# Opposition Brief — Falcon Insurance Co. v. Eli Lilly & Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_2373%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1987 - **Citation:** 479 U.S. 1060 ## Text IN THE Supreme Court of the United States OcToBER TERM, 1986 FALCON INSURANCE COMPANY and MUTUAL FIRE, MARINE AND INLAND INSURANCE COMPANY, Petitioners, Vv. Ev! LILLY AND COMPANY, Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit RESPONDENT'S BRIEF IN OPPOSITION THEODORE R. BOEHM * CHRISTOPHER G. SCANLON JOHN R. SCHAIBLEY, III BAKER & DANIELS 810 Fletcher Trust Building Indianapolis, IN 46204 (317) 636-4535 Counsel for Respondent * Counsel of Record Wreow . Bree Peerriwe Co.. Inc. - 789-0096 - WasHINGTON, D.C. 20001 “#3 ’ — Fi QUESTIONS PRESENTED 1. Did petitioners consent to suit in the forum of re spondent’s choice? 2. Is the fact bound issue whether petitioners’ contacts with the forum are such that they should have reasonably anticipated being haled into court there worthy of this Court’s review? (i) ii LIST OF PARTIES Respondent Eli Lilly and Company was plaintiff-appellee below, urging affirmance of the district court’s judgment. Pursuant to Rule 28.1, respondent states that it has no parent company, non-wholly owned subsidiary, or affili- ate corporation. The petitioners, defendants-appellants below, are listed in the Petition for a Writ of Certiorari at ii, along with information regarding petitioners’ par- ents, affiliates and subsidiaries. TABLE OF CONTENTS bp py el RB y 2, yy |) | cares EE I RD nin cncccs ccntetcecsnncasenseserasencevasesennes II III ccaitetnciinsnchascanncnscnecesensescmnsisenscecs pei Ge ae Nip y ot Jy | -. Sonn nneennne OPINIONS BELOW, JURISDICTION AND CONSTI- TUTIONAL AND STATUTORY PROVISIONS RENEE OS RUE UA Oe oe STATEMENT OF THE CASE ....W20......2...eeeeeceseeeeeees SUMMARY OF ARGUMENT QW... eee eeeeeeeee REASONS FOR DENYING THE WRIT ...................... I. THESE INSURERS HAVE CONSENTED TO SUIT IN THE DISTRICT OF COLUMBIA.... A. The Consent To Suit Constitutes A Waiver Of Any Objection To Personal Jurisdiction... B. Mutual Fire’s Stipulation Has Waived Its Personal Jurisdiction Defense ......................... II. ASSERTION OF PERSONAL JURISDIC- TION WOULD NOT OFFEND DUE PROC- ESS EVEN IF PETITIONERS HAD NOT EXPLICITLY CONSENTED ............ Jeinibenians I ald aaah eatin sldierrinnnaiscviniacxieasnems APPENDIX ES Ee (iii) iv TABLE OF AUTHORITIES CASES Page American and Foreign Insurance Association v. Commercial Insurance Co., 575 F.2d 980 (1st AN RARE eet ASME RIE rn Sie ak a CR 15 n.12 Ashwander v. Tennessee Valley Authority, 297 ok S|. RIES AE oe Ce aire eee 9 Black v. Cutter Laboratories, 351 U.S. 29 UII secnics és. capsc bases keeethise sda emecedaibaascattaiatsadescolin 8 Burger King Corp. v. Rudzewicz, 471 U.S. 462 SIRO SIT PS Al 9 IE eo RAIS AES ROR 5, 12,14 Calder v. Jones, 465 U.S. 783 (1984) ...0000000 11 Commonwealth of Puerto Rico v. S.S. Zoe Colo- cotront, 628 F.2d 652 (1st Cir. 1980), cert. de- SUN, A Wai Re CD ecetvcctcbccceeciesernesaensrcoseances 15 n.12 Hanson v. Denckla, 357 U.S. 235 (1958) ............... 14 International Shoe Co. v. Washington, 326 U.S. SE EE | sai bc etkcnchatatondkdceniotdnedtdbanbaibdinine 9,11 Keaton v. Hustler Magazine, Inc., 465 U.S 1770 Bo RONAN aD; gullies ner AMARC ase) Roe do 13 © Kulko v. Superior Court of California, 436 U.S. Re SIE entesctlariines Li Acre A a 10,11 &n.9 McGee v. International Life Insurance Co., 355 oS Ee Lt 5 RON hee toes See ae ee 10, 11, 14 National Equipment Rental, Ltd. v. Szukhent, Oe I EE nc 5 Petrowski v. Hawkeye-Security Insurance Co., 350 U.S. 495 (1956) (per curiam) ........................ 8 Rush v. Savchuk, 444 U.S. 320 (1980) .......00...00.... 13 Shaffer v. Heitner, 433 U.S. 186 (1977) ................. 10 United Farm Bureau Mutual Insurance Co. v. United States Fidelity & Guarantee Co., 501 Pa. 646, 462 A.2d 1800 (Pa. 19838) .............000000000000..... 15 World-Wide Volkswagen Corp. v. Woodson, 444 SIR ND ee ee 10, 11, 12 STATUTES — ee | iby nection eet eke ae 3 D.C. Code § 13-423 (1981 & Supp. IV 1986)........ 