Arrowood Indem. Co. v. AmerisourceBergen Corp.

1

ARROWOOD INDEMNITY COMPANY, Plaintiff, v. AMERISOURCEBERGEN CORPORATION AND AMERISOURCEBERGEN DRUG CORPORATION, et al. Defendants.

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Plaintiff, v. AMERISOURCEBERGEN CORPORATION, et al. Defendants.

AMERICAN ALTERNATIVE INSURANCE CORPORATION, et al. Plaintiffs, v. AMERISOURCEBERGEN CORPORATION, et al. Defendants.

XL INSURANCE AMERICA, INC., Plaintiff, v. AMERISOURCEBERGEN CORPORATION, et al. Defendants.

HARTFORD CASUALTY INSURANCE COMPANY, et al. Plaintiffs, v. AMERISOURCEBERGEN CORPORATION, et al. Defendants.

C.A. Nos. N22C-01-182 AML (CCLD), N22C-01-109 AML (CCLD), N22C-02-046 AML (CCLD), N22C-02-084 AML (CCLD), N22C-02-099 AML (CCLD)

Superior Court of Delaware

March 30, 2023

Submitted: March 9, 2023

Peter B. Ladig, Esquire, Elizabeth A. Powers, Esquire, BAYARD P.A., Wilmington, Delaware, Kevin T. Coughlin, Esquire Suzanne C. Midlige, Esquire, Patrick K. Coughlin, Esquire COUGHLIN MIDLIGE &GARLAND LLP, Morristown, New Jersey; Attorneys for Plaintiff Arrowood Indemnity Company.

Robert J. Katzenstein, Esquire Julie M. O'Dell, Esquire, SMITH, KATZENSTEIN &JENKINS LLP, Wilmington, Delaware, Christopher J. St. Jeanos, Esquire WILLKIE FARR &GALLAGHER LLP, New York, New York; Attorneys for Plaintiff National Union.

Carmella P. Keener, Esquire, COOCH AND TAYLOR, P.A., Wilmington, Delaware, Adam H. Fleischer, Esquire, Patrick Bedell, Esquire, Kevin F. Harris, Esquire, BATESCAREY LLP, Chicago, Illinois; Attorneys for Plaintiff American Alternative.

Erin R. Fay, Esquire, Gabriel B. Ragsdale, Esquire, BAYARD, P.A., Wilmington, Delaware, James P. Ruggeri, Esquire, Edward B. Parks, II, Esquire, RUGGERI PARKS WEINBERG LLP, Washington, District of Columbia; Attorneys for Plaintiffs Hartford Insurance.

Kathleen M. Miller, Esquire, Julie M. O'Dell, Esquire, SMITH, KATZENSTEIN &JENKINS LLP, Wilmington, Delaware, Kathryn Guinn, Esquire, DENTONS U.S. LLP, Denver, Colorado, Deborah J. Campbell, Esquire, DENTONS U.S. LLP, St. Louis, Missouri, Keith Moskowitz, Esquire, John Grossbart, Esquire, DENTONS U.S. LLP, Chicago, Illinois; Attorneys for Plaintiff XL Insurance America

Garrett Moritz, Esquire, Richard Garrett Rice, Esquire, ROSS ARONSTAM &MORITZ LLP, Wilmington, Delaware; Attorneys for Plaintiffs ACE American Insurance Company, ACE Property and Casualty Insurance Company.

Brian M. Rostocki, Esquire, Anne M. Steadman, Esquire, REED SMITH, LLP, Wilmington, Delaware, Courtney C.T. Horrigan, Esquire Reed Smith LLP, Pittsburgh, Pennsylvania; Attorneys for Defendants AmerisourceBergen Corporation, AmerisourceBergen Drug Corporation, and MWI Veterinary Supply, Inc.

Upon Defendants' Motions to Dismiss or Stay Duplicative Litigation: DENIED

MEMORANDUM OPINION

LEGROW, J.

The plaintiffs in these actions are insurers who issued commercial general liability policies to one or more of the defendants, which are a prescription opioid distributor and its predecessor entities. The distributor and its predecessors have been named as defendants in thousands of lawsuits for their respective roles in allegedly exacerbating the opioid epidemic in the United States. Many of these lawsuits were initiated by state, municipal, and local government entities and seek legal and equitable relief to offset government and health care expenditures that resulted from the national opioid epidemic. The distributor seeks defense costs and indemnification from the insurers.

There is a complex history of litigation between these parties. First, the distributor filed an action in West Virginia seeking declarations regarding various insurance companies' obligations, if any, to cover the distributor's defense costs and potential liability in the opioid lawsuits. The West Virginia court bifurcated that coverage case to resolve insurance coverage issues common among the policies in that case. The West Virginia court also entered a tailored anti-suit injunction relating to the parties and policies at issue there. That case is ongoing, but none of the insurers in these Delaware actions are parties in West Virginia.

