressly dispute that the documents

at issue fit within the ambit of the attorney-client privilege.17

Instead, they claim that they were entitled to them under either of

two exceptions, known as the "common interest" and "at issue"

doctrines. Because application of the former resolves this issue, 18

we do not address the latter.

The insurers urge us to follow the lead of the Illinois

Supreme Court in Waste Management, Inc., v. International Surplus

Fed. R. Civ. P. 26(b)(3) is the analogous federal 16

codification of Hickman. See United States v. Textron, Inc., 577

F.3d 21, 25 (1st Cir. 2009) (en banc).

The parties did not address the two privileges separately. 17

Because they protect different interests, however, we will do so. 

United States v. Nobles, 422 U.S. 225, 238 n. 11 (1975) (citing

Hickman, 329 U.S. at 508)).

Only documents created during the Ericsson litigation are at 18

issue in this appeal. No communications made during the instant

coverage litigation are being sought.

-33-
Lines Insurance Co., 579 N.E.2d 322 (Ill. 1991), which held that

under the common interest doctrine, "when an attorney acts for two

different parties who each have a common interest, communications

by either party to the attorney are not necessarily privileged in

a subsequent controversy between the two parties." Id. at 328.

The parties expend significant energy debating whether

Vicor and the insurers actually possessed a common interest during

the Ericsson litigation, with Vicor arguing that the disputes that

would later ripen into this coverage litigation undermine any

common interest that may have existed. Vicor also points out that

Waste Management has been criticized. See, e.g., Remington Arms

Co. v. Liberty Mut. Ins. Co., 142 F.R.D. 408, 417 (D. Del. 1992)

(declining to follow Waste Management's "strange theory"); see also 

PETCO Animal Supplies Stores, Inc. v. Ins. Co. of N. Am., No. 10-

682 (SRN/JSM), 2011 WL 2490298 at *21 n. 12 (D. Minn. June 10,

2011) (listing cases rejecting Waste Management).

We need not, however, venture beyond application of

Massachusetts law to resolve this issue. Massachusetts has

recognized an exception to the privilege that "renders the

privilege inapplicable to disputes between clients." Ogden, 202

F.3d at 461; Beacon Oil Co. v. Parelis, 160 N.E. 892, 894 (Mass.

1928). "Thus, when a lawyer represents multiple clients having a

common interest, communications between the lawyer and any one (or

more) of the clients are privileged as to outsiders, but not inter

-34-
sese." Id.; see also Dedham-Westwood Water Dist. v. Nat'l Union

Fire Ins. Co. of Pittsburgh, No. CIV.A. 96-00044, 2000 WL 33593142

at *3 (Mass. Super. Feb. 4, 2000) ("[W]hen an attorney has been

retained to represent both insured and insurer in a third party

action, communications by either party will not be privileged . .

. even if their interests later diverge.") (quoting Hoechst

Celanese Corp. v. Nat'l Union Fire Ins. co. of Pittsburgh, 623 A.2d

1118, 1123-24 (Del. Super. Ct. 1992)); EDO Corp. v. Newark Ins.

Co., 145 F.R.D. 18, 23 (D.Conn. 1992) ("[c]ommunications between an

insured and its attorney connected with the defense of underlying

litigation are normally not privileged vis-a-vis the insured

carriers in subsequent litigation").19

Vicor argues that the defense attorneys in the Ericsson

litigation did not represent both Vicor and the insurers. 

Massachusetts law, however, considers an attorney retained by an

Massachusetts has also used the term "common interest 19

doctrine" in a different way, interchangeably with the "joint

defense privilege." There, the doctrine "prevents clients from

waiving the attorney-client privilege when attorney-client

communications are shared with a third person who has a common

legal interest with respect to these communications. . . ." 