9 IN THE Supreme Court of the United States OCTOBER TERM, 1986 No. 86-818 FALCON INSURANCE COMPANY and MUTUAL FIRE, MARINE AND INLAND INSURANCE COMPANY, Petitioners, , - ELI LILLY AND COMPANY, Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit RESPONDENT’S BRIEF IN OPPOSITION Respondent respectfully urges the Court to deny the Petition for a Writ of Certiorari to review the judgment of the United States Court of Appeals for the District of Columbia Circuit entered on June 24, 1986. OPINIONS BELOW, JURISDICTION AND CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED Respondent accepts petitioners’ statement as to opin- ions below, jurisdiction, and constitutional and statutory provisions involved. 2 STATEMENT OF THE CASE This is a declaratory judgment action filed by Respond- ent Eli Lilly and Company (“Lilly”) against over one hundred insurers seeking a single uniform judicial res- olution of a dispute between, and among, those carriers and Lilly as to how Lilly’s standard product liability in- surance applies to claims arising from the sale of one of its nationally distributed pharmaceutical products. Petitioners are two among many insurers who issued excess liability policies to Lilly. As is common in the ex- cess lines insurance business, the policies issued by the two petitioners are “following form” policies. Rather than setting forth detailed provisions regarding the terms and conditions governing the insurance agreement, these policies adopt the terms and conditions of the policies of the underlying carriers. Faleon Insurance Company (“Falcon”) issued three policies to Lilly during the years 1960-68. Each of the - policies was issued on the same form and each incorpo- rated by reference the terms and conditions of an under- lying initial layer policy issued by Lloyd’s Underwriters. Both the terms and conditions of each of Falcon policies and the underlying Lloyd’s policies contain agreements by the insurer to submit to the jurisdiction of any court of competent jurisdiction in the United States. Mutual Fire, Marine and Inland Insurance Company (“Mutual Fire”) issued Lilly one policy containing its own consent-to-suit clause which is the same as the Falcon clauses for these purposes. Both etitioners insured Lilly against liability arising from the manufacture, sale or use of Lilly’s products. At the time of issue of each policy, Lilly’s products were distributed, sold and used all over the United States, in- cluding the District of Columbia. Moreover, three prod- uct liability cases (including one involving 12 plaintiffs) - were pending against Lilly in the District of Columbia 3 at the time these insurers filed their motion to dismiss and one other was pending at the time this lawsuit was filed. Companies that write excess coverage are generally not required to be licensed (but could constitutionally be required to be licensed) in the jurisdiction. Neither Fal- econ nor Mutual Fire is licensed in the District of Colum- bia. Both Falcon and Mutual Fire report premiums at- tributable to the District. Petitioners moved to dismiss on grounds of lack of jurisdiction over their persons. The district court was persuaded that petitioners had contractually consented to suit and denied petitioners’ motion without written opin- ion. On appeal, petitioners challenged the district court’s holding on the consent-to-suit provisions in their policies and further argued that assertion of personal jurisdiction violated the Due Process Clause. With respect to Mutual Fire, the Court of Appeals concluded that a perceived condition precedent to the consent-to-suit clause had not occurred. With respect to Falcon, the Court of Appeals determined that resolution of the consent to suit issue would require further determinations by the district court. As to both, however, the Court of Appeals held that a remand was unnecessary because personal juris- diction was properly and constitutionally exercised under the District of Columbia Long Arm Statute. Applying the test for determining the due process limits of the exercise of personal jurisdiction enunciated in World- Wide Volkswagen Corp. v. Woodson to the facts of this case, the court held that the assertion of personal juris- diction over the defendants comported with the require- ments of due process. On the record before it, the court also held that both petitioners engaged in transactions in the District to such an extent that the District could constitutionally require them to be licensed in the District, and hence were “doing business” in the District under 28 U.S.C. §1391(c). Pet. App. at 22a-28a. Petitioners do not challenge the venue holding in this Court. 