Court Opinion

ID: 4028750
Source: CourtListenerOpinion
Date Created: 2016-08-26 18:01:44.156885+00
Date Added: 2024-06-11T14:50:13.522098
License: Public Domain

Case: 15-11510   Date Filed: 08/26/2016   Page: 1 of 9

                                                       [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 15-11510
                     ________________________

                 D.C. Docket No. 0:12-cv-62392-KMM

THE TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, ST.
PAUL FIRE AND MARINE INSURANCE COMPANY, FEDERAL
INSURANCE COMPANY and GREAT NORTHERN INSURANCE COMPANY,

                                    Plaintiffs-Counter Defendants-Appellees,

                                 versus

ANDA, INC. and WATSON PHARMACEUTICALS, INC.,

                                   Defendants-Counter Plaintiffs-Appellants,

                                 versus

GEMINI INSURANCE COMPANY,

                                                Counter Defendant, Appellee.

                     ________________________

              Appeal from the United States District Court
                  for the Southern District of Florida
                     _______________________

                           (August 26, 2016)
                Case: 15-11510       Date Filed: 08/26/2016       Page: 2 of 9

Before WILLIAM PRYOR and JILL PRYOR, Circuit Judges, and STORY, *
District Judge.

STORY, District Judge:

       This case involves an insurance coverage dispute arising out of a state court

action seeking to hold Appellants liable for damages in connection with wide-

spread prescription drug abuse in West Virginia. The district court held that

Appellees have no duty to defend in the underlying action and granted summary

judgment for Appellees. We affirm.

       Defendants-Counter Plaintiffs-Appellants Anda, Inc. and Watson

Pharmaceuticals, Inc. (collectively, “Anda”) distribute pharmaceuticals. The State

of West Virginia sued Anda and other pharmaceutical companies in West Virginia

state court setting forth various causes of action related to the epidemic of

prescription drug abuse and its costs to the State of West Virginia.

       Anda purchased a number of general commercial liability insurance policies

from Plaintiffs-Counter Defendants-Appellees The Travelers Property Casualty

Company of America (“Travelers”), St. Paul Fire and Marine Insurance Company

(“St. Paul”), Federal Insurance Company (“Federal”), and Great Northern

Insurance Company (“Northern”) and Counter Defendant-Appellee Gemini

Insurance Company (“Gemini”) (collectively, the “Insurers”) between 2001 and

* Honorable Richard W. Story, United States District Judge for the Northern District of Georgia,
sitting by designation.

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2013. Anda sought defense and indemnification in the West Virginia Action. The

Insurers initiated this suit against Anda, seeking a declaratory judgment that they

have no duty to defend or indemnify Anda in the underlying action in West

Virginia state court. Federal and Gemini reached settlements with Anda on the

eve of oral argument. Accordingly, we address only the issue of whether Anda is

afforded coverage under the policies issued by Travelers and St. Paul. Because of

the products exclusion clauses in those policies, we conclude that the policies

provide no coverage for Anda.

                                I. BACKGROUND

      Anda is a wholesale pharmaceutical distributor. The State of West Virginia

has sued Anda and other pharmaceutical companies in West Virginia state court,

requesting an injunction against their distribution practices and seeking

compensation for expenses the state alleges it has incurred as a result of the

proliferation of “Pill Mills” and the attendant “opioid epidemic.” State of West

Virginia ex rel. Darrell V. McGraw Jr. v. Amerisourcebergen Drug Corp., et al.,

No. 12-C-141 (W. Va. Cir. Ct., Boone Cty.) (the “West Virginia Action”). The

State alleges that, as a result of Anda’s conduct, it has been forced to dedicate

significant resources to law enforcement and police operations, hospitals and

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emergency rooms, and jails and prisons. The costs imposed by the opioid

epidemic have diverted funds that the State would have used for other purposes.

                            A. The West Virginia Action

      The Amended Complaint in the West Virginia Action alleges that Anda and

other pharmaceutical distributors are “an integral part of the Pill Mill process.”

The State alleges that pharmaceutical distributors, including Anda, knowingly or

negligently flood the West Virginia market with commonly-abused drugs. The

State claims that it has suffered myriad harms as a result of the over-supply of

Anda’s products in the market, the proliferation of Pill Mills, and the attendant

opioid epidemic. Those harms include increased crime, congested hospitals and

emergency rooms, exhausted law enforcement resources, overcrowded jails and

prisons, and court dockets over-crowded with prescription drug-related cases and

crimes committed by addicts. The State alleges that Anda’s distribution of its

products not only damages the health and safety of West Virginians, but also

imposes massive economic damages on the State itself.

                        B. The Declaratory Judgment Action
      The Insurers issued general commercial liability insurance policies to Anda

between 2001 and 2013, with Traveler’s and St. Paul’s policies issuing between

2006 and 2013. Under these policies, the Insurers have the duty to defend and

indemnify Anda in lawsuits seeking damages for or because of bodily injury.

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These policies exclude, however, coverage for damages included within products-

completed provisions. The Travelers policy excludes coverage for injuries “arising

out of” “[a]ny goods or products . . . manufactured, sold, handled, distributed[,] or

disposed of by . . . You” (the “Travelers Products Exclusion”). Similarly, the St.

Paul policy states: “We won’t cover bodily injury or property damage that results

from your products or completed work” (the “St. Paul Products Exclusion”).

      The Insurers initiated the suit below, seeking a declaration that they have no

duty to defend or indemnify Anda in the West Virginia Action. Travelers Prop.

Cas. Co. of Am. et al. v. Anda, Inc. et al., Case No. 0:12-cv-62392-KMM (S.D.

