Delaware Superior Court Judge Paul R. Wallace has granted a motion for partial summary judgment filed by a California-based biotech company. This decision is greatly relevant to both insurers and companies seeking indemnification from D&O (directors and officers) policies.
In the crux of the matter, Gilead Sciences subsidiary Immunomedics found itself in the centre of multiple lawsuits over the development of a single drug. However, the disparate nature of these lawsuits has been the deciding factor in the court’s latest judgment.
Judge Wallace ruled that the presence of a central drug’s attention in numerous suits doesn’t automatically enable a D&O insurance provider to deny coverage in each case. The determinative element, according to the judge, was the relatedness and overlap in case facts.
The decision was made following comparative examination of a breach of fiduciary duty suit and a subsequently filed securities class action. Judge Wallace found the two cases were distinct enough to be considered as unrelated claims. As a result, the cross-motion from Hudson Insurance Co., who sought to deny coverage on the basis of related claims, was rejected.
By establishing a precedence for the level of overlap in case facts necessary for insurance cover denial, this Superior Court ruling will provide a noteworthy blueprint for future D&O insurance disputes.
More details on this landmark judgement can be found on the Delaware Business Court Insider.