In re Alexion Pharmaceuticals, Inc. Insurance Appeals

IN THE SUPREME COURT OF THE STATE OF DELAWARE

IN RE ALEXION §
PHARMACEUTICALS, INC. § No. 154, 2024
INSURANCE APPEALS § No. 157, 2024
§
§ Court Below: Superior Court
§ of the State of Delaware
§
§ C.A. No. N22C-10-340
§

Submitted: November 6, 2024
Decided: February 4, 2025

Before SEITZ, Chief Justice; VALIHURA, TRAYNOR, LEGROW, and
GRIFFITHS, Justices, constituting the Court en Banc.

Upon appeal from the Superior Court. REVERSED.

Garrett B. Moritz, Esquire, R. Garrett Rice, Esquire, A. Gage Whirley, Esquire,
ROSS ARONSTAM & MORITZ LLP, Wilmington, Delaware; Marc S. Casarino,
Esquire, KENNEDYS CMK LLP, Wilmington, Delaware for Defendant Below/
Appellant Endurance Assurance Corporation.

John C. Phillips, Jr., Esquire, David A. Bilson, Esquire, PHILLIPS MCLAUGHLIN
& HALL P.A., Wilmington, Delaware; James Sandnes, Esquire, Sarah F. Voutyras,
Esquire, SKARZYNSKI MARICK & BLACK LLP, New York, New York for
Defendant Below/Appellant Swiss Re Corporate Solutions America Insurance
Corporation f/k/a North American Specialty Insurance Company.

Bruce W. McCullough, Esquire, BODELL BOVÉ, LLC, Wilmington, Delaware;
Agelo L. Reppas, Esquire (argued), Brian J. Watson, Esquire, BATESCAREY LLP,
Chicago, Illinois for Defendant Below/Appellant Navigators Insurance Company.

Daniel M. Silver, Esquire, Benjamin A. Smyth, Esquire, MCCARTER & ENGLISH
LLP, Wilmington, Delaware; Robin L. Cohen, Esquire, Cynthia M. Jordano, Esquire
(argued), Orrie Levy, Esquire, David J. Matulewicz-Crowley, Esquire, COHEN
ZIFFER FRENCHMAN & MCKENNA LLP, New York, New York for Plaintiff
Below/Appellee Alexion Pharmaceuticals, Inc.
SEITZ, Chief Justice:

In this insurance coverage dispute, the issue on appeal is whether a Securities

and Exchange Commission investigation, disclosed to its insurers by Alexion

Pharmaceuticals, Inc., is related to a later securities class action brought against the

company and others. If related, the securities class action is covered by Alexion’s

first insurance tower. If not, it is covered by the second tower. Applying the

“meaningful linkage” standard, the Superior Court found that the two were unrelated

and placed the securities class action coverage in the second insurance tower. We

find, however, that the securities class action – in the words of the policy – arose out

of the circumstances disclosed by Alexion to its first tower insurers. Coverage

should have been placed in the first tower.

I.

A.

The facts are largely undisputed. Alexion Pharmaceuticals, Inc. develops

therapies for people living with rare disorders. Alexion was insured under two

claims-made director and officer (“D&O”) liability insurance programs covering

different periods. The first program provided $85 million of coverage for claims

made between June 27, 2014 and June 27, 2015 (“Tower 1”). The second program

provided $105 million of coverage for claims made between June 27, 2015 and June

27, 2017 (“Tower 2”). The two towers consist largely of the same insurers located

2
in the same coverage layers.1 Both towers are structured as ABC directors and

officers policies covering securities claims against the company.2 Each tower is

composed of a primary policy and follow-form excess policies.3

Both towers define a “Wrongful Act” as:

[A]ny error, misstatement, misleading statement, act, omission,
neglect, or breach of duty, including but not limited to a Wrongful
Employment Practice, actually or allegedly committed or attempted by:

1. Solely with respect to coverage under Insuring
Agreements A and B, any Insured Person in his or her
status as such, or any matter claimed against any Insured
Person solely by reason of his or her serving in such
capacity;

2. Solely with respect to coverage under Insuring Agreement
C, the Company, but solely with respect to a Securities
Claim . . . .4

