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Stryker Corp. v. National Union Fire Insurance Co. of Pittsburgh, PA

United States Court of Appeals, Sixth Circuit

November 18, 2016

Stryker Corporation; Howmedica Osteonics Corp., Plaintiffs-Appellees/Cross-Appellants,
v.
National Union Fire Insurance Company of Pittsburgh, PA., Defendant, TIG Insurance Company, Defendant-Appellant/Cross-Appellee.

          Argued: July 27, 2016

         Appeal from the United States District Court for the Western District of ichigan at Grand Rapids. No. 1:05-cv-00051-Robert Holmes Bell, District Judge.

         ARGUED:

          Jeffrey C. Gerish, PLUNKETT COONEY, Bloomfield Hills, Michigan, for Appellant/Cross-Appellee.

          D. Andrew Portinga, MILLER JOHNSON, Grand Rapids, Michigan, for Appellees/Cross-Appellants.

         ON BRIEF:

          Jeffrey C. Gerish, Mary Massaron, PLUNKETT COONEY, Bloomfield Hills, Michigan, Carlos del Carpio, Mary E. Fechtig, CARROLL MCNULTY & KULL LLC, Chicago, Illinois, for Appellant/Cross-Appellee.

          D. Andrew Portinga, David J. Gass, J. Michael Smith, MILLER JOHNSON, Grand Rapids, Michigan, for Appellees/Cross-Appellants.

          Laura A. Foggan, WILEY REIN LLP, Washington, D.C., for Amicus Curiae.

          Before: COLE, Chief Judge; BATCHELDER and COOK, Circuit Judges.

          OPINION

          COLE, Chief Judge.

         Stryker Corporation has been engaged in a longstanding row with XL Insurance America, Inc. (its commercial umbrella insurer) and TIG Insurance Company (its excess liability insurer). Fifteen years by our count. See Stryker Corp. v. XL Ins. Am., 576 F.App'x 496 (6th Cir. 2014); Stryker Corp. v. XL Ins. Am., 735 F.3d 349 (6th Cir. 2012); Stryker Corp. v. Nat'l Union Fire Ins. Co., 681 F.3d 819 (6th Cir. 2012). That insurance-coverage dispute, in its current incarnation, requires us to interpret the "consent-to-settle" provision of an excess-liability policy. The district court thought that the insurance contract contained a latent ambiguity, construed the policy against TIG, and entered summary judgment for Stryker. But the contract is not ambiguous, in any sense of the word, so we reverse.

         I.

         Stryker is a medical technologies firm. In the late 1990s, it purchased a subsidiary of Pfizer, Inc. that made and sold orthopedic products. One of those products, an artificial knee joint called the Duracon Unicompartmental Knee (or "Uni-Knee" for short), turned out to be defective. These medical devices were sterilized using gamma rays, which caused ultra-high-molecular-weight polyethylene in the artificial knees to degrade and, if implanted past their five-year shelf-life, potentially fail. Due to an inventory oversight, a number of expired Uni-Knees were sold to hospitals and implanted in patients. As a result, in the early 2000s, Stryker was subject to over 70 individual product-liability claims and potentially obligated to cover Pfizer's losses as well. See Stryker, 735 F.3d at 352-53.

         Stryker turned to its insurers for relief from exposure. Two policies, effective during the year 2000, are relevant here: a "commercial umbrella" policy, issued by XL, and an "excess liability" policy, issued by TIG. The umbrella policy covered any "batch" of losses that Stryker became "legally obligated to pay by reason of liability imposed by law or assumed by the [i]nsured . . . because of [b]odily [i]njury." That policy was limited to $15 million, after a $2 million self-insured retention. The excess-liability policy followed form, kicked in after the umbrella policy was fully "exhausted, " ...


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