Foster Farms, LLC v. Everest National Insurance Company

• Court: District Court, N.D. California
• Decided: April 24, 2023
• Docket: 3:21-cv-04356
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 FOSTER FARMS, LLC, et al., Case No. 3:21-cv-04356-WHO

8 Plaintiffs, ORDER ON CROSS MOTIONS FOR 9 v. SUMMARY JUDGMENT

10 EVEREST NATIONAL INSURANCE Re: Dkt. Nos. 57, 58 COMPANY, 11 Defendant.

12 13 This is an insurance coverage dispute between plaintiffs Foster Farms, LLC, and Foster 14 Poultry Farms (collectively, “Foster”) and defendant Everest National Insurance Company 15 (“Everest”). After Foster was sued for alleged antitrust violations concerning its chicken products, 16 Foster purchased insurance from Everest that covered antitrust claims but precluded coverage of 17 claims related to the chicken antitrust suits. Subsequently, Foster was sued for alleged antitrust 18 violations concerning its turkey products. Foster filed a claim with Everest for insurance coverage 19 of the turkey antitrust suits, but Everest denied the claim, citing the exclusion provision for the 20 chicken suits. Foster filed suit in this court, seeking declaratory judgment that the policy covers 21 the turkey antitrust claims, and Everest filed a counterclaim seeking the opposite. The parties filed 22 cross motions for summary judgment to resolve this question. For the following reasons, I find 23 that the relevant provision does not preclude coverage of the turkey antitrust suits. 24 BACKGROUND 25 I. FACTUAL BACKGROUND 26 A. The Chicken Antitrust Suits 27 In 2016, Foster was insured by National Union Fire Insurance Company (“AIG”), 1 as a defendant in various antitrust lawsuits brought on behalf of direct and indirect purchasers of 2 broiler chickens1 (“Broilers”), Direct Purchaser Complaint (“DPC”) [Dkt. No. 17] Ex. 1; Indirect 3 Purchaser Complaint (“IPC”) [Dkt. No. 17] Ex. 2. The suits were consolidated in the Northern 4 District of Illinois as In re Broiler Chicken Antitrust Litigation, No. 16-cv-8637 (N.D. Ill. 2020) 5 (“Chicken Antitrust Suits”). [Dkt. No. 17] Exs. 1, 2. The direct purchaser plaintiffs2 allege 6 violations of 15 U.S.C. § 1 (“the Sherman Act”), and the indirect purchasers3 allege violations of 7 § 1 of the Sherman Act, violations of state antitrust laws, violations of state consumer protection 8 laws, and unjust enrichment. DPC ¶¶ 362-72; IPC ¶ 250. 9 The Chicken Antitrust Suits allege that the twenty largest chicken producers in the U.S., 10 including Foster, engaged in anticompetitive conduct by conspiring to coordinate output and limit 11 Broiler production with the goal of increasing prices and profitability for U.S. chicken producers. 12 DPC ¶¶ 1, 362-72; IPC ¶¶ 1, 250. In furtherance of this goal, the suits assert that the defendants 13 conspired with a data analytics service provider called Agri Stats, Inc. (“Agri Stats”), which 14 produced confidential industry reports containing “detailed, competitively sensitive, and closely- 15 guarded non-public information” from the defendant chicken producers, including specific data on 16 pricing, volume, supply, and exports. DPC ¶¶ 1, 92; IPC ¶¶ 1, 102. The allegations state that Agri 17 Stats reports were not publicly available, were more detailed than public reports, and were 18 provided only to participating defendant-producers in exchange for fees and detailed information 19 regarding their operations. DPC ¶¶ 92-93; IPC ¶ 102-3. 20 Each defendant allegedly received multiple types of Agri Stats reports, including ones 21 concerning individual areas of operations, such as “breeding, hatching, hauling, feeding, 22

23 1 Broilers “are chickens raised for meat consumption to be slaughtered before the age of 13 weeks, and which may be sold in a variety of forms, including fresh or frozen, raw or cooked, whole or in 24 parts, or as a meat ingredient in a value added product, but excluding chicken that is grown, processed, and sold according to halal, kosher, free range, or organic standards.” [Dkt. No. 17] 25 Ex. 1 ¶ 74; [Dkt. No. 17] Ex. 2 ¶ 84.

