Chubb European Group SE [Formerly Ace European] v Perrigo Company Plc

• Jurisdiction: Ireland
• Judge: Mr Justice Holland
• Judgment Date: 19 July 2022
• Neutral Citation: [2022] IEHC 444
• Court: High Court
• Docket Number: Record No. 2021/3571P

Between:

Chubb European Group SE (Formerly Ace European Group Limited)

AIG Europe SA (Formerly AIG Europe Limited)

Axis Specialty Europe SE

Allianz Global Corporate & Speciality SE

Allied World Assurance Company (Europe) Designated Activity Company (Formerly Allied World Assurance Company (Europe) Limited)

Liberty Mutual Insurance Europe SE (Formerly Liberty Mutual Insurance Europe Limited)

XL Insurance Company SE

Zurich Insurance Plc

QBE Europe SA/NV (Formerly QBE Insurance (Europe) Limited)

and

Lloyd's Insurance Company SA

Plaintiffs

and

Perrigo Company Plc, Joseph Papa, Judy Brown, Marc Coucke, Laurie Brlas, Jacqualyn a Fouse, Ellen R Hoffing, Michael R Jandernoa, Donal O'Connor, Gary Cohen, Herman Morris Jr, Gerald K Kunkle Jr, John Hendrickson, Ronald Winowiecki, Douglas Boothe, David Gibbons

and

Ran Gottfried

Defendants

[2022] IEHC 444

Record No. 2021/3571P

THE HIGH COURT

COMMERCIAL

Discovery – Insurance policies – Indemnity – Defendant seeking discovery of documents – Whether the documents sought were relevant and necessary

Facts: The plaintiff insurers declined indemnity in respect of certain claims made by the defendants on certain Directors’ & Officers’ Liability and Company Reimbursement Insurance policies (the Policies) and on foot of claims made against the defendants by third parties. The plaintiffs sought declarations that the claims were not covered by the Policies or, if covered, were covered by the 2014 Policy only. The defendants counterclaimed that all the claims were covered by one or more of the 2014, 2015 and 2016 Policies. The first defendant, Perrigo Company Plc (Perrigo), applied to the High Court seeking discovery from all plaintiffs of all documents relating to the interpretation of the Policies, the declining of indemnity and the attribution of any rights of indemnity to the 2014 Policy only.

Held by Holland J that, regarding categories 1-3, he would grant discovery limited to documents which evidence or record the understanding of participants in the market in Directors’ & Officers’ Liability and Company Reimbursement Insurance policies and like policies at the time each Policy was written of the concept of Securities Law as used in such policies. Regarding categories 11-16, he held that he would grant discovery limited to documents which evidence or record facts relevant to coverage decisions in respect of the Perrigo Claims with reference to the 2014, 2015 and 2016 Policies, such facts to include: facts relevant to the interpretation of the Policies; and facts relevant to the categorisation of the claims made on the Policies and their relationships to the claims made in the Mylan Counterclaim and/or to the Specific Matters identified in the Specific Matters Exclusion endorsement to the 2016 Policy. Regarding categories 18 and 19, he held that he would grant discovery limited to documents relevant to: facts known or available to both the plaintiffs and the defendants when each policy was made; and the state of the market in Directors’ & Officers’ Liability and Company Reimbursement Insurance policies and like policies at the time each Policy was written and as the state of such market was generally known to participants in that market. Regarding category 21, he held that he would grant discovery limited to documents relevant to the state of the market in Directors’ & Officers’ Liability and Company Reimbursement Insurance policies and like policies at the time each Policy was written and as the state of such market was generally known to participants in that market.

Holland J invited the parties to liaise as to the drafting of the intended order as to discovery.

Discovery ordered.

