United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ELAINE E. BUCKLO, District Judge.
Baxter International, Inc. ("Baxter") has filed three related motions that are now fully briefed: (1) a motion for summary judgment arguing that AXA Versicherung ("AXA"), a German insurance company, indisputably breached its duty to defend Baxter in a series of lawsuits concerning contaminated blood products; (2) a motion to compel the production of forty-three documents that AXA has withheld on grounds of privilege; and (3) a motion for entry of a protective order against AXA's pending discovery requests. See Dkt. Nos. 151, 164, and 179, respectively. I deny all three of Baxter's motions for the reasons stated below.
This coverage dispute stems from the second wave of lawsuits filed against Baxter and other drug companies by hemophiliacs who contracted the human immunodeficiency virus ("HIV") or Hepatitis C virus ("HCV") from using contaminated blood products. "[These] second generation' claims arose from allegations of knowing misconduct [by drug companies] directed specifically toward victims outside the United States." In re Factor VIII or IX Concentrate Blood Products Litig., 484 F.3d 951, 954 (7th Cir. 2007). In total, the second generation litigation included more than two thousand claimants who contracted HIV or HCV from using contaminated blood products between 1970 and 1990. See id. (explaining that preferred treatment for hemophilia is injection of clotting proteins known as "factor concentrates" derived from plasma of donated blood).
Baxter faced potential liability in the second generation litigation from two types of blood products that were on the market before 1990: (1) factor concentrates distributed by Baxter's Hyland division and (2) factor concentrates distributed by the Immuno Group ("Immuno"), a group of European-based drug companies that Baxter acquired in 1996.
Under a global settlement agreement signed in May 2009, Baxter paid more than $15.2 million to settle nearly 97 percent of the second generation claims. AXA did not contribute to Baxter's defense or settlement of these claims.
In this lawsuit, Baxter seeks indemnification from AXA for all costs reasonably incurred in defending and settling second generation claims by hemophiliacs who allegedly contracted HCV from using an Immuno blood product. AXA's predecessor, Colonia Versicherung AG ("Colonia"), issued the underlying insurance policy to Immuno in 1990 (henceforth referred to as the "Immuno policy"). After Baxter acquired Immuno in 1996, the parties amended the policy in two important respects: (1) Baxter and its related entities were added to the policy as "co-insureds" and (2) coverage for product liability risks was limited to "products originating and quality control released by Immuno before December 19, 1996." R. at 212.
The Immuno policy provides coverage for damage or loss events that occurred between March 1, 1990 and December 19, 2011. The parties agreed on the following rule for determining when a health injury caused by an Immuno product (such as an HCV infection) "occurs" for purposes of obtaining coverage under the policy:
The injury to health shall be deemed to have occurred at the point in time at which the injured person first consults a physician concerning symptoms that are revealed, on that occasion or later, to be a symptom of the relevant health injury.
R. at 192 ("Doctor Clause").
The parties disagree over how this Doctor Clause applies to second generation claimants who contracted HCV from using an Immuno product between 1970 and 1990. Baxter contends that AXA had a duty to defend Baxter from the outset of the second generation litigation based on the potential that many claimants first consulted a physician regarding symptoms of their HCV infections during the Immuno policy's term (i.e., March 1, 1990 until December 19, 2011). Among other arguments, AXA counters that a mere potential for coverage did not trigger its duty to defend Baxter during the second generation litigation.
At this stage, I must view the facts in the light most favorable to AXA and draw all reasonable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). "[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record]... which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "Only after the movant has articulated with references to the record and to the law specific reasons why it believes there is no genuine issue of ...