26 2 Direct purchasers are “persons who purchased Broilers directly from any of the Defendants or their subsidiaries or affiliates for use or delivery in the United States.” DPC at 1. 27 1 processing, selling, and administration.” DPC ¶ 101; IPC ¶ 111. Agri Stats also provided a more 2 detailed monthly “Bottom Line Report” to the defendants’ CEOs, CFOs, and other top executives, 3 which contained data for participating producers’ profits, overhead, interest, and “other key 4 operation information.” DPC ¶ 102; IPC ¶ 112. The suits allege that some chief executives 5 specifically referred to these reports when making business decisions. See DPC ¶ 106; IPC ¶ 116. 6 According to the allegations, the defendants and Agri Stats repeatedly met at quarterly 7 meetings to present company and industry-wide data. DPC ¶ 103; IPC ¶ 113. Agri Stats led 8 “detailed discussions about industry profitability” and other key metrics and told “company 9 executives how much the industry was over- or undersupplying the market, indicate[d] its estimate 10 of demand, and share[d] other information based on the data Defendants provided.” DPC ¶ 103; 11 IPC ¶ 113. The suits also allege that the defendants had numerous other opportunities to collude 12 with each other and via Agri Stats through participation in trade associations, investor 13 conferences, tours of competitors’ plants, and discussions regarding mergers, acquisitions, and 14 capital financing. DPC ¶¶ 270-90; IPC ¶¶ 280-300. 15 Though the reports were anonymized, they were allegedly sufficiently detailed such that “a 16 reasonably informed producer” could discern competitors’ identities, and it was “common 17 knowledge” that competitors—namely their knowledgeable top executives—did so by “reverse 18 engineering” the report data. DPC ¶ 100-102; IPC ¶ 110-12. To the extent that companies were 19 not able to identify their competitors’ data from Bottom Line Reports, they could clarify during 20 meetings with Agri Stats, when Agri Stats confirmed identities. DPC ¶ 103; IPC ¶ 113. 21 The Chicken Antitrust Suits allege that the reports and communications allowed the 22 defendants-producers to share confidential and proprietary information to reduce competition, 23 constrain supply, and create pretext for industry-wide production cuts. See DPC ¶ 112; IPC ¶ 122. 24 Between 2008-2009 and 2011-2012, the defendants allegedly engaged in both short- and 25 long-term production cuts to reduce Broiler supply. DPC ¶¶ 118, 171; IPC ¶¶ 128, 175. Short- 26 term cuts included typical measures from which producers could recover in a matter of weeks, 27 such as destroying eggs, killing and reducing the number of chicks, limiting processing plant 1 and 2011-2012 production cuts also involved “unprecedented” long-term cuts to breeder stocks 2 that “went further up their supply chains than ever before,” DPC ¶ 165; IPC ¶ 175, including 3 retiring and killing off breeder flocks and reducing purchases of breeder pullets, DPC ¶¶ 116-17, 4 214; IPC ¶¶ 126-27, 224. The long-term cuts could affect production for “a period of years.” 5 DPC ¶ 116; IPC ¶ 126. During the 2011-2012 cuts, the defendants allegedly made direct 6 purchases from each other to meet their sales needs despite reducing their own production, which 7 allowed them to act “as though [the cuts] were for a single unified company, rather than 8 competing businesses.” DPC ¶ 313; IPC ¶ 323. 9 The Chicken Antitrust Suits also contain allegations about the Broiler market and industry. 