Insurance coverage lawsuits, perhaps more than any other kind of litigation, frequently lend themselves to forum disputes. One reason for this is that complex insurance disputes often have their roots in more than one state. It is not uncommon for a policyholder to be based in one state, the insurer in another, the broker in another, and the facts giving rise to the loss or the underlying litigation in yet another. Frequently, the relevant insurance policies span many years (or decades), so it is not uncommon for a policyholder to purchase its insurance program over the years from different insurers in different states, or to move its own corporate headquarters or operations, or both, among different states. Moreover, it is not uncommon for the facts giving rise to the underlying liabilities in the largest insurance disputes, such as toxic tort, product liability, environmental, or cyber liability, to be spread among many different states. Indeed, the geographic footprint of many large insurance disputes contains enough twists and turns to serve as a law school exam question and, typically, to provide fodder for the parties to make endless arguments about the proper forum and applicable laws.
In addition to having the basis to make forum arguments, parties in insurance litigation often have strong incentives to make them. Insurance disputes are governed purely by state law, and the substantive laws vary from state to state as much as, if not more than, in any area of the law. Variances among the states often are not subtle or minor—rather, on many issues, the laws of different states are diametrically opposed and compel opposite outcomes from one state to the next. The filing of a lawsuit in a particular state (or in a federal court sitting in that state) hardly guarantees the application of that state’s law, but it often is a good start toward getting to that result. Therefore, if parties anticipate that a certain issue will be decided on the basis of choice of law, there is frequently a rush by both sides to have the suit heard in the state whose law they deem favorable.
In addition to the potential benefits or pitfalls of a certain state’s law, there are often perceptions—true or not—that certain courts, judges, or juries are more friendly to one side or the other in insurance disputes. For example, there is a perception among many practitioners and litigants that state courts are more favorable to policyholders, and federal courts to insurers, and that bankruptcy courts often favor the debtor when the favorable resolution of an insurance dispute will bring funds into the estate. There is also a perception that courts in certain states (Delaware, Ohio, Pennsylvania, and West Virginia, for example) tend to favor policyholders, while courts in other states (Connecticut, New York, and Virginia, to name a few) are perceived by some as favoring insurers. Even individual judges are sometimes perceived as a “good draw” for one side or the other, often to a greater degree that is seen in other contexts.
For all these reasons, there is frequent jockeying among the parties to complex insurance disputes over which court will hear the case. Indeed, the authors of this article all have been involved in cases in which the resources devoted to the “preliminary” battle over forum surpass the resources devoted to litigating the merits. Given the importance of being in an advantageous forum and avoiding a bad one, frequently the advocacy is more zealous, and the arguments more creative, in forum disputes than anywhere else. As a result, parties and counsel often consider their own maneuvering to be a careful, strategic approach to litigation, while the other side’s arguments are nothing more than shameless forum shopping. This article discusses some of the procedural vehicles and legal doctrines affecting choice of forum and the ever-changing case law affecting forum disputes in insurance coverage litigation.