St. Paul Fire & Marine Ins. Co. v. Amerisourcebergen Corp.

• Citation: 80 Cal.App.5th 1,295 Cal.Rptr.3d 400
• Decision Date: 20 June 2022
• Docket Number: G059967
• Parties: ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al., Plaintiffs and Appellants, v. AMERISOURCEBERGEN CORPORATION et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

80 Cal.App.5th 1

295 Cal.Rptr.3d 400

ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al., Plaintiffs and Appellants,

v.AMERISOURCEBERGEN CORPORATION et al., Defendants and Respondents.

G059967

Court of Appeal, Fourth District, Division 3, California.

Filed June 20, 2022

Simpson Thacher & Bartlett and Chet A. Kronenberg, Los Angeles, for Plaintiffs and Appellants.

Reed Smith, Raymond Cardozo, San Francisco, Courtney C.T. Horrigan, Kim M. Watterson, Amber S. Finch and Katherine J. Ellena, Los Angeles, for Defendants and Respondents.

OPINION

GOETHALS, J.

St. Paul Fire and Marine Insurance Company (St. Paul Fire & Marine) and the appellants listed in the margin below (see fn. 1; collectively, the St. Paul Insurers or sometimes St. Paul) appeal from the trial court's order staying their declaratory judgment insurance coverage action.¹ The trial court issued the stay in recognition of the bellwether case of national importance that is ongoing in West Virginia (the West Virginia or WV coverage action), which, like this one, arises from the opioid prescription abuse and addiction crisis plaguing the country.

The WV coverage action commenced in March 2017, nearly four years before plaintiffs filed their complaint here. At the time the trial court issued its stay, proceedings had progressed significantly in West Virginia. Millions of pages of discovery have been produced; there have been voluminous motion practice, hearings, and rulings, including denial of summary judgment motions; there has also been an appeal to West Virginia's high court and a recent remand from that court. In Orange County, in contrast, all answers to the complaint remained pending at the time the trial court issued the stay; in fact, the trial court was still considering motions to quash service of summons for lack of personal jurisdiction over many defendants.

The trial court found that in this action and in the WV coverage action "some of the same insurance policies are at issue in both cases, and the West Virginia court will be interpreting at least one of St. Paul's policies to determine whether they cover opioid litigation, an answer that presumably will be the same whether the underlying litigation is in West Virginia or some other state." The trial court concluded, "It is therefore in the interests of comity and the conservation of judicial resources to avoid potential conflicting rulings and allow the earlier-filed case to proceed first, eliminating the risk of multiple and inconsistent judgments in different cases." The court then stayed further proceedings on the St. Paul Insurers' complaint in Orange County "pending resolution of the West Virginia action."

Meanwhile, back in West Virginia, the trial court hearing the coverage action entered a much blunter assessment of St. Paul Fire & Marine's California filing: "St. Paul has filed the California Coverage Action for improper purposes, namely, delay and forum shopping ...."

The trial court here was aware of that finding, plus other evidence in the already substantial record, including the West Virginia court's additional finding that "[w]hatever differences exist between this action and St. Paul's California Coverage Action, at a minimum, St. Paul is asking the California court to issue declarations governing the parties already before this Court, interpreting the exact same insurance policy language already before this Court, regarding the same type of cases already before this Court, and regarding the same cases on which this Court permitted the Insurer Defendants to take discovery, raising the identical coverage issues already pending before this Court, including coverage issues on which this Court has already issued rulings."

St. Paul challenges the trial court's stay order, arguing it constitutes an abuse of discretion. But a trial court's broad discretion to dismiss an action "in the interest of substantial justice" because it "should be heard in a forum outside this state" becomes broader still when the court enters a stay rather than a dismissal order. ( Code Civ. Proc.,² § 410.30, subd. (a) ; see, e.g., Morris v. AGFA Corp. (2006) 144 Cal.App.4th 1452, 1463, 51 Cal.Rptr.3d 301.) "[A] stay gives effect to the general rule that a court ordinarily has inherent power, in its discretion, to stay proceedings when such a stay will accommodate the ends of justice." ( People v. Bell (1984) 159 Cal.App.3d 323, 329, 205 Cal.Rptr. 568.) St. Paul fails to meet its burden to demonstrate an abuse of discretion in the trial court's stay order. We therefore affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