4 SUMMARY OF ARGUMENT No constitutional issue is presented by this case. Peti- tioners contractually consented to suit in the forum of Lilly’s choice. Application of the minimum contacts test was therefore not even required in the case. In any event, this case presents merely the application of well-settled principles of law to the facts of this par- ticular case. The issue is whether the relationship among the insurers, the forum, and the litigation was such that under traditional notions of fair play and substantial justice, the insurers should have reasonably anticipated being haled into the District of Columbia courts. This is an intensely fact bound inquiry and does not warrant this Court’s review. Petitioners present no special or important reasons for this Court to exercise its discre- tionary certiorari jurisdiction in this case. The Court of Appeals’ judgment correctly concludes that these excess insurers, by contracting to insure risks within the Dis- trict of Columbia, are subject to that forum’s exercise of personal jurisdiction to adjudicate the scope of coverage that their policies provide. That conclusion is correct and not at all novel. Finally, no live controversy affecting the substantive rights of the parties remains; only further delay is at stake. REASONS FOR DENYING THE WRIT I. THESE INSURERS HAVE CONSENTED TO SUIT IN THE DISTRICT OF COLUMBIA A. The Consent To Suit Constitutes A Waiver Of Any Objection To Personal Jurisdiction Both Mutual Fire and Faleom issued policies to Lilly that contain, or expressly incorporate by reference, stand- ard “consent-to-suit” clauses.’ It is well settled that per- ‘1 Petitioners’ assertion that the Court of Appeals concluded that the consent-to-suit clauses “provided no basis for personal jurisdic- tion over petitioners,” Pet. at 5 n.2 is misleading. The Court of 5 sonal jurisdiction is a personal right that may be waived. Such a waiver is effective if accomplished by contract before any suit is filed. Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (slip op. at 9-10 n.14); National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311 (1964). Under the terms of the insurers’ policies, the carriers have consented to jurisdiction in any court chosen by the insured. The consent-to-suit clauses are dispositive of the in- surers’ objections to personal jurisdiction here. Pursuant to those clauses, the insurers submit themselves to the jurisdiction of any “court of competent jurisdiction” in the United States selected by the insured.? They contrac- tually obligated themselves to take whatever steps are necessary to comply with any of the requirements neces- sary to give the court jurisdiction.* Appeals rejected petitioners’ arguments that the clauses did not cover in personam jurisdiction. Pet. App. at 18a. Moreover, with respect to Falcon, the Court believed that it was simply not possible to determine on the basis of the record before it whether the clause was applicable, indicating that it would remand the issue if it were not affirming on another ground. As to Mutual Fire, the Court held that Mutual Fire’s refusal to take a specific position on the coverage provisions of its policies did not constitute a repudiation of its liability. The Court viewed such a repudiation as a condition prece- dent of the consent-to-suit clause. Mutual Fire has since been presented with a dollar claim and has not paid, thereby “repudiat- ing,”’ in Lilly’s view more than is necessary. * Both carriers are bound by the following contractual provision: It is agreed that in the event of the failure of the Insurer (s) hereon to pay any amount claimed to be due hereunder, In- surer(s) hereon, at the request of the Insured, wil) submit to the jurisdiction of any Court of competent jurisdiction within the United States and will comply with all requirements neces- sary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court. % Below, Mutual Fire and Falcon argued that the term “compe- tent jurisdiction” required in personam jurisdiction without refer- 6 Faleon and Mutual Fire raised the issue of a “condi- tion precedent,” arguing that until they fail to honor a dollar-claim from Lilly, Lilly could not invoke the clause. Both carriers anticipatorily repudiated their obligations to Lilly—indeed, if there had not been such an anticipa- tory repudiation, there would be no issue of coverage to litigate on the merits. There clearly was such an issue.