Federal Insurance Company v. Raytheon Company
United States Court of Appeals for the First Circuit
426 F.3d 491 (2005)
Raytheon Company (Raytheon) (defendant), a defense contractor, had a liability policy with Federal Insurance Company (FIC) and an excess policy with Axis Surplus Insurance Company (Axis) (defendants). The FIC policy was a “claims-made” policy. Therefore, FIC was required to defend Raytheon against a claim or complaint filed against Raytheon during the policy period. The policy excluded coverage for overlapping complaints, defined as any complaint filed against Raytheon based on facts or circumstances that are similar to those underlying a prior complaint filed against Raytheon. On October 12, 1999, an article was published claiming that Raytheon was behind schedule on its defense contracts. The next day, Raytheon reported millions in one-off charges and reduced its earnings expectation, leading to a decrease in Raytheon’s stock price. On October 19, 1999, a securities class-action complaint was filed against Raytheon. The lead plaintiff was a state insurance fund seeking to represent, as a class, anyone who had purchased Raytheon stock from October 7, 1998–October 12, 1999. The complaint alleged that Raytheon had produced misleading reports and had failed to disclose losses. In May 2003, another class-action complaint was filed against Raytheon based on violations of the Employment Retirement Income Security Act (ERISA). This ERISA complaint, brought on behalf of Raytheon’s pension-plan beneficiaries, alleged breach of fiduciary duty. The securities class action and the ERISA class action were based on similar facts but different legal theories and involved different parties. The complaints contained similar allegations. The ERISA complaint included allegations of misdeeds occurring after October 12, 1999 and other allegations that were excluded from the securities class-action complaint. After the ERISA complaint was filed, Raytheon sought coverage from the defendants. The defendants filed declaratory suits for non-coverage based on the exclusion for overlapping complaints. The trial court determined that the ERISA action was excluded by this exclusion. Raytheon appealed.
Rule of Law
Holding and Reasoning (Dyk, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 175,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.