10 They allege that the Broiler industry is vertically integrated, DPC ¶ 243; IPC ¶ 253, and that 11 supply and demand are inelastic, DPC ¶ 252; IPC ¶ 262, in part because purchasers often cannot 12 forgo purchasing in the face of increasing prices, and in part because consumers do not substitute 13 chicken for other proteins, DPC ¶¶ 114, 255; IPC ¶¶ 124, 265. The suits also assert that the entire 14 industry uses similar cost structures, including the use of publicly available “spot prices,” and that 15 feed is the largest cost component. DPC ¶¶ 11, 299-300; IPC ¶¶ 11, 309-310. 16 Finally, the suits allege that the coordinated production cuts and the resulting increases in 17 Broiler prices were due to defendant’s anticompetitive behavior rather than market forces. DPC 18 ¶¶ 10-12; IPC ¶¶ 10-12. To support this, the complaints explain how decreases in the price of feed 19 costs—corn and soybean meal—led to increases, rather than decreases, in the price of Broilers. 20 DPC ¶¶ 300-302; IPC ¶¶ 310-312. 21 The Chicken Antitrust Suits allege that, as a result of the conspiracy: 22 A. Price competition has been restrained or eliminated with respect of Broilers; B. The prices of Broilers have been fixed, raised, stabilized, or maintained at 23 artificially inflated levels; and C. Purchasers of Broilers have been deprived of free and open competition. 24 DPC ¶ 339; IPC ¶ 350. 25 B. The Turkey Antitrust Suits 26 After entering a new insurance contract with Everest, as outlined below, Foster was named 27 in three antitrust lawsuits brought against turkey producers (the “Turkey Antitrust Suits”): Olean 1 Wholesale Grocery Coop., et al. v. Agri Stats, et al., No. 1:19-cv-8318 (N.D. Ill. filed Dec. 19, 2 2019), a putative class action of direct turkey purchasers (“Olean”), Complaint [Dkt. No. 6] 3 (“Compl.”) Ex. A ¶¶ 47-48; Sandee’s Catering v. Agri Stats, et al., No. 1:20-cv-2295 (N.D. Ill. 4 filed Apr. 13, 2020), a putative class action of indirect turkey purchasers (“Sandee’s”), Compl. Ex. 5 B ¶¶ 47-48; and Gnemi LLC v. Agri Stats, Inc. et al., No. 1:20-cv-07371 (N.D. Ill. filed Dec. 11, 6 2020) (“Gnemi”), Compl. Ex. C ¶¶ 47-48.4 The cases were later consolidated with additional 7 antitrust suits regarding the turkey market.5 8 The Turkey Antitrust Suits were filed against a group of turkey producers that allegedly 9 controls 80 percent of the wholesale turkey market in the U.S. Olean ¶ 1; Sandee’s ¶ 1. The suits 10 assert causes of action under § 1 of the Sherman Act, as well as state antitrust, consumer 11 protection, and unjust enrichment laws and doctrine. Olean ¶¶ 146-63; Sandee’s ¶¶ 146-232. The 12 complaints allege that Foster and other defendants conspired to raise and fix prices by exchanging 13 information regarding turkey production and sale through Agri Stats, with the goal of increasing 14 profitability in the market. Olean ¶¶ 3, 11; Sandee’s ¶¶ 3, 11. 15 The Turkey Antitrust Suits allege that defendants subscribed to Agri Stats and received 16 monthly reports much like those in the Chicken Antitrust Suits. Olean ¶¶ 10, 74; Sandee’s ¶¶ 10, 17 73. The reports allegedly contained information specific to turkey producers, “including 18 information on profits, prices, costs, and production levels,” as well as information on “industry- 19 wide supply levels,” “breeder flock and hatchery data,” and “growout flocks.” Olean ¶¶ 10,16; 20 Sandee’s ¶¶ 10, 16. The suits assert that the turkey reports included similar data as the reports in 21 the Chicken Antitrust Suits, such as “the number of broilers placed, chick mortality by week and 22 overall percentage, chick cost, days between flocks provided to contract farmers (aka, ‘down 23 time’), feed conversion rate . . . , and daily average weight.” Olean ¶ 17; Sandee’s ¶ 17. The 24