‘ Lilly and Mutua! Fire and Falcon, together with the other insurers, litigated the issue of coverage. Mutual Fire and Falcon should not be heard to say that they have not re- pudiated their liability to Lilly, while at the same time litigating the issue of their liability to Lilly for the past five years. The alleged “condition precedent” of the insurers’ con- sent to suit is “the failure of the insurer(s) hereon to pay any amount claimed to be due hereinunder... .” What Lilly claims to be due under the policy is any amount of Lilly’s damages for products liability claims (up to the policy limits) which are covered by these insurers under Lilly’s interpretation of the policies. The insurers have expressly repudiated their obligation to pay such claimed amount, and hence the “condition prec- edent” has occurred. The issue of what amounts are due under these particular policies is simply a question on the merits, and has nothing to do with personal jurisdic- tion. Lilly paid premium dollars for the right to choose the forum in which to litigate those questions on the ence to the consent to suit clause. The Court of Appeals properly rejected the argument. * Petitioners herein and others have petitioned for certiorari on the merits of the coverage issue in The Home Insurance Company, et al. v. Eli Lilly and Company, No. 86-822 (Pet. for Cert. filed Nov. 20, 1986). 7 merits, and that should be the end of the personal juris- diction issue in this case.* Mutual Fire’s refusal to take an affirmative position on the meaning of the coverage provision at issue in this litigation should not be equated with a non-repudiation of liability. The Court of Appeals noted that in answers to interrogatories, Mutual Fire asserted that its inter- pretation of the policies differed from that advanced by Lilly without revealing Mutual Fire’s view of the mean- ing of the policy. But whatever interpretation is secretly embraced by Mutual Fire, it must be materially different than that advanced by Lilly. If it is not, then Mutual Fire is simply engaged in bad faith litigation. Moreover, a party should not be permitted to assert the failure of a condition precedent by simply taking a litigation position which raises the mere possibility that the condition has not occurred. At bottom, Mutual Fire’s position is that when an insured notifies it of claims and the insured’s position on how such claims are to be han- dled, when the insurer disputes the insured’s position, it has not repudiated its obligation. The insurer cannot as- sert his own failure to take a substantive position on the grounds for its repudiation as a failure of a repudiation condition precedent.* ® Indeed, in supplemental proceedings now ongoing in the district court, Mutual Fire, along with other insurers as to whom Lilly has made a dollar-demand for payment, are litigating questions concern- ing the payment of the amounts due Lilly under the policies and other claim specific matters. *In addition to the consent-to-suit clause discussed above, Mutual Fire's policy also provided: “Further, pursuant to any statute of any state, territory or district of the United States which make provision therefor, the Insurer(s) hereon hereby designate the superintendent, com- missioner or director of insurance or other officers specified for that purpose in the statute, or his successor or successors in office, as their true and lawful attorney upon whom may be B. Mutual Fire’s Stipulation Has Waived Its Personal Jurisdiction Defense Mutual Fire has stipulated that it “agrees to be bound . . . by whatever final order is entered” in this action as to The Home Insurance Company, the issuer of the first tier policy underlying its excess policy. Stipulation dated July 5, 1983. Appendix. That stipulation con- stitutes a waiver of its personal jurisdiction argument." A personal jurisdiction objection can be waived at any point in the proceedings below, and a stipulation by a party previously asserting personal jurisdiction as a de- fense providing that the party will be bound by the Court’s judgment, waives the personal jurisdiction issue. See Petrowski v. Hawkeye-Security Ineurance Co., 350 U.S. 495 (1956) (per curiam) (reversing 226 F.2d 126 (7th Cir. 1955) )." This Court reviews judgments, not statements in opin- ions. E.g., Black v. Cutter Laboratories, 351 U.S. 292, served any lawful process in any action, suit or proceeding instituted by or on behalf of the insured or any beneficiary hereunder arising out of this contract of insurance... .” Falcon's policies contain a similar provision. * The agreement to be bound by the judgment in this case also renders the personal jurisdiction issue essentially moot as to Mutual Fire. of men- tion personal jurisdiction, this Court observed that the other stipu- lations as well supported its conclusion that the insurer had waived the personal jurisdiction issue. 