Knoll Pharmaceutical v. Auto. Ins. Co. of Hartford
| Decision Date | 13 July 2001 |
| Docket Number | No. 00 C 6733.,00 C 6733. |
| Parties | KNOLL PHARMACEUTICAL CO., Plaintiff, v. AUTOMOBILE INSURANCE CO. OF HARTFORD, National Union Fire Insurance Co. of Pittsburgh, PA and Royal Insurance Co. of America, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Tyrone C. Fahner, Alan J. Martin, Jordan Rudnick, Mayer, Brown & Platt, Chicago, IL, Kenneth J. Merlino, Power, Rogers & Smith, P.C., Chicago, IL, for plaintiff.
James Bernard Glennon, George M. Ferreti, Clausen Miller P.C., Chicago, IL, for Automobile Ins. Co. of Hartford.
Thomas B. Underwood, Sandra Young, Michael Duane Sanders, Heidi A. Smith, Purcell & Wardrope, Chtd, Chicago, IL, Heidi A. Smith, Donald S. Nathan, P.C., Chicago, IL, for National Union Fire Insurance of Pittsburgh, PA.
Dion Joseph Sartorio, Shaun McParland Baldwin, David C. Butman, Daniel Ira Graham, Jr., Tressler, Soderstrom, Maloney & Priess, Chicago, IL, for Royal Insurance Co. of America.
Knoll Pharmaceutical Company ("Knoll") filed this diversity lawsuit, seeking a declaration that Automobile Insurance Company of Hartford ("Automobile"), National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union") and Royal Insurance Company of America ("Royal") (collectively "Defendant Insurers") owed a duty to defend Knoll in the underlying case, In re Synthroid Marketing Litigation, 110 F.Supp.2d 676 (N.D.Ill.2000). Currently before this Court are Knoll's and Defendant Insurers' motions for judgment on the pleadings. Knoll's motion is partially granted, (R. 23-1), and all of Defendant Insurers' motions for judgment on the pleadings are denied (R. 27-1, 33-1, 34-1).
Defendant Insurers issued the policies in question to Boots Pharmaceuticals, Inc., a wholly-owned subsidiary of Boots (USA). In 1995, BASF acquired Boots (USA) and, in connection with that acquisition, Boots Pharmaceuticals changed its name to Knoll Pharmaceutical Co. Knoll claims relief under these policies as successor-in-interest to Boots. Defendant Insurers deny that the policies have transferred to Knoll.
Boots manufactured, marketed and sold a prescription drug known as Synthroid. Synthroid, a synthetic form of a thyroid hormone (levothyroxine sodium), is used to treat certain thyroid diseases and cancer. Levothyroxine sodium (LT4) medications are narrow therapeutic index drugs: slight over— or under-dosing can cause serious medical problems. Beginning in 1986, various companies have claimed their LT4 medications are Synthroid's bioequivalents— drugs capable of being freely inter-changed without altering their therapeutic effects. When bioequivalents exist, doctors may prescribe these other brand names or generic versions to their patients at lower prices.
Certain consumers and third-party payors filed more than seventy lawsuits, most as class actions, against Knoll and other defendants regarding the sale and marketing of Synthroid. These actions were transferred to the United States District Court for the Northern District of Illinois, as part of a Multi-District Litigation ("MDL") proceeding called In re Synthroid Marketing Litigation. See 110 F.Supp.2d 676. In the Master Consumer Class Action Complaint ("MCCAC"), the underlying plaintiffs were consumers who purchased Synthroid beginning January 1, 1990. In the Master Third-Party Payor Class Action Complaint ("TPPCAC"), the underlying plaintiffs were payors of health and medical services and supplies, including government agencies, who allegedly paid excessive costs for Synthroid medication on behalf of their insureds. These complaints contain allegations that the insured "concealed or suppressed information about cheaper bioequivalent drugs, falsely represented that there were no equivalents, and charged individual consumers and their insurers more than they would have been able to if the correct information had been known, in violation of federal antitrust and racketeering laws and state fraud statutes." Id. at 679.
According to the MCCAC, by fraudulently concealing information proving that bioequivalents to Synthroid exist and by misrepresenting that Synthroid is superior to other LT4 drugs, Knoll, Boots and BASF "have successfully controlled the levothyroxine market, persuaded physicians to specify Synthroid in their levothyroxine prescriptions, and thus required the millions of persons afflicted with hypothyroidism and other thyroid diseases to purchase Synthroid instead of the less expensive, bioequivalent brand name and generic levothyroxine drugs." According to Knoll, the Food and Drug Administration ("FDA") has not determined that all LT4 products are bioequivalent.
Knoll's complaint highlights the allegations in the underlying litigation reflecting Boots' advertisements. These advertisements claimed that "[t]here is no substitute for Synthroid," that there was "[n]o proven bioequivalent product," and that "[n]o adequate and well-controlled studies have demonstrated bioequivalence among levothyroxine sodium products." Knoll also focuses on allegations claiming that Boots published certain letters and articles disparaging a scientist, Dr. Betty Dong, whose University of California at San Francisco study suggested the existence of bioequivalents for Synthroid. In their answers and briefs, Defendant Insurers emphasize the allegations against Boots for antitrust activities, consumer fraud, unfair competition, negligent misrepresentation and violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Moreover, the underlying allegations do not claim Boots slandered, libeled or disparaged any of the consumers' or third party payors' goods or reputations.