1
App. to Appellants’ Joint Opening Br. at A370 [hereinafter A__] (Alexion Pharmaceuticals D&O
Insurance Coverage Summary Chart). Four insurers – Swiss Re, Endurance, Navigators, and
Hudson – participated only in one of the towers. Id. Old Republic participated in both towers but
was in different coverage layers. Id.
2
ABC policies contain three insuring agreements. Side A covers directors’ and officers’ liability
not indemnified by the company. Side B reimburses the company for indemnifying its directors
and officers. Side C covers securities claims against the company. See A54 (Chubb Tower 2
Policy at 1); see also A158 (Chubb Tower 1 Policy at 1).
3
See A52 (Chubb Tower 2 Policy Declarations at 1); A107 (Swiss Re Tower 2 Policy Declarations
at 1); A122 (Endurance Tower 2 Policy Declarations at 1); A148 (Navigators Tower 2 Policy
Endorsement No. 2 at 1); see also A156 (Chubb Tower 1 Policy Declarations at 1); A209–10
(Hudson Tower 1 Policy Declarations at 1–2).
4
A91 (Chubb Tower 2 Policy Endorsement No. 13 at 1) (emphasis omitted); A199 (Chubb Tower
1 Policy Endorsement No. 18 at 1) (emphasis omitted).

3
Both towers define “Interrelated Wrongful Acts” as “all Wrongful Acts that

have as a common nexus any fact, circumstance, situation, event, transaction, cause

or series of related facts, circumstances, situations, events, transactions or causes.”5

Both towers define “Claim” as:

1. a written demand for monetary damages or non-monetary or
injunctive relief;

2. a civil, criminal, arbitration, administrative or regulatory
proceeding for monetary damages or non-monetary or injunctive
relief commenced by: (i) service of a complaint or similar
pleading; (ii) with respect to a criminal proceeding, a return of
an indictment, information, or similar document; or (iii) the
receipt of filing of a notice of charges; or

3. a civil, criminal, administrative or regulatory investigation
commenced by the service upon or other receipt by any Insured
Person of a written notice or subpoena from the investigating
authority identifying such Insured Person as an individual
against whom such a proceeding described in paragraph 2
immediately above may be commenced.6

Both towers also contain the following relevant provisions (“Limit of Liability

Provision” and “Notice Provision,” respectively):

VII. LIMIT OF LIABILITY

A. All Claims arising out of the same Wrongful Act and all
Interrelated Wrongful Acts of the Insureds shall be
deemed to be one Claim, and such Claim shall be deemed
to be first made on the date the earliest of such Claims is
first made, regardless of whether such date is before or
5
A55 (Chubb Tower 2 Policy at 2) (emphasis omitted); A159 (Chubb Tower 1 Policy at 2)
(emphasis omitted).
6
A55 (emphasis omitted); A159 (emphasis omitted).

4
during the Policy Period. All Loss resulting from a single
Claim shall be deemed a single Loss.7

IX. NOTICE

B. If, during a Policy Period or, if elected, the Extended
Reporting Period, the Insureds first become aware of facts
or circumstances which may reasonably give rise to a
future Claim covered under this Policy, and if the Insureds
give written notice to the Insurer during the Policy Period
or, if elected, the Extended Reporting Period, of the
identity of the potential claimants; a description of the
anticipated Wrongful Act allegations; the identity of the
Insureds allegedly involved; the circumstances by which
the Insureds first became aware of the facts or
circumstances; the consequences which have resulted or
may result; and the nature of the potential monetary
damages and non-monetary relief; then any Claim which
arises out of such Wrongful Act shall be deemed to have
been first made at the time such written notice was
received by the Insurer. No coverage is provided for fees,
expenses and other costs incurred prior to the time such
Wrongful Act results in a Claim.8

Tower 2 also contains an endorsement modifying its prior notice exclusion

provision (“Prior Notice Exclusion”):

The Insurer shall not be liable for Loss on account of any Claim:9

J. alleging, based upon, arising out of, or attributable to any
Wrongful Act, fact, or circumstance which has been the
subject of any written notice given and accepted under any

7
A61 (Chubb Tower 2 Policy at 8) (emphasis omitted); A165 (Chubb Tower 1 Policy at 8)
(emphasis omitted).
8
A61 (cleaned up); A165 (cleaned up).
9
A58 (Chubb Tower 2 Policy at 5) (emphasis omitted).