9 297 (1956). The judgment of the Court of Appeals that there was personal jurisdiction over these insurers was correct. Indeed, no constitutional issue is presented by this case because the insurers consented to suit in the forum of Lilly’s choice. Under fundamental principles of constitutional adjudication, this Court “will not pass upon a constitutional question .. . if there is also present some other ground upon which the case may be disposed of.” Ashwander v. Tennessee Valley Authority, 297 US. 288, 347 (1936) (Brandeis, J., concurring). In this case, the constitutional issue should not even be reached be- cause the insurers contractually consented to jurisdiction. Il. ASSERTION OF PERSONAL JURISDICTION WOULD NOT OFFEND DUE PROCESS EVEN IF PETITIONERS HAD NOT EXPLICITLY CONSENTED Petitioners do not challenge the Court of Appeal’s hold- ing that the District of Columbia Long Arm Statute, D.C. Code § 13-423/a) (1981 & Supp. IV 1986) provides for personal jurisdiction over petitioners in this case because they contracted to insure risks within the District of Columbia. Rather, petitioners argue that the Due Proc- ess Clause renders application of that statute void in this case. This issue turns on well known doctrine. It has long been settled that where, as here, the adequacy of notice is not at issue, “due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Jnter- national Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted). Whether maintenance of this suit against the petition- ers in the courts of the District of Columbia offends tra- 10 ditional notions of fair play and substantial justice ulti- mately requires determining the “reasonableness” or “fair- ness” of requiring a corporation to defend a particular suit in a particular forum. Under well-settled doctrine, the following factors are to be considered: “!T]he burden on the defendant . .. will in an appropriate case be considered in light of other rele- vant factors, including the forum State’s interest in adjudicating the dispute, see McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957); the plain- tiff’s interest in obtaining convenient and effective relief, see Kulko v. California Superior Court, supra, 436 U.S., at 92, at least when that interest is not adequately protected by the plaintiff’s power to choose the forum, cf. Shaffer v. Heitner, 433 U.S. 186, 211, n. 37 (1977); the interstate judicial sys- tem’s interest in obtaining the most efficient resolu- tion of controversies; and the shared interest of the several States in furthering fundamental substantive social policies... .”” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980). Each of these factors demonstrates the reasonableness of the assertion of personal jurisdiction in this case. The forum, through its long arm statute, has specifically ex- pressed an interest in adjudicating contracts to insure any risk within the District of Columbia at the time of contracting. Moreover, Lilly’s interest (and indeed the interest of the petitioners themselves) in obtaining con- venient and effective resolution of a controversy and the interstate judicial system’s interest in obtaining the most efficient resolution of controversies are manifest. Peti- tioners seek multiple and duplicative litigation in several forums; indeed, petitioners’ pursuit of this issue is eco- nomically irrational unless inefficiency and its attendant delays are their only goals. The doctrine to be applied has been often revisited. A central question is whether “the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” 11 World-Wide Volkswagen, 444 U.S. at 297. “Whether due process is satisfied must depend .. . upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.” International Shoe, 326 U.S. at 319. Moreover, when a corporation purposely avails itself of the privilege of conducting activities with- in the forum state, it should reasonably anticipate being haled into court there. World-Wide Volkswagen, 444 U.S. at 297. And as this Court has squarely held in Calder v. Jones, 465 U.S. 788, 788 (1984), a plaintiff’s contacts with the jurisdiction “may be so manifold as to permit jurisdiction when it would not exist in their absence.” The Court of Appeals correctly applied these well estab- lished principles to the facts of this particular case.