CHICAGO, IL (February 18, 2009) — McDermott Will & Emery LLP obtained a multi-million dollar verdict on behalf of its client, Leprino Foods Company (Leprino), the country's largest manufacturer of mozzarella cheese, in an insurance coverage dispute involving its former carrier, Factory Mutual Insurance Company (FM). The jury handed down the verdict in Leprino's favor on February 12, 2009 in the U.S. District Court for the District of Colorado. Leprino's total recovery for its loss will be $13.5 million, plus interest and costs.
In 1999, Leprino purchased an "All Risk" insurance policy from FM. When the policy was issued, FM agreed to delete an exclusion for "changes in flavor" to Leprino's products, because from time to time Leprino stores mozzarella cheese in public warehouses around the country. During the policy period, approximately eight million pounds of Leprino's cheese was damaged while in storage at a third-party warehouse, and Leprino's customer rejected the cheese because it had developed an off-flavor. However, FM rejected Leprino's claim for coverage because of a separate exclusion in the policy involving losses due to "contamination."
In 2002, Leprino filed suit against FM in federal court in Colorado, claiming that the contamination exclusion was inapplicable and ambiguous and that Leprino reasonably expected coverage for its loss due to the modification of the policy. In 2004, the court determined that the only question for trial was whether Leprino's coverage expectations were reasonable despite the contamination exclusion. After an adverse jury verdict, McDermott successfully persuaded the United States Court of Appeals for the Tenth Circuit to reverse the lower court's rulings and order a new trial on behalf of Leprino.
On remand, the judge determined that the question to be presented at the re-trial was whether the "exception" to the contamination exclusion provided coverage for Leprino's loss. After a three-day trial, the jury determined that Leprino satisfied its burden to prove that its loss was directly caused by other instances of "physical damage" at the warehouse and found its loss to be covered under the insurance policy.
The favorable verdict for Leprino was achieved through the efforts of Michael A. Pope, partner in the Firm's Chicago office and head of its International Product Liability Practice Group, and Christian Nemeth, also a partner in the Chicago office, both of whom tried the case. Michael W. Weaver, an associate with the Firm, also provided substantial assistance.
McDermott Will & Emery is a leading international law firm with a diversified business practice. We represent a wide range of commercial, industrial and financial enterprises, both publicly and privately held. Our clientele include some of the world’s largest corporations, small and medium-sized businesses, and individuals.