On January 19, 2024, the Commercial Court of Marion County, Indiana, ordered Allianz Global Risk Insurance Company (“Allianz”) to pay $5.1 million in defense costs and nearly $1 million in prejudgment interest to Technicolor for defense costs incurred in an underlying class action-style lawsuit in Taiwan.

The class action lawsuit was brought in 2016 by an association on behalf of over 1,000 former workers seeking to hold Technicolor liable for alleged bodily injuries caused by exposure to toxic chemicals while working at different factories in Taiwan. This is the second class action brought against Technicolor and the second time Technicolor has sued its insurers for refusing to defend it in these underlying actions. See Thomson Inc. v. Ins. Co. of N. Am., 11 N.E.3d 982 (Ind. Ct. App. 2014).

In 2018, Technicolor sued its insurers that issued primary and umbrella liability policies to Technicolor from 2000 to 2016. In earlier rulings—some of which are on appeal—the trial court found that only Allianz (and to a lesser extent XL) was required to defend Technicolor under Allianz’s 2014-2016 umbrella policies. No other insurers were ordered to defend Technicolor.

Throughout the lawsuit, Allianz sought to defeat or minimize its defense obligations in multiple ways. In the most recent round of briefing, Allianz raised three main arguments. First, Allianz argued that it was not jointly and severally liable for Technicolor’s defense costs. Second, Allianz argued that it only insured some of the Technicolor entities sued in the underlying action and thus it should not be liable for all defense costs. Third, Allianz argued that its “other insurance” provisions relieved it of its duty to defend until Technicolor had secured coverage from its historic insurers.

The trial court rejected each of these arguments. It found that Allianz was jointly and severally liable for all of Technicolor’s defense costs. The existence of “Other Insurance” provisions, the court found, was irrelevant to the duty to defend because the duty to defend language made no reference to the Other Insurance provisions. The trial court also held that Technicolor was entitled to a “full defense” requiring Allianz to pay all defense costs even though Allianz did not insure one of the Technicolor defendants.

In awarding all the defense costs sought by Technicolor, the Court held that Technicolor’s costs were “market tested” and reasonable and necessary. The “market tested” presumption arises when an insurer wrongfully refuses to defend and the policyholder incurs defense costs without any assurance that it will ever recover these costs. Thomson, 11 N.E.3d at 1024; USA Gymnastics v. Lib. Ins. Underwriters, 46 F.4th 571, 579-80 (7th Cir. 2022); Taco Bell v. Continental Casualty Co., 388 F.3d 1069, 1075-77 (7th Cir. 2008). This “market test” is “a better check than any court can provide after-the-fact.” Id. The trial court found that Allianz failed to rebut this “market tested” presumption because it failed to present any evidence that any specific expense was unreasonable or unnecessary. The trial court’s finding was further bolstered by the testimony of Technicolor’s national coordinating counsel J. Chad Mitchel and expert Ferguson McNiel, both attorneys with extensive experience defending toxic tort lawsuits across multiple continents.

Finally, the trial court found that Technicolor was entitled to prejudgment interest (at 8% per year) on all defense costs incurred, with interest accruing 60 days from the date of its invoices. Through June 2023, prejudgment interest on the $5.1 million in defense costs totaled $962,106, increasing at $1,115.34 per day thereafter.

Technicolor is represented by George Plews, Sean Hirschten, and Ryan Leagre. The evidentiary hearing was led by Sean Hirschten, with Jessica McQuillen testifying in support of the prejudgment interest calculations.

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