® In this case, “the plaintiff is the focus of the activities of the defendant out of which the suit arises. See McGee v. International Life Insurance Co., 355 U.S. 220 (1957).” Calder v. Jones, 465 U.S. at 788. Lilly’s cause of action arises from the insurers’ “commercial transactions in in- terstate commerce” with Lilly. See Kulko v. Superior Court of California, 436 U.S. at 97. These insurers “pur- posefully derive[d] benefit from activities relating to” the District of Columbia, id. at 96, and clearly derived “commercial benefit” from insuring risks within the Dis- trict of Columbia. 7d. at 100. The District of Columbia long arm statute rests on the entirely reasonable premise that insuring risks in the District affects conduct in the *“Like any standard that requires a determination of ‘reason- ableness,’ the ‘minimum contacts’ test of Jnternational Shoe is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite ‘affiliating cir- cumstances’ are present... . [T]his determination is one in which few answers will be written ‘in black and white. The grays are dominant and even among them the shades are enumerable.’” Kulko v. Superior Court of California, 486 U.S. 84, 93 (1978) (citations omitted). 12 District. To put it another way, Lilly’s tort liability in the District is the defendants’ liability in the District. These insurers do not and cannot dispute the fact that they were aware of Lilly’s nationwide business. And they intentionally and purposefully insured the risks posed by Lilly’s products distributed in all of those jurisdictions. In the context of this case these factors are particularly forceful. The underlying carriers and most excess car- riers are all indisputably subject to jurisdiction and _ venue in the District of Columbia. These two excess car- riers agreed to insure the same risks as primary insurers. That in itself avails petitioners of benefits and protection of the law wherever the first tier policy is in litigation. Moreover, a contrary rule simply encourages multiple suits to resolve the same controversy. Petitioners’ analogy to the facts of World-Wide Volks- wagen simply does not wash. Unlike the automobile in World-Wide Volkswagen, the presence of Lilly’s products in the District of Columbia was in no sense “fortutious” and petitioners’ assumption of the risk posed by those products in the District of Columbia or elsewhere is in no sense involuntary. The petitioners’ business is the assumption of just such risk. Petitioners entered into a “carefully structured” relationship with Lilly that en- visioned “wide reaching contacts” with Lilly on a nation- wide basis. See Burger King Corp, v. Rudzewicz, 471 U.S. 462 (1985) (slip op. at 17). Petitioners are per- fectly free to “structure their primary conduct” with assurances as to where that conduct will render them lia- ble to suit. See World-Wide Volkswagen, 444 U.S. at 297. Petitioners have consciously decided to issue excess product liability insurance for products marketed nation- wide." Petitioners are free to issue different kinds of %© Moreover, their form policies contain consent-to-suit clauses in the forum of the insureds’ choice, providing jurisdiction even in those forums that do not assert long-arm jurisdiction to the limits of due process, and in other forums preventing needless litigation of meritless challenges to jurisdiction on due process grounds. : 13 insurance policies, or issue policies to local enterprises. In view of their primary conduct as professional risk takers, to accept petitioners’ position that they cannot reasonably anticipate suit where their customers whom they have indemnified are subject to suit is to blink at reality. Petitioners’ reliance on Rush v. Savehuk, 444 U.S. 320 (1980), is equally misplaced. In Rush, a state attempted to exercise quasi in rem jurisdiction over an individual who had no forum contacts by attaching the contractual obligation of an