Travelers Prop. Cas. Co. of Am. v. Anda, Inc., 15-11510

• Decision Date: 26 August 2016
• Docket Number: No. 15-11510,15-11510
• Parties: 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, v. ANDA, INC. and WATSON PHARMACEUTICALS, INC., Defendants-Counter Plaintiffs-Appellants, v. GEMINI INSURANCE COMPANY, Counter Defendant, Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

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,
v.
ANDA, INC. and WATSON PHARMACEUTICALS, INC., Defendants-Counter Plaintiffs-Appellants,
v.
GEMINI INSURANCE COMPANY, Counter Defendant, Appellee.

No. 15-11510

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

August 26, 2016

DO NOT PUBLISH

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

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

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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

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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...