Cavallaro v. United States, 284 F.3d 236, 250 (1st Cir. 2002)

(emphasis added). It is "typically understood to apply when two or

more clients consult or retain an attorney on particular matters of

common interest." Ken's Foods, Inc. v. Ken's Steak House, Inc.,

213 F.R.D. 89, 93 (D. Mass. 2002) (citation and internal quotation

marks omitted). "In such a situation, the communications between

each of them and the attorney are privileged against third

parties." Id. (citation and internal quotation omitted). This

branch of the doctrine is not at issue here. Instead, it might

have arisen in an attempt to shield communications between Vicor

and its defense counsel from Ericsson in the underlying litigation.

-35-
insurer to represent the insured as the attorney for both. 

Imperiali v. Pica, 156 N.E.2d 44, 47 (Mass. 1959) ("[A]n attorney

undertaking the defense of the case covered by the policy is an

attorney for both the insurer and the insured . . . ."); Rhodes v.

AIG Domestic Claims, Inc., No. 05-1360-BLS2, 2006 WL 307911 at *9

(Mass. Super. Jan 27, 2006).

Vicor further argues that the fact that the insurers

tendered the underlying defense pursuant to a reservation of rights

defeats any claim of a common interest. We disagree. It is

undisputed that the primary insurers paid defense counsel and

partially funded the settlement with Ericsson. That suffices to

rebut Vicor's argument. Cf. Owens-Corning Fiberglass Corp. v.

Allstate Ins. Co., 660 N.E.2d 765, 769 (Ohio Com. Pl. 1993) (no

common interest where insurers neither provided representation nor

indemnified insured in underlying suits).

Here, the record reflects multiple letters, reports and

other communications between underlying defense counsel and the

insurers regarding such matters as liability assessment, strategic

litigation planning and calculations of potential damage outcomes. 

All were marked as "privileged and confidential," and the parties

agree they were privileged as to third-parties, such as Ericsson. 

We agree with the reasoning set forth in RPM, Inc. v. Hartford

Accident & Indemnity Co., Inc., No. 1:03CV1322, slip op. at 12-13

(N.D. Ohio, April 11, 2006) (quoted in 1 Barry R. Ostrager & Thomas

-36-
R. Newman, Handbook on Insurance Coverage Disputes § 2.08[b] (14th

ed. 2008)): "Plaintiffs cannot have it both ways. They cannot

make use of the benefit of the common interest exception to avoid

waiver of the attorney-client privilege as to third parties and

simultaneously assert the privilege against the parties with whom

they share a common interest." Accordingly, we conclude that the

district court erred, and Vicor cannot rely on the attorney-client

privilege to shield all communications between it and underlying

defense counsel.

Resolution of the work-product privilege issue requires

less discussion. In the context of coverage litigation, it is a

touchstone of such a claim that Vicor must demonstrate that its

attorneys prepared the putatively shielded documents in

anticipation of a lawsuit with the insurers. EDO Corp., 145 F.R.D.

at 24; Textron, Inc., 577 F.3d at 29. In this case, events provide

fairly clear lines of demarcation. Documents produced while the

insurers were providing a defense are unlikely to be protected;

those produced during the periods when the insurers denied coverage

-- or refused to provide indemnity -- are likely to be protected. 

See EDO Corp., 145 F.R.D. at 24; Hoechst Celanese Corp., 623 A.2d

at 1126. Given the fact that the precise nature of the EricssonVicor settlement is crucial to a determination of which of

Ericsson's claims are covered, the record supports the insurers'

substantial need for at least some of documents at issue. Thus, to

-37-
the extent that the district court's denial of the insurers' motion

to compel was based on application of the work product doctrine,

the court abused its discretion.

These conclusions do not quite end the matter. 