insurer to defend and indemnify him in connection with the suit. The Court held that the rela- tionship of the insurer to the state did not provide a basis for asserting personal jurisdiction over the individ- ual policyholder. The purpose of the insurance policy, of course, was to reduce the risk of the insured, not to in- crease it by subjecting him to suit in additional jurisdic- tions. Moreover, the insurance policy was “not the sub- ject matter of the case... .” Jd, at 329. In short, it was unfair to attribute the insurer’s contacts with the forum to the hapless policyholder. The insured had bar- gained under his automobile insurance policy to shift his risks to the insurer, not to have the insurer’s risks shifted to him. In the instant ease, of course, the situa- tion is just the reverse. The subject matter of the case is the insurance policy, and the risk taker is merely being asked to assume the risk it consciously and voluntarily assumed. Moreover, petitioners surely reasonably had to expect that if Lilly was sued in the District it was likely to at- tempt to implead petitioners if a dispute arose over their duty to indemnify or pay defense costs. Such a dispute has arisen, and while the full scope of the dispute tran- scends the particular lawsuits which have thus far been filed against Lilly in the District of Columbia, the “issue is personal jurisdiction, not choice of law.” Keaton v. 14 Hustler Magazine, Inc., 465 U.S. 770, 778 (1984) (quot- ing Hanson v. Denckla, 357 U.S. 235, 254 (1958) .™ Petitioners, in the form of premiums, purposefully ob- tained benefits from Lilly as a result of its national ac- tivities. They now seek to avoid the risks they knowingly assumed. The consequences of their repudiation of their agreement to indemnify Lilly affect Lilly in the District of Columbia and on a nationwide basis. “(Where individuals ‘purposeful derive benefit’ from their interstate activities, it may well be unfair to allow them to escape having to account in other States for consequences that arise proximately from such activities; the Due Process Clause may not read- ily be weilded as a territorial shield to avoid inter- state obligations that have been voluntarily assumed. And because ‘modern transportation and communica- tions have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity,’ it usually will not be unfair to subject him to the burdens of litigating in another forum for disputes related to such activity. McGee v. International Life Insurance Co.,... .” Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (slip op. at 11). The insurers should not be permitted to cast aside their obligations voluntarily assumed.” 11 Petitioners’ only answer on this point is the assertion that impleader of these petitioners by Lilly was impossible because there has been no refusal by petitioners to indemnify Lilly. Pet. at 11, n.5. The question, however, is personal jurisdiction, not the merits of the parties’ various contractual arguments. Petitioners certainly had to reasonably foresee the possibility that they would be haled into court in the District of Columbia in one of the foresee- ably many products liability actions which might be filed against Lilly in the District. Once impieaded, they could of course argue that under the policies they were not substantively liable, but that would have nothing whatever to do with the court’s jurisdiction over their person to determine such substantive legal questions. 12 Given that standard form business liability insurance contains consent-to-suit clauses, and that liability issuers do reasonably 15 Finally the insurers’ contention that the decision below conflicts with the holding of the Supreme Court of Penn- sylvania in United Farm Bureau Mutual Insurance Co. v. United States Fidelity & Guarantee Co., 501 Pa. 646, 462 A.2d 1300 (Pa. 1983) rests on a misreading of the Pennsylvania decision. The court struck down the asser- tion of personal jurisdiction in that case because of its conclusion that the “policies inherent in federalism would not permit [its] legislature to require a totally foreign insurance company, such as United Farm, to provide no fault insurance to its policyholders.” Jd. at 1307. The issue, thus, was the extraterritorial assertion of the sub- stantive law of the State of Pennsylvania, and the court simply reasoned that because the substantive basis of the lawsuit