Fla.). In an omnibus order deciding cross-motions for summary judgment, the

district court concluded that because the State did not assert claims “for bodily

injury” or “because of bodily injury,” the Travelers and St. Paul policies did not

afford coverage. The district court found that the Travelers and St. Paul Products

Exclusions were not triggered because no “bodily injury” was alleged. Anda

moved for reconsideration of the court’s grant of summary judgment for the

Insurers. The district court denied that motion and this appeal followed.

                          II. STANDARD OF REVIEW

      We review a district court’s order granting a motion for summary judgment

de novo. Lindley v. F.D.I.C., 733 F.3d 1043, 1050 (11th Cir. 2013). We may

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affirm the district court’s judgment for any reason supported by the record, even if

the court below did not rely upon the same reasoning. See Williams v. Bd. of

Regents, 477 F.3d 1282, 1301 (11th Cir. 2007).

                                III. DISCUSSION

      In reaching its decision below, the district court relied on the policy

language that required the insurers to defend or indemnify claims “because of” or

“for” “bodily injury.” Travelers Prop. Cas. Co. of America, et al. v. Anda, Inc., et

al., Case No. 0:12-cv-62392-KMM (Mar. 9, 2015). The district court concluded

that the St. Paul and Travelers policies did not afford coverage because the State’s

Amended Complaint in the West Virginia Action asserted claims “for” and

“because of” economic harm to the State rather than “bodily injury.”

      We decline to reach the question of whether the State’s claims in the West

Virginia Action are “for” or “because of” bodily injury. We think the better

conclusion is that the St. Paul and Travelers policies do not afford coverage

because of the policies’ Products Exclusions. The St. Paul and Travelers policies

contain a “Products and Completed Work Exclusion” and a “Products Exclusion,”

respectively, that preclude coverage. Accordingly, St. Paul and Travelers have no

duty to defend or indemnify.

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      The Travelers and St. Paul policies are general commercial liability policies

that specifically exclude coverage for products liability. The Travelers Products

Exclusion omits coverage for bodily injury “arising out of” Anda’s products while

the St. Paul Products Exclusion eliminates coverage for damage that “results from”

Anda’s products.

      Each of these policies is governed by California law. California law

interprets “arising out of” and “results from” similarly, and requires only a minimal

causal connection or link between the products sold or distributed by an insured

and the alleged injury. Pension Trust Fund v. Fed. Ins. Co., 307 F.3d 944, 952-53

(9th Cir. 2002) (collecting cases); Cont’l Cas. Co. v. City of Richmond, 763 F.2d
1076, 1080 (9th Cir. 1985) (“‘Arising out of’ are words of much broader

significance than ‘caused by.’ They are ordinarily understood to mean ‘originating

from,’ ‘having its origin in,’ ‘growing out of’ or ‘flowing from’ or in short,

‘incident to, or having a connection with.’”).

      The injuries alleged by the State in the West Virginia Action have, at the

very minimum, a “connection with” Anda’s products. In that action, the State

seeks to enjoin the way Anda distributes its products. It also seeks monetary

damages arising from the injuries—whether they be “bodily” or not—caused by

these products. At bottom, the State claims that Anda and other pharmaceutical

distributors have so flooded the market with their products that West Virginia

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suffers from an opioid epidemic. As a result of that epidemic, the State has

suffered monetary losses that it now seeks to recover. The causal connection

between Anda’s products and the injuries alleged by the State is sufficient to meet

the low bar set by California law. Accordingly, we conclude that all the

underlying claims, if covered at all, are embraced within the Travelers and St. Paul

Products Exclusions, which render any coverage inapplicable.

      This holding is in line with our previous ruling in Taurus Holdings, Inc. v.

U.S. Fidelity and Guaranty Co., 367 F.3d 1252 (11th Cir. 2004). In that case, we

considered a question of insurance coverage for a similar underlying suit. There,

government municipalities sued Taurus—which manufactures, sells, and

distributes firearms—for expenses incurred as a result of gun violence in their

communities. Id. at 1252. Taurus’s commercial general liability insurance

policies, like Anda’s here, excluded coverage for damages included within a

“products-completed operations hazard” provision. Id. at 1253. That provision

similarly excluded coverage for “bodily injury and property damage . . . arising out

of your product or your work.” Id. (emphasis removed). On appeal, we

considered whether, under Florida law, the products-completed operations hazard

exclusion applied to the underlying lawsuits against Taurus. We certified the

question to the Florida Supreme Court, which held that the cost of medical and

other services the municipalities incurred as a result of gun violence “arise out of”

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the use of guns. Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 913 So. 2d 528,

540 (Fla. 2005).

      In so holding, the Florida Supreme Court defined the term “arising out of”

broadly, meaning “‘originating from,’ ‘having its origin in,’ ‘growing out of,’

‘flowing from,’ ‘incident to’ or ‘having a connection with.’” Id. at 532-33

(quoting Hagen v. Aetna Cas. & Sur. Co., 675 So. 2d 963, 965 (Fla. 5th DCA

1996)). We conformed our holding in Taurus to the opinion of the Florida

Supreme Court. We held that the products-completed operations hazard exclusion

found in the commercial general liability policies Taurus purchased excluded

coverage for the claims raised against Taurus in the underlying municipal suits.

Taurus Holdings, Inc. v. U.S. Fid. & Guar. Co., 431 F.3d 765, 766 (11th Cir.

2005). The “arising out of” language in the Anda policy exclusions has the same

meaning as that in the Taurus policies. As in Taurus, we interpret the exclusionary

language here broadly and impose a low bar for causation. Accordingly, the

commercial liability policies issued by Travelers and St. Paul exclude coverage for

the claims raised against Anda in the West Virginia Action. The judgment of the

district court is affirmed.

                                IV. CONCLUSION

      We AFFIRM the summary judgment in favor of Travelers and St. Paul.

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