5
other directors & officers policy of which this Policy is a
renewal or replacement.10

B.

Among Alexion’s drug therapies is Soliris, an “orphan drug” that treats rare

genetic diseases.11 In 2017, Soliris had about 11,000 customers worldwide.12 Soliris

had a retail price of $500,000 to $700,000 for each patient.13 To find and retain these

uncommon but highly lucrative patients, Alexion allegedly engaged in extreme

business practices.14 These practices eventually attracted the attention of the

Securities and Exchange Commission. On March 9, 2015, the SEC issued a formal

investigation order against Alexion (“SEC Investigation Order”).15 The SEC

Investigation Order raised possible violations of the federal securities laws involving

inaccurate annual 8-K, 10-K, and 10-Q reports;16 failure to maintain adequate books

10
A79 (Chubb Tower 2 Policy Endorsement No. 9) (emphasis omitted).
11
A16 (Compl. ¶ 2).
12
A516 (Bloomberg Article).
13
A517.
14
Alexion Pharm., Inc. v. Endurance Assurance Corp., 2024 WL 639388, at *2 (Del. Super. Ct.
Feb. 15, 2024) [hereinafter Superior Court Decision].
15
A941 (SEC Investigation Order at 1).
16
A942.

6
and records;17 failure to maintain an adequate system of internal accounting

controls;18 and bribing foreign officials and political parties.19

Two months later, the SEC served Alexion with a subpoena and a document

preservation demand (collectively, “SEC Subpoena”).20 The SEC Subpoena sought

all documents relating to Alexion’s grant-making worldwide;21 statements regarding

the recall of certain lots of Soliris;22 compliance with the Foreign Corrupt Practices

Act (“FCPA”), including gifts and payments to public health institutions and

government agents;23 and lobbying efforts worldwide, especially in Japan, Brazil,

Russia, and Turkey.24

On June 18, 2015, Alexion sent its Tower 1 insurers a notice (“2015 Notice”)

disclosing Alexion’s receipt of the SEC Subpoena.25 Alexion explained that

“[w]hile the subpoena seeks information related to Alexion’s activities and policies

17
Id.
18
Id.
19
A943–44 (SEC Investigation Order at 3-4).
20
A372 (SEC Subpoena Letter at 1).
21
A382 (SEC Subpoena Attachment at 6).
22
A384 (SEC Subpoena Attachment at 8).
23
A384–85.
24
A386–87.
25
A530 (2015 Notice at 1).

7
and procedures worldwide, it notes in particular Japan, Brazil, Turkey, and

Russia.”26 Alexion also stated that the SEC Subpoena “seeks information related to

Alexion’s recalls of specific lots of Soliris and related securities disclosures.”27

In the 2015 Notice, Alexion also warned the Insurers that “[a]ny

determination that Alexion’s operations or activities are not, or were not, in

compliance with existing United States or foreign laws or regulations, including by

the SEC pursuant to its investigation of Alexion’s compliance with the FCPA and

other matters, could result in consequences to one more of the insureds.”28 Alexion

also foreshadowed that “[o]ther internal or government investigations or legal or

regulatory proceedings, including lawsuits brought by private litigations may also

follow as a consequence.”29 Finally, Alexion noted that “[c]ooperating with and

responding to the SEC in connection with its investigation of Alexion’s FCPA

practices and other matters, as well as responding to any future U.S. or foreign

governmental investigation or whistle blower lawsuit, could result in substantial

expenses.”30

26
Id.
27
Id.
28
A530–31 (2015 Notice at 1–2).
29
A531.
30
Id.

8
C.

On December 29, 2016 – during the Tower 2 coverage period – Alexion

stockholders filed a federal securities class action in the District of Connecticut

(“Securities Class Action”). The stockholders alleged that Alexion and its directors

and officers violated Sections 10(b) and 20(a) of the Exchange Act, as well as SEC