25 4 The Gnemi suit was voluntarily dismissed in January 2021, [Dkt. No. 17] Ex. 3, and I do not cite it further in this Order. 26

5 The “Turkey Antitrust Suits” refer to the Olean, Sandee’s, and Gnemi suits for the purposes of 27 this coverage dispute. The consolidated cases also included Winn-Dixie Stores, Inc. v. Agri Stats, 1 reports allegedly provided information that allowed the defendant-producers to compare 2 “performance, sales prices, and costs to other participants.” Olean ¶ 75; Sandee’s ¶ 74. 3 The Agri Stats reports were available to participating turkey producers, but not to the 4 public or purchasers. Olean ¶¶ 10, 88; Sandee’s ¶¶ 10, 87. To access the reports, companies were 5 required to pay fees and provide company data. Olean ¶ 10; Sandee’s ¶ 10. 6 The reports were allegedly provided to sales personnel, “top management and executives,” 7 and finance executives. Olean ¶¶ 13-15, 19; Sandee’s ¶¶ 13-15, 19. Various defendants allegedly 8 used the reports to evaluate items, prices, and distribution in relation to other producers, and to set 9 prices, and improve returns. Olean ¶¶ 13-15, 19; Sandee’s ¶¶ 13-15, 19. 10 Although the Agri Stats reports were anonymous, the complaints allege that the defendants 11 could “deanonymize” them and “identify the data of specific companies based on their industry 12 knowledge.” Olean ¶ 18; Sandee’s ¶ 18. 13 In addition to using Agri Stats data to collude, the Turkey Antitrust Suits allege that the 14 defendants’ “top-level executives . . . discuss[ed] topics with one another relating to pricing, 15 production, and other non-public proprietary information” during informal meetings at turkey 16 conferences, which “g[ave] CEOs and top-level executives comfort that their competitors remain 17 committed to a plan to artificially restrict turkey production.” Olean ¶ 127; Sandee’s ¶ 126. The 18 defendants also allegedly communicated through membership in trade councils and associations. 19 Olean ¶¶ 128-29; Sandee’s ¶¶ 127-28. 20 The Turkey Antitrust Suits generally allege that the turkey producers “exercise[d] a 21 remarkable level of industry-wide restraint in keeping the growth of turkey supply in check” and 22 that the defendant-producers “acted in a concerted way to decrease turkey supply.” Olean ¶¶ 20, 23 108; Sandee’s ¶¶ 20, 107. They also assert that the defendants engaged in coordinated production 24 cuts in 2009, 2013, 2014, and 2015. Olean ¶¶ 108-16; Sandee’s ¶¶ 107-15. The abnormal pricing 25 allegedly ceased shortly after and in response to the filing of the Chicken Antitrust Suits in 2016. 26 Olean ¶¶ 31, 110; Sandee’s ¶¶ 31, 109. 27 Finally, the complaints outline characteristics of the turkey market, including that it is 1 Olean ¶ 93, 96; Sandee’s ¶ 92. Additionally, they assert that there are few sellers in the market 2 and that the defendants control approximately 80 percent of production and processing. Olean 3 ¶ 102; Sandee’s ¶ 101. Turkey is also a “fungible” product, which supports price uniformity 4 between producers, but turkey is not easily substituted for other products. Olean ¶¶ 103, 106-07; 5 Sandee’s ¶¶ 102, 105-06. Demand for turkey products is inelastic and consumer demand does not 6 change significantly in response to changes in price. Olean ¶ 106; Sandee’s ¶ 105. 7 The Turkey Suits further allege that as a result of the defendant turkey producers’ 8 conspiracy: 9 A. Price competition has been restrained or eliminated with respect to turkey; B. The prices of turkey have been fixed, raised, stabilized, or maintained at 10 artificially inflated levels; C. [P]urchasers of turkey have been deprived of free and open competition; and 11 D. [P]urchasers of turkey . . . paid artificially inflated prices. Olean ¶ 141; Sandee’s ¶ 141. 12 13 C. The Policy 14 1. Policy Negotiations In 2017, Foster sought to transfer its insurance coverage from AIG. Declaration of Patrick 15 Sklarski (“Sklarski Decl.”) [Dkt. No. 57] Ex. 1 ¶ 3; Declaration of Dustin Feeny (“Feeny Decl.”) 16 [Dkt. No. 58] Ex. 1 ¶ 7. Foster’s insurance broker, Lockton, solicited quotes for directors’ and 17 officers’ (“D&O”) insurance coverage. Feeny Decl. ¶ 7. Foster specifically sought a policy that 18 would provide coverage for antitrust suits because it identified a trend of “food companies 19 increasingly being named in suits alleging antitrust violations.” Id. ¶¶ 5, 8. 20 In April 2017, Lockton began negotiating with Everest for Foster’s liability insurance 21 coverage, including coverage for antitrust claims. Sklarski Decl. ¶ 3. Everest provided Lockton 22 with its Private Company Liability Proposal, which included antitrust coverage. Id. Ex. B. 23 Because Everest was aware of the pending Chicken Antitrust Suits against Foster, the proposal 24 included a Specific Matter Exclusion (“SME”) that precluded coverage for liability related to the 25 Chicken Antitrust Suits, as well as two other “events.” Id. ¶ 5; id. Ex. B at 86. 26 Subsequently, Everest issued a Private Company Liability Policy to Foster for the period 27 1 for the period May 7, 2019, to May 7, 2020, without any changes to the Antitrust Coverage 2 Endorsement or the SME. Saka Decl., Ex. 22 at 97:8-14; Sklarski Decl. ¶ 9; see generally Private 3 Company Liability Policy (“Policy”) [Dkt. No. 6] Ex. 4. 4 2. Relevant Policy Terms 5 The Policy provides, among other things, Management and Company Liability coverage 6 for Foster for the policy period May 7, 2019, to May 7, 2020. See Compl. Ex. 4. The Insuring 7 Clauses of the Management and Company Liability Part provide, in relevant part, that Everest 8 “shall pay on behalf of [Foster] all Loss for which [Foster] becomes legally obligated to pay on 9 account of a Claim first made against [Foster] during the Policy Period or the Extended Reporting 10 Period, if exercised, for a Wrongful Act.” Policy at 17, as modified by Endorsement No. 17. For 11 the purposes of the Company Liability Coverage, a “Wrongful Act” is defined as “any actual or 12 alleged error, misstatement, misleading statement, neglect, breach of duty, omission or act by the 13 Company.” Id. at 60, Endorsement No. 17. 14 To provide antitrust coverage, Everest removed its standard antitrust exclusion from the 15 D&O policy form and added a form antitrust endorsement.6 Saka Decl., Ex. 22 at 59:21-60:18; 16 see Sklarski Decl. Ex. B at 85. The antitrust endorsement adds to the Insuring Clause:

17 E. ANTI TRUST COVERAGE The Insurer shall pay on behalf of the Company, all Loss for 18 which the Company becomes legally obligated to pay on account of any Anti-Trust Claim first made against the Company during 19 the Policy Period or the Extended Reporting Period, if exercised, for a Wrongful Act taking place before or during the 20 Policy Period, subject to a maximum limit of liability of $5,000,000, which is part of and not in addition to the applicable 21 Limits of Liability set forth in Items 2 and 6 of the Declarations. 22 Policy, Insuring Clause § I.E, as modified by Endorsement No. 21. Antitrust claims include 23 violations of the Sherman Act. Id. at 71, Endorsement No. 21. 24 The Policy also contains the SME, which provides:

25 The Insurer shall not be obligated to defend or be liable to pay Loss 26 6 The standard exclusion barred coverage of Claims “based upon, arising out of or attributable to 27 an actual or alleged violation of the Sherman Anti-Trust Act” and other state and federal laws on account of any: (i) Claim based upon, arising out of, or attributable 1 to any Events; (ii) investigation, defense, prosecution, adjudication, settlement, disposition or resolution of any Event(s); or (iii) any 2 Claim alleging the same or substantially the same Wrongful Acts, Interrelated Wrongful Acts, facts, circumstances or situations 3 underlying or alleged in any Events:

4 Events AIG Claim #501-519830-001 (Claimant: BROILER CHICKEN 5 ANTITRUST) AIG Claim #501-478035-001 (Claimant: ALEXANDERWONG) 6 Zurich Claim #9410555146 (Claimant: Fair Labor Standards Act)

7 It is further understood and agreed that the Insurer shall not be obligated to defend or be liable for Loss on account of any Claim 8 alleging, based upon, arising out of, or attributable to or in any way related directly or indirectly, in whole or in part, to an Interrelated 9 Wrongful Act (as that term is defined below) regardless of whether such Claim involved the same or different claimants, the same or 10 different Insureds, the same or different legal causes of action or is brought in the same or different venue or resolved in the same or 11 different forum.