JUDGMENT OF Mr Justice Holland DELIVERED THE 19 ^TH OF JULY 2022

Contents

Judgment of Mr Justice Holland delivered the 19 th of JULY 2022	2
Introduction and Background	4
Mylan Counterclaim	6
Omega Counterclaim	8
29 Securities Actions — including Roofers 1 & 2 and Carmignac	9
Claims Made Policies, Aggregation	10
Reed Smith letter & Kennedy's Reply to Reed Smith	11
Shareholder Demand Letter & Perrigo Derivative Complaint/Claim	13
“Perrigo Claims” & “Contested Claims”	14
2017 & 2018 Policies	14
Interpretation, Factual Matrix & Discovery — Initial Observation	14
The Pleadings & the Policies	15
Statement of Claim & Particulars	15
The Reliefs Claimed	15
Omega Counterclaim & Perrigo Derivative Complaint not Securities Claims	16
2014 Policy Condition 5.1(iii) — Limit of Liability	18
2015 to 2018 Policies §4.3 — Prior Notice Exclusion	18
2016 to 2018 Policies §5.2 — Single Claim Provision	18
2016 to 2018 Policies — Specific Matters Exclusion Endorsement	19
Coverage Position Correspondence	20
Particulars of Wrongful Acts/Misrepresentations & Relationships Between Them	20
Perrigo's Amended Defence & Counterclaim & Particulars thereof	22
Notice for Particulars of Perrigo's Defence & Counterclaim & Reply thereto	24
Other Pleadings	25
The Discovery Sought, Offered & ResIsted	25
Categories 1 – 5: The Omega Counterclaim	25
Categories 6 – 10: The Perrigo Derivative Complaint	25
Categories 1 – 10 — Reasons	26
Categories 11 – 16: The Perrigo Claims	26
Categories 11 – 16 — Reasons	27
Categories 17 – 21: The Policy Documents, Underwriting Files, and Guidelines Applicable to the Policies and Claims 28	Categories 17 – 21 — Reasons	29
Affidavit of Julie Murphy O'Connor	29
Affidavit of Andrew McGahey	32
Discovery by Perrigo to the Plaintiffs	35
Law on Discovery	37
The Purpose and Importance of Discovery	38
The Broad Principles	39
Relevance to the Issues Pleaded — Admissibility not the Criterion	43
Standard of Proof of Relevance	46
Necessity	48
Proportionality & Burden	48
Tensions between Principles and Imperfectly Informed Judgment	50
Documents “relating to” — Documents which “evidence or record”	51
Reformulation of Categories	52
Law on Discovery — Mythen	53
Principles of Interpretation of Insurance Policies	58
Submissions	63
Perrigo's Submissions	64
Plaintiffs' Submissions	65
Analysis	69
The 2017 & 2018 Policies	69
Proportionality & Burden	70
Discovery for purposes of Interpretation of Contracts	71
Hyper Trust Illustrative as to relevance of Documents & Law Society v MIBI	74
Marketing and Explanatory Materials	77
Discovery for purposes of Interpretation Contra-Proferentem	78
The Basis on which the Coverage Decisions May be Challenged at Trial.	79
Whether Claims are Securities Claims? — The Omega Counterclaim & the Perrigo Derivative Complaint	81
Omega Counterclaim — Securities Law	81
Perrigo Derivative Claim	82
Reserves & Claims Handing Guidelines	83
Hyper Trust Illustrative as to Admissibility of Expert Evidence	84
CONCLUSION	85

INTRODUCTION AND BACKGROUND

1 This judgment concerns a discovery application by the First Defendant, (“Perrigo”) against all Plaintiffs in a complex claim as to insurance coverage. Perrigo is a public limited company and, simplifying somewhat, a manufacturer of generic and over-the-counter drugs. It is the policyholder under a series of 5 Directors' & Officers' Liability and Company Reimbursement Insurance policies named, by reference to commencement date, for each of the years 2014 to 2018 inclusive 1 (“the Policies”). I will use the commencement dates to describe the policies accordingly but such description is a little misleading in that each policy started in mid-December and so, in much the greater part, covers the following year.

2 Under each Policy the Defendants other than Perrigo (“the other Defendants”) are insured persons 2. The other Defendants have been directors and officers of Perrigo. Again simplifying and as the title to the Policies intimates, their general purpose is to indemnify Perrigo and the other Defendants in respect of certain types of legal actions taken against them by third parties asserting wrongs in the management and governance of Perrigo. The other Defendants are separately represented and did not participate in the motion. Perrigo is also an insured person but only as to certain “Securities Claims” alleging “Wrongful Acts” against Perrigo 3.

3 The Plaintiffs are the insurers potentially liable on the Policies. Though nothing turns on it for present purposes, it bears noting that the First Plaintiff – Chubb — was the lead underwriter and subscribed to 100% of the primary layer of insurance under each policy, with the remaining Plaintiffs subscribing for various excess layers in varying percentages 4.

4 The Plaintiffs have declined indemnity in respect of certain claims made by the Defendants on certain of the Policies and on foot of about 30 claims (including a class action) made against the Defendants by third parties in 2015 and succeeding years. The Plaintiffs in these proceedings in essence seek declarations that the claims are not covered by the Policies or, if covered, are covered by the 2014 Policy only. They sent 31 “Declinature”/“Coverage Position” letters to the Defendants setting out their positions to that effect. The Defendants counterclaim to the contrary – that all the claims are covered by one or more of the 2014, 2015 and 2016 Policies. Depending on how the claims are distributed to the various Policies, it seems that about €125 million is at stake in the proceedings.

5 I will later list the categories of discovery sought but very broadly, Perrigo seeks, and the Plaintiffs resist, discovery from all Plaintiffs of all documents relating to the interpretation of the Policies, the declining of indemnity and the attribution of any rights of indemnity to the 2014 Policy only. The protagonists made written and...