Rule 10b-5. They cited a series of unethical and illegal sales and lobbying practices,

including obtaining data from partner labs to identify potential customers, deploying

extreme fear tactics to garner patients, and funding foreign organizations. They also

alleged that, “[d]espite Alexion’s efforts to cover up the Company’s

misconduct, . . . the truth continued to slowly reveal itself” through partial

disclosures.31

On January 5, 2017, Alexion sent its Tower 2 insurers notice of the Securities

Class Action (“2017 Notice”). Chubb,32 the primary insurer for both towers, initially

accepted coverage for the Securities Class Action under Tower 2, but it later

reassigned coverage to Tower 1. Chubb justified the reassignment on the grounds

that the Securities Class Action “ar[o]se from the circumstances and anticipated

Wrongful Acts reported during the 2014–2015 Policy Period, as well as many of the

31
A264–65 (Securities Class Action Am. Compl. ¶ 23).
32
ACE American Insurance Company is part of the Chubb Group and is referred to as “Chubb” in
this appeal.

9
same Wrongful Acts and Interrelated Wrongful Acts.”33 Chubb stated that the

overlap included Alexion’s grant-making activities, its compliance with the FCPA,

and its activities in Japan, Brazil, Turkey, and Russia.

On July 2, 2020, Alexion settled with the SEC for about $21.5 million (“SEC

Settlement”).34 On September 12, 2023, Alexion settled the Securities Class Action

for $125 million (“Securities Class Action Settlement”). Although the Securities

Class Action Settlement exceeded the coverage limits of each tower, Tower 2

provided $20 million more coverage than Tower 1.35 Thus, Alexion had an

economic incentive to pursue coverage for the Securities Class Action under Tower

2. It demanded that the settlement be covered under Tower 2.

D.

Alexion filed a coverage action in the Superior Court against Endurance,

Hudson, Navigators, Old Republic, and Swiss Re. Alexion alleged that Endurance,

Navigators, and Swiss Re (collectively, “Tower 2 Insurer Defendants”) breached

their coverage contracts under the Tower 2 policies. Alexion also sought a

declaratory judgment against these defendants that the Securities Class Action is a

33
A557 (Letter from Clyde & Co US LLP to Matthew Batters at 4, Oct. 8, 2018) (emphasis
omitted).
34
A577 (SEC Cease-and-Desist Order at 8).
35
Tower 1 provided $85 million of coverage. A28 (Compl. ¶ 36). Tower 2 provided $105 million
of coverage. A23 (Compl. ¶ 26).

10
“claim” first made during the Tower 2 period.36 In the alternative, Alexion sought a

declaratory judgment against Hudson and Old Republic that the Securities Class

Action is a “claim” first made during the Tower 1 period.37

In dispositive motion briefing, Alexion argued that the Securities Class Action

was unrelated to the SEC Subpoena.38 Endurance opposed Alexion’s motion and

argued the opposite.39 Navigators and Swiss Re also opposed Alexion’s motion and

sought additional discovery on the SEC investigation.40 Hudson opposed Alexion’s

motion to the extent that Alexion sought a determination that the claims belonged in

Tower 1.41 Old Republic was eventually dismissed from the case with prejudice.42

36
A44–46 (Compl. ¶¶ 96–102).
37
A46 (Compl. ¶¶ 103–05).
38
App. to Appellee Alexion Pharmaceutical, Inc.’s Answering Br. at B38 (Opening Br. in Support
of Pl.’s Mot. Summ. J. at 31).
39
A748 (Endurance Assurance Corp.’s Memo in Opp. Pl.’s Mot. for Part. Summ. J. at 23).
40
A452–54 (Certain Insurer Defs.’ Answering Br. in Opp. to Pl.’s Mot. for Part. Summ. J. at 21–
23).
41
Answering Br. of Hudson Ins. Co. in Opp. to Pl.’s Mot. for Summ. J. on Relatedness, at 12–14,
Superior Court Decision, Docket No. 60 [hereinafter Super. Ct. Dkt. __].
42
Stipulation and [Proposed] Ord. of Dismissal with Prejudice as to Claims Against Old Republic
Ins. Co.), at 1–3, Superior Court Decision, Super. Ct. Dkt. 118.

