Nat’l Union Fire Ins. Company of Pittsburgh, Pa. v. Mead Johnson & Co. LLC

Dist. Ct. erred in granting plaintiffs-insurance companies’ motion for summary judgment in actions seeking declaration that they owed no duty to pay defendant-insured on underlying tort action alleging false advertising against defendant concerning defendant’s statements regarding competitor’s less expensive infant formula, where Dist. Ct. believed that defendant violated timely notification clause in both polices by failing to notify both plaintiffs of existence of underlying lawsuit until after conclusion of trial on underlying claim that resulted in $13.5 million jury verdict in competitor’s favor. Under Indiana law, while instant late notice created rebuttable presumption of harm to plaintiffs that would have allowed them to disclaim coverage, plaintiffs could disclaim coverage only if there was prejudice caused by said late notice. Moreover, remand was required to establish whether either plaintiff had incurred any harm where: (1) one plaintiff’s policy limit was only $2 million, such that it was not obvious how said plaintiff could have obtained either jury verdict or settlement that was less than $2 million had it been in control of defense in underlying lawsuit; and (2) although other plaintiff’s excess insurance policy provided coverage up to $25 million, said plaintiff suggested that it would have used same law firm/tactics that defendant had used in underlying lawsuit.