Schering Corp. v. Home Ins. Co., No. 1314

CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)
Writing for the CourtKAUFMAN
Citation712 F.2d 4
PartiesSCHERING CORPORATION, Plaintiff-Appellee-Cross-Appellant, v. HOME INSURANCE COMPANY, Defendant-Appellant-Cross-Appellee. ockets 83-7056, 83-7102.
Decision Date21 June 1983
Docket NumberNo. 1314,D

Page 4

712 F.2d 4
SCHERING CORPORATION, Plaintiff-Appellee-Cross-Appellant,
v.
HOME INSURANCE COMPANY, Defendant-Appellant-Cross-Appellee.
No. 1314, Dockets 83-7056, 83-7102.
United States Court of Appeals,
Second Circuit.
Submitted June 1, 1983.
Decided June 21, 1983.

Page 6

Skadden, Arps, Slate, Meagher & Flom, New York City (Barry H. Garfinkel, Sheila L. Birnbaum, Irene A. Sullivan, Barbara Wrubel, Jeffrey S. Lichtman, New York City, of counsel), for defendant-appellant-cross-appellee.

Winthrop, Stimson, Putnam & Roberts, New York City (Edwin J. Wesely, Eloise L. Morgan, Virginia G. Shubert, Susan J. Kohlmann, Henry R. Simon, New York City, of counsel), for plaintiff-appellee-cross-appellant.

Brobeck, Phleger & Harrison, San Francisco, Cal. (E. Judge Elderkin, William R. Irwin, Donald W. Brown, Tom M. Freeman, L. Christopher Vejnoska, San Francisco, Cal., of counsel) and Anderson, Russell, Kill & Olick, P.C., New York City (Eugene R. Anderson, Jerold Oshinsky, New York City, of counsel), for amici curiae Fireboard Corp., et al.

Santarelli & Gimer, Washington, D.C. (Richard H. Gimer, Washington, D.C., of counsel); Hall, Henry, Oliver & McReavy, San Francisco, Cal. (Stephen McReavy, Lee H. Cliff, Jeffrey Kaufman, San Francisco, Cal., of counsel); Wilmer, Cutler & Pickering, Washington, D.C. (Dennis M. Flannery, Carol H. Fishman, Washington, D.C., of counsel) and Dinsmore & Shohl, Cincinnati, Ohio (Gerald V. Weigle, Jr., Janet R. Eaton, David H. Beaver, Cincinnati, Ohio, of counsel), for amici curiae Commercial Union Ins. Companies, Firemen's Fund Ins. Co.; Ins. Co. of North America, and Liberty Mut. Ins. Co.

Covington & Burling, Washington, D.C. (Robert N. Sayler, Edward J. Beder, Jr., John G. Buchanan, III, Washington, D.C. of counsel); Clifford & Warnke, Washington, D.C. (Harold D. Murry, Jr., John G. Calender, Washington, D.C., of counsel); Rogovin, Huge & Lenzner, Washington, D.C. (Harry Huge, Saul B. Goodman, Washington, D.C., of counsel); Cravath, Swaine & Moore, New York City (Robert S. Rifkind, Louis M. Solomon, New York City, of counsel); The Upjohn Co., Kalamazoo, Mich., (Kenneth M. Cyrus, Kalamazoo, Mich., of counsel); Slade & Pellman, New York City (John F. Triggs, Anthony P. Coles, New York City, of counsel) and E.R. Squibb & Sons, Inc., Princeton, N.J. (Robert C. Johnston, Princeton, N.J., of counsel), for amici curiae The Upjohn Co., Abbott Laboratories, Emons Industries, Inc. and E.R. Squibb & Sons, Inc.

Day, Berry & Howard, Hartford, Conn. (Thomas J. Groark, Allan B. Taylor and Eve Cutler Rosen, Hartford, Conn., of counsel) for amicus curiae Aetna Cas. & Sur. Co.

Before KAUFMAN, PRATT and GIBSON, * Circuit Judges.

KAUFMAN, Circuit Judge:

When a motion for summary judgment presents complex legal issues with far-reaching implications, a judge must balance two competing goals. Confronted with the prospect of lengthy pre-trial proceedings that postpone the day of judgment, the district court must conserve judicial resources by promptly resolving those matters in which "no genuine issue as to any material fact" is presented. Fed.R.Civ.P. 56(c). At the same time, justice requires careful consideration of the entire posture of the case so the "drastic device" of summary judgment, Heyman v. Commerce and Industry Co., 524 F.2d 1317, 1320 (2d Cir.1975), is not precipitously imposed.

In its understandable zeal to resolve non-perspicuous issues of interpretation, a district court may at times lose sight of the need for restraint. Justice must be both rapid and fair. Matters which our system of conflict resolution reserves for full exposition at trial may not be consigned to cursory disposition. This Court has on numerous occasions set forth the standards which judges must follow in deciding whether to grant summary judgment. See, e.g., Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 444-45 (2d Cir.1980); SEC v. Research Automation Corp., 585 F.2d 31, 33 (2d Cir.1978); Home Insurance Co. v. Aetna Casualty & Surety Co., 528 F.2d 1388, 1390

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(2d Cir.1976); Heyman v. Commerce and Industry Co., supra, 524 F.2d at 1319-20. Because we believe the court below misapplied these guidelines in the present dispute, we reverse its grant of summary judgment in this declaratory judgment action and remand for further proceedings.

To facilitate understanding of the issues raised for our consideration, we set forth the facts in some detail, mindful that ambiguities must be resolved and reasonable inferences drawn in favor of the party against whom summary judgment is sought. Heyman v. Commerce and Industry Co., supra, 524 F.2d at 1320.

