(Article from Insurance Law Alert, March 2025)
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Holding
A Missouri trial court ruled that a “your products” exclusion in liability policies barred coverage for underlying opioid-related claims against a drug manufacturer. Opioid Master Disbursement Tr. II v. Ace Am. Ins. Co., 2025 Mo. Cir. LEXIS 4 (Mo. Cir. Ct. Mar. 10, 2025).
Background
Mallinckrodt, an opioid manufacturer, filed for Chapter 11 bankruptcy in 2020 and its Plan of Reorganization took effect in 2022. As part of the Plan, a Delaware court approved the creation of a trust for personal injury claims against the company.
Thereafter, a court approved of Mallinckrodt’s plan to exit the bankruptcy, but the company re-entered Chapter 11 proceedings in 2023 based on a potential default on hundreds of millions of dollars in debt. The court ultimately approved Mallinckrodt’s second Plan of Reorganization.
In the present coverage case, a trust created in 2022 (known as the “Opioid Master Disbursement Trust II”), filed suit seeking coverage under Mallinckrodt’s liability policies. The insurers argued that coverage was barred by a “your products” exclusion. The court agreed and granted the insurers’ motion for summary judgment.
Decision
The relevant “your products” exclusion barred coverage for claims “arising out of” Mallinckrodt’s products. In concluding that the provision precluded coverage for the underlying opioid-related claims against Mallinckrodt, the court explained that, under Missouri law, “arising out of” is interpreted broadly to mean “originating from,” “having its origins in,” “growing out of,” or “flowing from.” Additionally, the court noted that the definition of “your product” also encompassed representations made about those products.
The court rejected the trust’s assertion that the exclusion applied only to Mallinckrodt’s representations about its own products, and not to generic representations about the use of opioids generally. The court stated: “Any alleged injuries caused by Mallinckrodt’s ‘unbranded’ representations arose out of Mallinckrodt’s products, both because those unbranded representations were part of Mallinckrodt’s efforts to boast its own opioid product sales and because unbranded representations about the safety and efficacy of opioids in general encompass Mallinckrodt’s products.”
The court also held that coverage was not available under umbrella and excess policies because it was undisputed that the “claims-made-and-reported” requirements of those policies were not satisfied.
Comments
The decision expressly distinguished between the causation standard created by “arising out of” verbiage in an insurance policy and the standard for proximate causation under Missouri law, explaining that “arising out of” “includes a much broader spectrum” of conduct than that encompassed by proximate causation.