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Tuesday, June 05, 2007

Ind. Decisions - 7th Circuit decides two Indiana cases today

In Harzewski, Erisa v. Guidant Corp (SD Ind., Larry J. McKinney, Chief Judge), a 17-page opinion, Judge Posner writes:

October 2004 to November 2005 was a period, prior to Boston Scientific’s acquisition of Guidant (which took place in April 2006), when according to the complaint the price of Guidant stock was inflated by a fraud committed by the company’s management. The alleged fraud consisted of the concealment of information concerning defects in the company’s implantable defibrillators, which accounted for nearly half its revenues. Very shortly after Boston Scientific’s acquisition of Guidant, the full gravity of Guidant’s problems came to light and the revelation contributed to the drop in the price of Boston Scientific stock from $22.49 when Boston Scientific bought Guidant to $16.33 on May 3 of this year.

The district court dismissed the complaint on the ground that the named plaintiffs have no “standing” to bring this suit because they retired from Guidant and cashed out their pension benefits before the filing of the amended complaint, and so ceased to be participants in the pension plan. The lawyers for the class could, to keep the class action alive, have substituted as named plaintiffs members of the class who remained participants in the plan—current employees. But being unwilling to abandon the claims of class members in the situation of the named plaintiffs, they decided instead to appeal the district court’s ruling. * * *

So the case must go back to the district court. But as its first order of business, that court will have to take a very careful look at the plaintiffs’ theory of how they were injured. * * *


RIPPLE, Circuit Judge. I am pleased to join that part of the panel’s fine opinion that holds that the district court erred in dismissing this case for lack of standing. In my view, it would be far better, as a prudential matter, to refrain from commentary on the merits at this time. Therefore, I respectfully decline to join that part of the panel’s opinion that addresses the merits of the case.

In Abstract & Title Guaranty Co. v. Chicago Insurance (SD Ind., John Daniel Tinder, Judge), a 9-page opinion, Judge Kanne writes:
This diversity case comes to us after entry of summary judgment in favor of the defendant. The plaintiff appeals. For the reasons set forth below, we affirm. * * *

In summary, a jurisdiction might choose to have a law that prevents an insurer from interpleading the policy limit. Such a law might require that insurers pay claims one at a time in the order that they are filed, or perhaps find some other way to prioritize the claims. Some jurisdictions have chosen such a rule of law, but the Indiana Court of Appeals in Mahan indicates that Indiana is not one of them. Furthermore, a company might choose to buy an insurance policy that requires the insurer to defend even after the policy limits are met, or to prioritize legal fees so that they are paid before other claim expenses and damages. ATG did not choose to buy such a policy, but instead asks the courts to write that requirement into its contract after the fact. We decline to do so. In light of these facts, we agree that summary judgment in favor of CIC was proper on the question of breach of contract. * * *

ATG also argues that CIC has breached its duty of good faith throughout these proceedings. * * * We find ourselves, once again, instructed by the recent decision in Mahan. * * * There, like here, “after investigating the facts and circumstances surrounding the accident, [the insurer] determined that [the insured] was [liable], and . . . most likely would be subject to multiple claims, the total of which would meet, if not exceed, the limits of the policy . . . . [The insurer] did not breach its duty of good faith. ” Mahan, 862 N.E.2d at 677. We see no evidence that leads us to a contrary conclusion in this case.

Posted by Marcia Oddi on June 5, 2007 12:23 PM
Posted to Ind. (7th Cir.) Decisions