Resolution of both the attorney-client and work product claims

require a more precise examination of the course of the

relationship between the parties as it relates to the Ericsson

litigation and the juncture at which various communications were

made. We acknowledge the difficulty entailed in the three-way

relationship recognized by Massachusetts law. The fact that both

the insured and insurer are deemed to be clients does not mean that

all communications are excepted from the applicable privileges, or

that the insurers are necessarily entitled to the entire defense

file, as they claim. From the current record, however, we cannot

make the necessary judgments about which materials are subject to

disclosure. It is enough to say, however, that the district court

abused its discretion in denying the insurers' motion to compel in

its entirety, and upon remand, should tailor a discovery order

consistent with this opinion, should the parties not be able to

reach substantial agreement on their own. See Fed. R. Civ. P.

37(a)(1) (requiring parties to confer regarding discovery disputes

or attempt to do so prior to filing motion to compel). 

-38-
C. Vicor's cross-appeal

Vicor argues that the district court erred when it

granted the primary insurers summary judgment on Vicor's Breach of

Duty to Defend claim, which asserted that the insurers failed to

meet their obligation to pay Vicor's reasonable attorneys' fees in

the underlying litigation. The record reflects that Vicor paid

approximately $5.2 million of the $7.4 million billed by the two

defense firms Vicor chose in the underlying suit. The district

court order granting the motion stated that the insurers had

"discharged [their] obligations to pay reasonable legal fees." Fee

awards are reviewed for abuse of discretion. French v. Corporate

Receivables, Inc. 489 F.3d 402, 403 (1st Cir. 2007). We review the

grant of summary judgment de novo. Scottsdale Ins. Co. v. Torres,

561 F.3d 74, 77 (1st Cir. 2009).

Vicor offers a number of arguments in support of its

claim that the district court erred. The first -- that the

district court failed to explain how it arrived at the fee award

sufficiently to allow evaluation on appeal -- carries the day. 

Therefore we vacate the award so that the matter can be addressed

on remand. We briefly explain.

We are mindful of the Supreme Court's admonition that

fee litigation can, but should not, transform into the tail that

wags the dog. See City of Burlington v. Dague, 505 U.S. 557, 566

(1992). And while the district court's attorneys' fee findings

-39-
"need not be infinitely precise, deluged with details, or even

fully articulated," Foley v. City of Lowell, 948 F.2d 10, 20 (1st

Cir. 1991), "we must have some basis for understanding its

reasoning." Mass. Eye & Ear Infirmary v. QLT Phototherapeutics,

553 F.3d 47, 74 (1st Cir 2009). While the record suggests that the

issue was well-joined in the district court, the court's order

provides us with no such basis of understanding. The insurers

argue that we can affirm because the district court was presented 

with all relevant materials, and that "no elaboration is essential

if the reviewing court can without difficulty discern the basis for

the unexplained . . . finding from the record." United States v. 

One Star Class Sloop Sailboat, 546 F.3d 26, 41 (1st Cir. 2008).

While the above-cited case is correctly quoted, we noted

in One Star Class Sloop Sailboat that the district court "cit[ed]

book and verse, [and] found that [the prevailing party] had

stubbornly persisted in litigating (and then losing) a cavalcade of

issues." Id. Indeed, in a separate -- although brief -- order,

the district court in that case addressed the parties' relative

success, the appropriate hourly rate, and what he believed to be

"overlitigation," in arriving at an award less than what the

prevailing party had requested. See United States v. One Star

Class Sailboat, No. 05-10192-WGY, 2008 WL 678519 at *1 (D. Mass.

Jan. 9, 2008). Here, however, we have been provided with no

analytical guideposts from which we can undertake a proper review. 

-40-
Thus, we must vacate the grant of summary judgment as to the fee

award and remand for further consideration of the claim. We take

no position on whether summary judgment is the appropriate vehicle

to resolve the issue on remand.

V. Conclusion

The judgment of the district court is vacated. The case

is remanded for proceedings not inconsistent with this opinion.20

Each party shall bear its own costs.

Given our vacatur of the judgment, we need not address 20

Vicor's appeal of the district court's reduction of the verdict, or

Continental's appeal of the judgment on the basis that its excess

policy was not brought into play by the jury's allocation of

damages over two separate policy years.

-41-