12 For the purposes of this endorsement, the term Interrelated Wrongful Act means: (i) any fact, circumstance, act or omission 13 alleged in any Event(s) and/or (ii) any Wrongful Act which is the same as, is similar or related to, or a repetition of, any Wrongful Act 14 alleged in any Event(s). 15 Id. at 50, Endorsement No. 15. The Policy excludes coverage for any claim “based upon, arising 16 out of, or attributable to any fact, circumstance or Wrongful Acts which have been the subject of 17 any written notice given and accepted under any prior directors and officers, management liability 18 or comparable insurance policy or coverage part.” Id. Management and Company Liability 19 Coverage Part, Exclusions § IV, as modified by Endorsement No. 17. 20 The Policy does not include duty to defend coverage for the Management and Company 21 Liability Coverage Part. See Policy at 2, Item 6.7 22 7 The Policy provides: 23 1. If duty to defend coverage is purchased with respect to any Liability Coverage Part as designated in the Coverage Schedule 24 in Item 6 of the Declarations, the Insurer shall have the right and duty to defend any Claim covered under such Liability Coverage 25 Part, even if any of the allegations are groundless, false or fraudulent. The Insurer’s duty to defend any Claim shall cease 26 upon exhaustion of the Limit of Liability applicable to such Claim. 27 2. If duty to defend coverage is not purchased with respect to any 1 2 D. Denial of Coverage 3 In January 2020, Foster notified Everest of Olean. Saka Decl. Ex. 8; Declaration of James 4 Mandarino (“Mandarino Decl.”) [Dkt. No. 57]. In April 2020, Everest initially denied coverage 5 for the Turkey Antitrust Suits, informing Foster that coverage was precluded by the Policy’s SME. 6 See Mandarino Decl. ¶ 4. Foster requested reevaluation. See Saka Decl. Ex. 2. After reviewing 7 Foster’s concerns, Everest reiterated its determination that the SME applied and precluded 8 coverage for the Turkey Antitrust Suits. See Letter Denying Coverage (“Denial Letter”) [Dkt. No. 9 6] Ex. E.8 10 II. PROCEDURAL BACKGROUND 11 Foster filed this suit in June 2021, alleging breach of contract and seeking declaratory 12 judgment that the SME does not apply to the Turkey Antitrust Litigation and that Everest must 13 advance Foster’s defense costs. Complaint (“Compl.”) [Dkt. No. 6] 14:22-24. In August 2021, 14 Everest filed its answer and a counterclaim, seeking declaratory judgment that the Policy does not 15 afford coverage for the Turkey Antitrust Suits and that Everest has no duty to defend or advance 16 costs for the Turkey Antitrust Suits. [Dkt. No. 17] 32:3-9. 17 In January 2023, Everest moved for summary judgment Foster’s claims and its own 18 counterclaim. (“D. Mot.”) [Dkt. No. 57] 1:3-9. Foster cross-moved for partial summary judgment 19 on the declaratory judgment claims. (“P. Mot.”) [Dkt. No. 58] 1:3-9. Foster and Everest timely 20 and not the duty of the Insurer to defend any Claim covered under 21 such Liability Coverage Part. Solely with respect to such Liability Coverage Part, the Insurer shall advance covered 22 Claim Expenses within ninety (90) days after the receipt by the Insurer of properly detailed Claim Expenses invoices. Any 23 advancement of covered Claim Expenses shall be repaid to the Insurer by the Insureds severally according to their respective 24 interests if and to the extent it is later determined the Insureds shall not be entitled under the terms and conditions of this policy 25 to coverage for such Claim Expenses.