11
E.

The Superior Court granted Alexion’s motion for partial summary judgment,

thereby placing the Securities Class Action coverage in Tower 2.43 First, the court

determined that the “meaningful linkage” standard should be used to interpret the

Prior Notice Exclusion. The court also held that there was “little practical difference

between two claims having a meaningful link and sharing material facts.”44 Relying

on ACE American Insurance Co. v. Guaranteed Rate, Inc., the court also found that

the “linkage must be meaningful, not tangential.”45

Applying the “meaningful linkage” standard to the SEC Subpoena and the

Securities Class Action, the court determined that they were “only loosely connected

by Alexion’s activities in Brazil.”46 The court recognized that the Securities Class

Action plaintiffs considered the SEC’s findings from the SEC Subpoena to be useful

evidence in their case. But the court ultimately rejected it as a meaningful link on

two grounds.

43
Superior Court Decision at *11.
44
Id. at *9.
45
Id. (quoting ACE Am. Ins. Co. v. Guaranteed Rate, Inc., 305 A.3d 339, 349 (Del. 2023)).
46
Id. at *10.

12
First, the court found it “unremarkable that ably represented litigants would

portray any available evidence as favorable to them.”47 Next, the court observed

that the Securities Class Action plaintiffs did not use the SEC’s findings to prove

their allegations. Instead, they only used them more generally to demonstrate “a

sustained pattern of illegal and unethical conduct in the sales and marketing of

Soliris.”48 The court ultimately concluded that “the factual connection between the

SEC Subpoena and the Securities Action is insufficient to make them related” and

placed the Securities Class Action in Tower 2.49

II.

On appeal, the Tower 2 Insurer Defendants argue that the Superior Court erred

by treating the 2015 Notice as a “[c]laim” instead of a “disclosure of ‘facts or

circumstances that may give rise to a future claim.’”50 By “compar[ing] what it saw

as two [c]laims,” they argue, the court incorrectly framed the inquiry as whether the

SEC Subpoena was meaningfully linked to the Securities Class Action.51 Instead,

the proper comparison, they claim, was whether the Securities Action arose from

47
Id.
48
Id.
49
Id. at *11.
50
Appellants’ Joint Opening Br. at 25.
51
Id. at 25–26.

13
“any Wrongful Act, fact, or circumstance” that was the subject of Alexion’s 2015

Notice. As the Insurers point out, the 2015 Notice disclosed the potential for future

claims related to the SEC Subpoena. In the alternative, they argue that more

discovery was required to assess whether the Securities Class Action was

sufficiently related to the facts or circumstances disclosed.52

We review the Superior Court’s summary judgment decision de novo.53

A.

We look to the contract language to determine the parties’ intent.54 If the

language is “clear and unambiguous, the parties’ intent is ascertained by giving the

language its ordinary and usual meaning.”55 “[A] contract is ambiguous only when

the provisions in controversy are reasonably or fairly susceptible of different

interpretations or may have two or more different meanings.”56

Here, the policies’ relevant terms are unambiguous. Both towers contain a

broad Notice Provision, which provides that “any Claim which arises out of [any

52
Id. at 45.
53
ConAgra Foods, Inc. v. Lexington Ins. Co., 21 A.3d 62, 68 (Del. 2011) (“We review the Superior
Court’s grant or denial of a summary judgment motion de novo. We also review the Superior
Court’s interpretation of an insurance contract de novo.” (citations omitted)).
54
First Solar, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 274 A.3d 1006, 1013 (Del. 2022).
55
RSUI Indem. Co. v. Murdock, 248 A.3d 887, 905 (Del. 2021) (quoting AT & T Corp. v. Faraday
Cap. Ltd., 918 A.2d 1104, 1108 (Del. 2007)).
56
Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 1992).

14
properly noticed] Wrongful Act shall be deemed to have been first made at the time

such written notice was received by the Insurer.”57 The Notice Provision is not

limited to mature Claims like filed lawsuits. It includes a “notice of circumstances”

where the insured can give notice when it “first become[s] aware of facts or

circumstances which may reasonably give rise to a future Claim” under the policy.58

In claims-made insurance programs, the notice of circumstances benefits the insured.