As the trial court explained below, the WV coverage action "involves whether St. Paul Fire & Marine and other insurers were obligated to defend and indemnify the ABC Entities against prescription opioid lawsuits in West Virginia that settled in January 2017 for $16 million."³

One of the ABC Entities, ABDC initiated the WV coverage action in March 2017 by filing suit in West Virginia state court against at least some of its insurance carriers, including St. Paul Fire & Marine. ABDC sought breach of contract damages and declaratory relief regarding the scope of coverage afforded by policies issued by the insurers, including primary coverage and excess general liability policies. ( AmerisourceBergen Drug Corporation v. ACE American Insurance Co. et al. , 2021 WL 2678137 (Cir. Ct. Boone County W.Va., 2017, No. CC-03-2017-C-36).)

The coverage dispute arose out of earlier litigation that had marked the beginning of the legal fallout from the opioid prescription abuse and addiction crisis. In the first of thousands of similar lawsuits filed around the country, the West Virginia Attorney General in 2012 sued ABDC in West Virginia state court alleging that ABDC negligently, recklessly, or intentionally distributed prescription opioids to West Virginia pharmacies, hospitals, and doctors in a manner that contributed to the opioid addiction crisis. The lawsuit sought damages for costs for medical care and drug treatment for West Virginians who became addicted to opioids. Once the West Virginia Attorney General's lawsuit (the WV AG action) settled in January 2017, ABDC demanded that St. Paul Fire & Marine and other insurers contribute to the settlement, but they rejected the demand.

As of January 2021, more than 3,200 similar lawsuits had been filed by local and state governments, Native American tribes, various companies and individuals, and other entities against ABDC, its subsidiaries, and many other pharmaceutical companies. Approximately 2,800 of these cases have been consolidated in federal multidistrict litigation. ( In re Nat. Prescription Opiate Litigation (2017) 290 F.Supp.3d 1375 (the National Opioid MDL or MDL).) The multidistrict panel explained that the consolidated cases "involve common factual questions about, inter alia , the manufacturing and distributor defendants' knowledge of and conduct regarding the alleged diversion of these prescription opiates." ( Id. at p. 1378.)⁴

As far as we are aware, neither the MDL nor any other prescription opioid liability cases pending around the country include corresponding litigation regarding insurance coverage issues. The WV coverage action appears to be the first of its kind, or among the first, filed anywhere in the country, and the trial judge handling the matter is among the most experienced jurists in the underlying subject matter, having heard and resolved the WV AG action over the course of almost five years.

In July 2018, ABDC filed an amended complaint in the WV coverage action. The amended complaint identified additional pending West Virginia opioid crisis liability lawsuits for which ABDC and a subsidiary sought coverage declarations. The amended complaint specified that the plaintiffs sought damages and a declaration of insurance coverage for losses asserted in the West Virginia liability lawsuits consolidated in the National Opioid MDL, including the two West Virginia actions selected by the MDL panel as bellwether trials. The amended complaint further stated the plaintiffs' intent to identify additional cases involving potential liability which they asserted triggered policy coverage. By October 2020, the plaintiffs in the WV coverage action identified more than 165 lawsuits in West Virginia state and federal courts (including West Virginia cases in the MDL) involving liability they claimed would trigger policy coverage.

Since its inception in March 2017, the parties have engaged in discovery of epic proportions in the WV coverage action. ABDC has responded to nearly 100 document demands, producing over 10 million pages of discovery, including deposition transcripts and exhibits that the ABC Entities produced in the National Opioid MDL, while also answering related interrogatories. For their part, the insurer defendants in the WV coverage action have produced nearly 80,000 pages of policy-related documents. The discovery process in the WV coverage action required appointment of a discovery commissioner, which delayed proceedings for more than a year as multiple motions for protective orders and motions to compel production were litigated. The process entailed a series of reports by the discovery commissioner and corresponding court hearings and rulings. Numerous depositions were also conducted through 2020.

Attempting to bring the WV coverage action to a close, the insurers there, including St. Paul Fire & Marine (but not St. Paul Mercury or the three other Travelers subsidiary-plaintiffs here), filed motions for summary judgment. They asserted that the definition of "bodily injury" and related policy language under which the ABC Entities claimed coverage could not, as a matter of law, be construed to extend coverage to the damages alleged in the prescription opioid liability lawsuits. The West Virginia court was not persuaded.

On November 23, 2020, the court denied the insurers' summary judgment motions finding, at least at that stage in the...