I

This controversy arose from a dispute between Schering Corporation ("Schering"), a drug manufacturer, and its excess liability insurer, Home Insurance Company ("Home"). At stake is Home's potential liability for untold millions of dollars in payment for claims by plaintiffs who assert injury from Schering's synthetic estrogen product, dienestrol ("DEN"). The story of DEN is a tragic tale of modern medicine as well as a word of caution to insurers to anticipate potential problems created by unscrutinized standard clauses in policies.

In 1958, Schering commenced the manufacture and distribution of DEN either directly or through a subsidiary. Synthetic estrogens such as DEN and its chemical cousin, the well-known diethylstilbesterol ("DES"), have been prescribed to women since the early 1940's for a variety of reasons. In particular, DEN was widely administered to patients with high-risk pregnancies for the purpose of preventing miscarriages.

While thousands of doctors were dispensing synthetic estrogens to millions of expectant mothers, Schering and Home entered into an important series of contracts. From August 30, 1966 to February 7, 1976, Schering paid Home over $1,000,000 in premiums for excess liability coverage. Unable to anticipate the tidal wave of controversy, anguish, and, finally, litigation, that would soon inundate the makers and users of both DES and DEN, Schering and its insurer concluded standard-form comprehensive general liability ("CGL") contracts. The critical provision of this type of policy is the stipulation that the insurer agreed to indemnify the manufacturer for liability when use of its products resulted in personal injury during the policy period. The pertinent language is set forth in the margin. 1

In 1971, an association between synthetic estrogens and clear-cell vaginal adenocarcinoma (a cancer of glandular tissues in the vagina) in daughters of women who had taken DES was reported in the medical literature. Herbst, Ulfelder & Poskanzer, Adenocarcinoma of the Vagina, 284 New England J.Med. 878 (1971). Later that year, the Food and Drug Administration (FDA) proscribed the use of DEN (as well as DES) in the treatment of pregnant women. Although DES and DEN continue to be marketed for purposes other than preventing miscarriages, their deleterious effects on female offspring of women who took the drugs while with child (commonly referred to as "DES daughters") are well documented. Since the initial study and FDA banning order, maternal ingestion has been associated with adenosis (abnormal presence of glandular epithelial cells or tissue in the vagina or cervix), structural abnormalities of the cervix and vagina, surgical interventions such as vaginectomies, and a host of other afflictions (infertility, anxiety,...

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  • AXA Inv. Managers UK Ltd. v. Endeavor Capital Mgmt. LLC, No. 11 Civ. 3221(PGG)(MHD).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 24, 2012
    ...a reasonable conflicting interpretation of a material disputed fact” will summary judgment be denied. Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9–10 (2d Cir.1983).B. Plaintiff's Initial Burden The agreements in issue both contain choice-of-law provisions stating that they “shall be gover......
  • W.R. Grace & Co. v. Continental Cas. Co., Nos. 88-2902
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 6, 1990
    ...This was error. General rules of construction come into play "only as a matter of last resort." Schering Corp. v. Home Ins. Co., 712 F.2d 4, 10 n. 2 (2d Cir.1983). See also Bybee v. John Hancock Mut. Life Ins. Co., 507 S.W.2d 330, 331 (Tex.Civ.App.--Tyler 1974, writ ref'd n.r.e.). Of course......
  • Clark v. Capital Credit & Collection Serv., No. 04-35563.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 24, 2006
    ...not be granted while opposing party timely seeks discovery of potentially favorable information") (citing Schering Corp. v. Home Ins. Co., 712 F.2d 4, 10 (2d Cir.1983)); see also VISA Intern. Service Ass'n v. Bankcard Holders of America, 784 F.2d 1472, Page 1179 (9th Cir.1986) (discussing t......
  • Jackson v. Goord, No. 97 CV 7149(GBD)(MHD).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • September 21, 2009
    ...conflicting interpretation of [the] material disputed fact[s]," summary judgment must be denied. Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9-10 (2d III. Environmental Claims Defendants argue that none of plaintiff's environmental claims are serious enough to rise to the level of an Eight......
  • Request a trial to view additional results
324 cases
  • AXA Inv. Managers UK Ltd. v. Endeavor Capital Mgmt. LLC, No. 11 Civ. 3221(PGG)(MHD).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 24, 2012
    ...a reasonable conflicting interpretation of a material disputed fact” will summary judgment be denied. Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9–10 (2d Cir.1983).B. Plaintiff's Initial Burden The agreements in issue both contain choice-of-law provisions stating that they “shall be gover......
  • W.R. Grace & Co. v. Continental Cas. Co., Nos. 88-2902
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 6, 1990
    ...This was error. General rules of construction come into play "only as a matter of last resort." Schering Corp. v. Home Ins. Co., 712 F.2d 4, 10 n. 2 (2d Cir.1983). See also Bybee v. John Hancock Mut. Life Ins. Co., 507 S.W.2d 330, 331 (Tex.Civ.App.--Tyler 1974, writ ref'd n.r.e.). Of course......
  • Clark v. Capital Credit & Collection Serv., No. 04-35563.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 24, 2006
    ...not be granted while opposing party timely seeks discovery of potentially favorable information") (citing Schering Corp. v. Home Ins. Co., 712 F.2d 4, 10 (2d Cir.1983)); see also VISA Intern. Service Ass'n v. Bankcard Holders of America, 784 F.2d 1472, Page 1179 (9th Cir.1986) (discussing t......
  • Jackson v. Goord, No. 97 CV 7149(GBD)(MHD).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • September 21, 2009
    ...conflicting interpretation of [the] material disputed fact[s]," summary judgment must be denied. Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9-10 (2d III. Environmental Claims Defendants argue that none of plaintiff's environmental claims are serious enough to rise to the level of an Eight......
  • Request a trial to view additional results

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