The insured can lock in existing insurance coverage for later related claims even

though the facts and circumstances have yet to occur or might be somewhat

different.59

Under the Limit of Liability Provisions in both towers, “[a]ll Claims arising

out of the same Wrongful Act and all Interrelated Wrongful Acts . . . shall be

deemed to be one Claim . . . first made on the date the earliest of such Claims is first

made . . . .”60 In other words, all Claims arising out of a properly noticed Wrongful

57
A61 (Chubb Tower 2 Policy at 8) (emphasis omitted); A165 (Chubb Tower 1 Policy at 8)
(emphasis omitted).
58
A61 (emphasis omitted); A165 (emphasis omitted).
59
See Restatement of the L. of Liab. Ins. § 33 (Am. L. Inst. 2019) (explaining that a “notice of
circumstances” clause “provide[s] policyholders the option to secure coverage under an existing
claims-made policy for a legal action that may be brought in the future”).
60
A61 (Chubb Tower 2 Policy at 8) (emphasis omitted); A165 (Chubb Tower 1 Policy at 8)
(emphasis omitted).

15
Act or Interrelated Wrongful Act are treated as a single Claim made on the earliest

date the insurer received the insured’s written notice.

The parties do not dispute that Alexion’s 2015 Notice was proper under the

Tower 1 policies.61 Rather, they dispute whether the Securities Class Action is a

claim arising out of any Wrongful Acts or Interrelated Wrongful Acts disclosed by

Alexion in the 2015 Notice.62 Tower 1’s Notice Provision language – “arises out

of” – is undefined. Tower 2’s Prior Notice Exclusion language – “alleging,” “based

upon,” “arising out of,” and attributable” – is also undefined. With no other textual

evidence of the parties’ intent found in the policies, we interpret “arises out of,” and

other similar terms, as requiring some “meaningful linkage between the two

conditions imposed in the contract.”63 Although these terms are “paradigmatically

broad,”64 and we interpret them broadly, the linkage must be meaningful and not

tangential.65 Thus, if the Securities Class Action is meaningfully linked to any

61
Alexion drafted the 2015 Notice, which Chubb accepted on June 30, 2015. A534–35 (Letter
from ACE (Chubb) to Michael Greco at 1–2, June 30, 2015).
62
Under both towers’ limit of liability provision, all claims arising out of the same Wrongful Act
or Interrelated Wrongful Acts are deemed to be a single claim. A61 (Chubb Tower 2 Policy at 8);
A165 (Chubb Tower 1 Policy at 8).
63
Pac. Ins. Co. v. Liberty Mut. Ins. Co., 956 A.2d 1246, 1257 (Del. 2008).
64
City of Newark v. Donald M. Durkin Contr., Inc., 305 A.3d 674, 680 (Del. 2023) (citations
omitted).
65
ACE Am. Ins. Co., 305 A.3d at 349.

16
Wrongful Act, including any Interrelated Wrongful Act, disclosed by Alexion in the

2015 Notice, the Securities Class Action is covered by Tower 1.

B.

Although we agree with the Superior Court that “meaningful linkage” is the

appropriate standard of comparison, we disagree with its conclusion that “the link

between the securities action and the prior incident is tangential, not meaningful.” 66

As an initial matter, the court erred in identifying the objects of comparison for the

“meaningful linkage” analysis. Alexion’s 2015 Notice was not a claim. Chubb

accepted Alexion’s 2015 Notice “as a notice of circumstance that may give rise to a

claim.”67 Indeed, Chubb explicitly noted that, at the time of this acceptance, “there

has been no Claim against either the Company as a Defendant or the Company’s

directors and officers.”68

Nevertheless, the Superior Court treated the 2015 Notice as a claim. After it

“established that a meaningful linkage is required to bar coverage,” the Superior

Court concluded that “the remaining question is whether such a link exists between

the SEC Subpoena and the Securities Action.” 69 Focusing its inquiry on the link

66
Superior Court Decision at *1.
67
A535 (Letter from ACE (Chubb) to Michael Greco at 2, June 30, 2015).
68
Id.
69
Superior Court Decision at *9.

17
between the SEC Subpoena and the Securities Class Action, the court held that the

latter “is not related to a previous claim.”70 By treating the 2015 Notice as a claim,

however, the Superior Court narrowed the scope of the inquiry to the wrongful acts

alleged in the SEC Subpoena. Instead, the court should have focused on Alexion’s

disclosure of the SEC investigation in the 2015 Notice. It should have asked whether

the Securities Class Action is meaningfully linked to any of the alleged wrongful

acts disclosed in the 2015 Notice.

C.