Boots tendered the original underlying complaint to Defendant Insurers for a defense in 1997. All Defendant Insurers refused the tender, denying they had a duty to defend Knoll under the insurance policies in question.
Automobile issued Boots three commercial general liability ("CGL") policies effective from April 1, 1989 to April 1, 1992. Royal issued Boots a CGL policy effective from April 1, 1992 to September 30, 1993. National Union issued Boots two CGL polices effective from September 30, 1993 to December 1, 1995. All of the insurers have issued policies containing identical language.1 The language order is negligibly different on Automobile's policies covering April 1, 1989 to April 1, 1991. All of the policies define both "advertising injury" and "personal injury" as injury "arising out of" several offenses including, inter alia, "[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." Each policy also contains a section stating that the insured's "rights and duties under this policy may not be transferred without our written consent except in the case of death of an individually named insured." (Id.)
On October 27, 2000, Knoll filed a three-count complaint in this Court seeking: (1) a declaratory judgment that Defendant Insurers had a duty to defend Knoll in the underlying Synthroid litigation; (2) a finding that each Defendant Insurer's refusal to defend Knoll against the underlying complaint breached its respective insurance policies requiring each defendant to defend and indemnify on behalf of Knoll all liabilities, losses, costs and expenses incurred in the underlying litigation; and (3) attorneys' fees and additional amounts recoverable pursuant to § 155 of the Illinois Insurance Code. Knoll claims that Defendant Insurers' policies' advertising and personal injury provisions activated defense obligations. Presently before the Court are the parties' cross-motions for judgment on the pleadings filed pursuant to Federal Rule of Civil Procedure 12(c). For the following reasons, we partially grant Knoll's motion for judgment on the pleadings. Furthermore, we deny Automobile's, National Union's and Royal's motions for judgment on the pleadings.
A party can move for judgment based on the pleadings alone. N. Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452 (7th Cir.1998). Rule 12(c) provides the standard to be applied on a motion for judgment on the pleadings:
After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
Fed.R.Civ.P. 12(c). In this case, the parties have not presented material outside of the pleadings. Therefore, this motion for judgment on the pleadings is subject to the same standards as a Rule 12(b)(6) motion to dismiss: all well-pleaded facts are taken as true, all inferences are drawn in favor of the nonmovant and all ambiguities are resolved in favor of the nonmovant. Alexander v. City of Chicago, 994 F.2d 333, 335 (7th Cir.1993). Thus, a "motion for judgment on the pleadings may be granted only if the moving party clearly establishes that no material issue of fact remains to be resolved and that he or she is entitled to judgment as a matter of law." Nat'l Fid. Life Ins. Co. v. Karaganis, 811 F.2d 357, 358 (7th Cir.1987).
As a preliminary matter, we must resolve a conflict of laws. W. Am....
To continue reading
Request your trial
-
Haywood v. Lucent Technologies, Inc., 00 C 4445.
...that person in the community's eyes or deters third persons from associating with that person. Knoll Pharm. Co. v. Auto. Ins. Co. of Hartford, 152 F.Supp.2d 1026, 1037-38 (N.D.Ill.2001) (citing Crinkley v. Dow Jones & Co., 67 Ill.App.3d 869, 24 Ill.Dec. 573, 385 N.E.2d 714, 720 (1978) and B......
-
Burgett, Inc. v. American Zurich Ins. Co.
...competitor claims that is “more effective than or superior to ... other drugs available.” See Knoll Pharmaceutical Co. v. Automobile Ins. Co. Of Hartford, 152 F.Supp.2d 1026, 1036 (N.D.Ill.2001). Similarly to the facts underlying E.piphany, in this case, Burgett represented to Samick that i......
-
Basf Ag v. Great American Assur. Co.
...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 multi-district litigation— consolidated numerous class actions filed by consumers and health insurer......
-
Knoll Pharmaceutical v. Automobile Ins. Co.
...on the pleadings and denied Defendant Insurers' motions for judgment on the pleadings. Knoll Pharm. Co. v. Auto. Ins. Co. of Hartford, et al., 152 F.Supp.2d 1026 (N.D.Ill.2001) ("Knoll I"). On October 1, 2001, we granted Knoll's motion for summary judgment, finding that Defendant Insurers' ......
-
Chapter 8
...Inc. v. Assurance Company of America, 400 F.3d 982 (7th Cir. 2005); Knoll Pharmaceutical Co. v. Automobile Insurance Co., 152 F. Supp.2d 1026 (N.D. Ill. 2001); Winklevoss Consultants, Inc. v. Federal Insurance Co., 11 F. Supp.2d 995 (N.D. Ill. 1998). Eighth Circuit: Sletten and Brettin Orth......
-
Chapter 3
...Co. of New York, 2007 WL 4801222 (N.D. Ill. June 13, 2007); Knoll Pharmaceutical Co. v. Automobile Insurance Company of Hartford, 152 F. Supp.2d 1026 (N.D. Ill. 2001) (choice of law upheld); Kubes v. American Medical Security, Inc., 895 F. Supp. 212 (S.D. Ill. 1995) (choice of law upheld). ......