After the West Virginia coverage action was filed, certain insurers filed an action in California against the distributor and sought declarations that they have no duty to defend or indemnify the distributor for its liability in the opioid lawsuits.

That case also involves crossclaims between various insurers regarding the extent of their respective potential liability. The California court stayed that action as to the insurers who are parties to the West Virginia action. The California court also issued a tentative ruling that it lacked jurisdiction over the distributor and its affiliates. The remaining insurers have now voluntarily dismissed all their claims in California without prejudice.

Between the time the California court issued its stay and the time the insurers dismissed their claims in California, the insurers filed five actions in this Court. Each case has been brought by an insurer and is against the distributor or related entities. The insurers seek declarations that they have no duty to defend or indemnify the distributor or any of its entities for the opioid lawsuits. Some insurers also seek declarations limiting the scope of their respective potential duties to defend or indemnify.

The distributor moved to dismiss or stay these five actions based on forum non conveniens. The distributor contends these cases should be dismissed or stayed because the Delaware actions are "later filed," and earlier actions remain pending in other jurisdictions. The insurers oppose these motions and urge the Court to allow the Delaware actions to proceed. At this point, there are no other "pending cases" involving these insurers, and an analysis of the forum non conveniens factors otherwise weighs in favor of proceeding in Delaware. For those reasons, as explained further below, the Court denies the distributor's motions to dismiss or stay these actions.

FACTUAL BACKGROUND

A. Defendant Entities and the Opioid Lawsuits

In 1977, Alco Standard Corporation acquired Drug House, a pharmaceutical wholesaler that operated in Pennsylvania and Delaware.^[1] In 1979, Alco Standard acquired Kauffman-Lattimer, an Ohio-based company, to expand Alco Standard's distribution market.^[2] In 1994, Alco Health Services, an Alco Standard subsidiary, changed its name to Amerisource Health.^[3] Around 2001, Amerisource Health merged with Bergen Brunswig, another pharmaceutical distributor, to form AmerisourceBergen.^[4]

Defendants AmerisourceBergen Corporation ("ABC") and AmerisourceBergen Drug Corporation ("ABDC") (collectively, "AmerisourceBergen" or "Defendants") are both Delaware corporations with their principal places of business in Pennsylvania.^[5] AmerisourceBergen has been named as a defendant in several thousand lawsuits across the country relating to Defendants' distribution of prescription opioids.^[6] These lawsuits were brought by state and local government entities, Native American tribes, and others seeking economic damages, injunctive relief, and other remedies against prescription opioid manufacturers, drug distributors, and retail pharmacies for alleged harm resulting from the opioid epidemic (the "Opioid Lawsuits").^[7] The majority of the Opioid Lawsuits are consolidated in the United States District Court for the Northern District of Ohio, Eastern Division, in the multi-district litigation captioned In re National Prescription Opiate Litigation, MDL No. 2804, Case No. 1:17-md-2804 (the "MDL Action").^[8] Under the procedural framework established by the MDL Action and other state courts, the Opioid Lawsuits are represented by "bellwether complaints" that "act as indicators of the content and allegations of the broader class of Opioid Lawsuits."^[9]

Some of the cases in the MDL Action are designated as "Track One" cases (the "Track One Cases").^[10] In the Track One Cases, the bellwether complaints allege AmerisourceBergen violated its statutory duties under federal and state laws to "monitor, detect, investigate, refuse to fill[,] and report suspicious orders of prescription opioids."^[11] These cases do not allege AmerisourceBergen is liable to the plaintiffs for damages caused by bodily injury. Instead, they seek recovery for economic damages the plaintiffs expended to combat the opioid epidemic.^[12]AmerisourceBergen has settled some of the Opioid Lawsuits and is litigating numerous others.^[13]

B. The Pending Actions in this Court

There are five separate actions consolidated for purposes of considering and resolving AmerisourceBergen's current Motions to Dismiss or Stay Duplicative Litigation Due to Improper Venue (collectively, the "Motions").^[14] First, Arrowood Indemnity Company ("Arrowood") originally filed an action against ABC and ABDC on January 26, 2022.^[15] On March 1, 2022, Arrowood filed its Amended Complaint to add St. Paul Fire and Marine Insurance Company, St. Paul Mercury Insurance Company, ACE American Insurance Company, and ACE Property and Casualty Insurance Company as co-defendants (the "Additional Defendants").^[16]Arrowood issued seven commercial general liability insurance policies to Amerisource Health (the "Arrowood Policies"), each of which provided coverage for one year from December 31, 1994, to December 31 2001.^[17] AmerisourceBergen has demanded coverage for the Opioid Lawsuits under the Arrowood Policies for 1996-2000.^[18] Arrowood seeks declarations from this Court that Arrowood has no duty to defend or indemnify AmerisourceBergen under those policies.^[19] In the event Arrowood is found to have a coverage obligation with respect to the Opioid Lawsuits, Arrowood alleges the Additional Defendants likewise have coverage obligations,^[20] and Arrowood...