Upon de novo review, we find that the Securities Class Action is meaningfully

linked to the wrongful acts disclosed in the 2015 Notice. First, both involve the

same alleged wrongdoing – Alexion’s grantmaking activities worldwide. The 2015

Notice disclosed that Alexion had received a SEC Subpoena “requesting information

related to Alexion’s grant-making activities and compliance with the Foreign

Corrupt Practices Act.”71 The 2015 Notice also disclosed that the SEC Subpoena

sought information on Alexion’s activities, policies, and procedures worldwide,

especially in Brazil, Japan, Russia, and Turkey.72

70
Id. at *1 (emphasis added).
71
A530 (2015 Notice at 1).
72
Id.

18
The Securities Class Action alleged the same wrongdoing investigated by the

SEC and disclosed by Alexion in the 2015 Notice. The plaintiffs alleged that

Alexion improperly issued grants to patient advocacy groups in Brazil to sue the

government for reimbursements for Soliris, rather than directly negotiate the price

of Soliris with the Brazilian government.73 Furthermore, the first Securities Class

Action complaint explicitly referred to the SEC Subpoena and the SEC’s Foreign

Corrupt Practices Act investigation into Alexion’s grantmaking to patient advocacy

groups.74 The Securities Class Action also referred to a Bloomberg article, which

reported on the SEC’s Foreign Corrupt Practices Act investigation into Alexion’s

grantmaking activities in Brazil, Colombia, Japan, Russia, and Turkey.75 These

wrongful acts raised in the Securities Class Action are the same ones disclosed in

Alexion’s 2015 Notice.

Alexion argues that the focus of the SEC investigation was different from that

of the Securities Class Action.76 It claims that, “[u]nlike the SEC Investigation,

which focused on . . . examples of book-keeping violations under the FCPA in

Brazil, the Securities Action alleged that Alexion’s third-party payments to a patient

73
A304–06 (Securities Class Action Am. Compl. ¶¶ 155–62).
74
A615 (Securities Class Action Compl. ¶ 108).
75
A527 (Bloomberg Article).
76
Appellee Alexion Pharmaceuticals, Inc.’s Answering Br. at 29.

19
advocacy group in Brazil unethically funded fraudulent lawsuits, and that Alexion

failed to disclose this practice.”77 This difference, Alexion contends, renders the link

“tangential” and “insufficient to lasso the entire Securities Action back into Tower

1.”78

We are unpersuaded. Both the SEC investigation and the Securities Class

Action involve the same underlying wrongful act – Alexion’s improper sales tactics

worldwide, including its grantmaking efforts in Brazil and elsewhere. Because both

the SEC investigation and the Securities Class Action involve the same conduct, it

does not matter whether the SEC and the stockholder plaintiffs are different parties,

asserted different theories of liabilities, or sought different relief. It is the common

underlying wrongful acts that control.

In any event, Alexion overstates the differences between the two theories of

liability. In addition to a FCPA violation, the SEC investigation also subpoenaed all

documents, including federal securities disclosures such as 8-K, 10-K, and 10-Q

reports, concerning Alexion’s statements regarding the Soliris recall.79 The

Securities Class Action alleged the same possible Exchange Act and SEC Rule

77
Id.
78
Id.
79
A384 (SEC Subpoena Attachment at 8).

20
violations.80 It is true that the SEC investigation and the Securities Class Action

alleged non-identical time periods. But while not perfectly identical, they do

meaningfully overlap.81

III.

Both investigations involved the same Wrongful Act – Alexion’s grantmaking

activities. A meaningful linkage exists between the Securities Class Action and the

SEC investigation as disclosed by Alexion in its 2015 Notice. Under the policies of

both towers, the Securities Class Action claim is deemed to have been first made at

the time the 2015 Notice was received by Chubb – during the Tower 1 coverage

period. Therefore, coverage is under Tower 1. Applying the Prior Notice Exclusion

provision of Tower 2, no coverage is available under Tower 2. The judgment of the

Superior Court is reversed.

80
A360–66 (Securities Class Action Am. Compl. ¶¶ 354–78).
81
Alexion’s 2015 Notice stated that the SEC Subpoena demanded preservation of documents “on
or after January 1, 2009.” A530 (2015 Notice at 1). The class period in the Securities Class Action
is between January 30, 2014, and May 26, 2017. A256 (Securities Class Action Am. Compl. at 1).

21