against the defendant was invalid, the courts of the commonwealth could not reqiure the defendant to de- fend such an unconstitutional action. Jd. Indeed, the court expressly stated, albeit in dictwm, that “traditional no- tions of fair play and due process would not be offended by requiring United Farm [the insurer] to defend [its insured] in our courts,” because United Farm should have foreseen the possibility of a suit against the insured in its courts. Jd. at 1307 (emphasis added). Hence, the Pennsylvania case does not deal with the issue presented here. In closing, Lilly submits that the outcome on the per- sonal jurisdiction. issue will not affect the substantive rights of the parties and hence is of limited interest to them. Because a grant of this petition for certiorari would cause additional, needless delay, Lilly has filed this anticipate and engage in national litigation, the constitutional issue seldom arises regarding such insurance. The decision below is con- sistent with the only other decisions dealing with this issue. Com- monwealth of Puerto Rico v. S.S. Zoe Colocotroni, 628 F.2d 652 (ist Cir. 1980), cert. denied, 450 U.S. 912 (1981); American and For- eign Insurance Association v. Commercial Insurance Co., 575 F.2d 980 (1st Cir. 1978). No question of general importance is pre- sented by this case. 16 brief. However, even if the Court of Appeals had ruled against Lilly on the personal jurisdiction issue, the issue on the merits between Lilly and these parties was never- theless resolved in the case below. If the petitioners fail to recognize that, Lilly can bring suit where petitioners have conceded jurisdiction is proper and move for sum- mary judgment. That, of course, would spin wheels for no useful purpose. At bottom, that is precisely what pe- titioners seek. CONCLUSION For the foregoing reasons, the petition should be denied. Respectfully submitted, THEODORE R. BOEHM * CHRISTOPHER G. SCANLON JOHN R. SCHAIBLEY, III BAKER & DANIELS 810 Fletcher Trust Building Indianapolis, IN 46204 (317) 636-4535 Counsel for Respondent * Counsel of Record December 20, 1986 ie se Tey “he. Bet rn ine la APPENDIX UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Civil Action No. 82-0669 Judge Norma Holloway Johnson ELI LILLY AND COMPANY, Plaintiff We THE HOME INSURANCE COMPANY, et al., Defendants STIPULATION It is hereby stipulated and agreed between counsel for plaintiff and counsel for defendant Mutual Fire, Marine and Inland Insurance Company that a) such defendant agrees to be bound as to each of its own policies of insurance issued to plaintiff by whatever final order is entered in this declaratory judgment action as to the triggering language of those policies of insur- ance of other carrier defendants (see Schedule B to Plain- tiff’s Motion for Summary Judgment, filed March 31, 1983) that underlie and govern each policy of the defend- ant as shown on Attachment A to this Stipulation; b) such defendant will not be obligated to respond to any discovery requests or other pretrial filings or mo- tions made by plaintiff; ce) such defendant shall not seek discovery from plain- tiff or make any request requiring decision or approval by the Court on any matter that could affect plaintiff's interests after the effective date hereof. 2a d) notwithstanding Paragraphs “b” and “c” above, defendant shall remain a party herein and be served with all filings and other communications required to be served on parties by the Federal Rules of Civil Proce- dure. /s/ Richard H. Gimer Richard H. Gimer M. Stuart Madden Waltraut S. Addy SANTARELLI & GIMER 2033 M Street, N.W. Suite 700 Washington, D.C. 20036 Attorneys for Defendant Mutual Fire, Marine & Inland Insurance Company SO ORDERED: /s/ Norma Holloway Johnson Norma Holloway Johnson United States District Judge /s/ Peter C. Ward Peter C. Ward Michael A. Nardolilli BAKER & DANIELS Suite 600 1920 N Street, N.W. Washington, D.C. 20036 Theodore R. Boehm Christopher G. Scanlon BAKER & DANIELS 810 Fletcher Trust Building Indianapolis, Indiana 46204 Attorneys for Plaintiff Eli Lilly and Company DATE: July 5, 1983 3a ATTACHMENT A Policy Number (Lilly No.) Insurer Mutual Fire, Marine and Inland Insurance (75-5) Company CN 500528 Governed By Company/ Policy No. (Lilly No.) Home HEC-44-29-972 (78-1) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_2373%3A2. Public record. Not legal advice.