26 Policy at 12, Company Liability Policy General Terms and Conditions § VII.A.1-2.

27 8 It is not clear from the parties’ filings when Everest was made aware of Sandee’s and Gnemi, but 1 filed their respective oppositions and replies. (“D. Oppo.”) [Dkt. No. 60]; (“P. Oppo.”) [Dkt. No. 2 61]; (“D. Repl.”) [Dkt. No. 64]; (“P. Repl.”) [Dkt. No. 65]. I held a hearing on April 12, 2023, at 3 which counsel for both parties appeared. 4 LEGAL STANDARD 5 Summary judgment on a claim or defense is appropriate “if the movant shows that there is 6 no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of 7 law.” Fed. R. Civ. Proc. 56(a). In order to prevail, a party moving for summary judgment must 8 show the absence of a genuine issue of material fact with respect to an essential element of the 9 non-moving party’s claim, or to a defense on which the non-moving party will bear the burden of 10 persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has 11 made this showing, the burden then shifts to the party opposing summary judgment to identify 12 “specific facts showing there is a genuine issue for trial.” Id. at 324. The party opposing 13 summary judgment must then present affirmative evidence from which a jury could return a 14 verdict in that party’s favor. Anderson v. Liberty Lobby, 477 U.S. 242, 257 (1986). 15 On summary judgment, all reasonable factual inferences are drawn in favor of the non- 16 movant. Id. at 255. In deciding a motion for summary judgment, “[c]redibility determinations, 17 the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury 18 functions, not those of a judge.” Id. However, conclusory and speculative testimony does not 19 raise genuine issues of fact and is insufficient to defeat summary judgment. See Thornhill Publ’g 20 Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). 21 DISCUSSION 22 At issue in this case is whether the SME precludes coverage for the Turkey Antitrust Suits. 23 The exclusion precludes coverage for claims (1) “based upon, arising out of, or attributable to” the 24 Chicken Antitrust Suits or an Interrelated Wrongful Act; (2) “alleging the same or substantially 25 the same Wrongful Acts, Interrelated Wrongful Acts, facts, circumstances or situations underlying 26 or alleged in” the Chicken Antitrust Suits; and (3) “in any way related directly or indirectly, in 27 whole or in part, to an Interrelated Wrongful Act” in the Chicken Antitrust Suits “regardless of 1 Policy, Endorsement No. 15. An “Interrelated Wrongful Act” is defined as “any fact, 2 circumstance, act or omission alleged in” the Chicken Antitrust Suits or any act that is “the same 3 as, is similar or related to, or a repetition of” any wrongful act alleged in the Chicken Antitrust 4 Suits. Id. 5 Everest argues that the Turkey Antitrust Suits are subject to the SME because they allege 6 substantially the same underlying facts and circumstances or, alternatively, arise out of or are 7 attributable to the facts and circumstances alleged in the Chicken Antitrust Suits. Foster argues 8 that the lawsuits are not related because they involve different markets, objectives, schemes, 9 classes of plaintiffs, and underlying alleged acts. 10 I. PRINCIPLES OF CONTRACT INTERPREATION 11 As an initial matter, jurisdiction in this case is based on diversity, and neither party 12 disputes that the construction of the Policy is governed by California law. See Integon Nat’l Ins. 13 Co. v. Reece, 423 F. Supp. 3d 831, 840 (E.D. Cal. 2019) (applying California law of contract 14 interpretation in an insurance case heard under diversity jurisdiction). 15 “California courts interpret insurance contracts under the ‘ordinary rules of contractual 16 interpretation.’” L.A. Lakers, Inc. v. Fed. Ins. Co., 869 F.3d 795, 800 (9th Cir. 2017) (quoting 17 Palmer v. Truck Ins. Exch., 21 Cal. 4th 1109, 988 P.2d 568, 652 (1999)). The “fundamental rule[] 18 of contract interpretation” is that the “contract must give effect to the ‘mutual intention’ of the 19 parties.” MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 647, 73 P.3d 1205 (2003) (citations 20 omitted); see also Cal. Civ. Code § 1636 (“A contract must be so interpreted as to give effect to 21 the mutual intention of the parties as it existed at the time of contracting, so far as the same is 22 ascertainable and lawful.”). Where possible, courts determine the parties’ mutual intent “solely 23 from the written provisions of the insurance policy,” L.A. Lakers, 869 F.3d at 801 (quoting 24 Palmer, 988 P.2d at 652), to ascertain the “plain meaning” of the language, Hartford Cas. Ins. Co. 25 v. Swift Distrib., Inc., 59 Cal. 4th 277, 288, 326 P.3d 253, 259 (2014) (quoting Waller v. Truck Ins. 26 Exch., Inc., 11 Cal. 4th 1, 18, 900 P.2d 619 (1995)). The language is given its “clear and explicit 27 meaning,” interpreted in its “ordinary and popular sense,” looking to “the meaning a layperson 1 ascribe to the contract language is not ambiguous, [courts] apply that meaning.” Pension Tr. Fund 2 for Operating Eng’rs v. Fed. Ins. Co., 307 F.3d 944, 950 (9th Cir. 2002) (quoting AIU Ins. Co. v. 3 Superior Ct., 51 Cal. 3d 807, 822, 799 P.2d 1253 (1990)). 4 “[T]o determine whether an ambiguity exists,” “[t]he policy must be examined as a whole, 5 and in context.” Minkler v. Safeco Ins. Co. of Am., 49 Cal. 4th 315, 322, 232 P.3d 612, 616 6 (2010), opinion after certified question answered sub. nom. Minkler v. Safeco Ins. Co., 399 F. 7 App’x 230 (9th Cir. 2010) (citation omitted); see also Westport Ins. Corp. v. N. Cal. Relief, 76 F. 8 Supp. 3d 869, 878 (N.D. Cal. 2014) (noting that resolution of ambiguity is a question of law). 9 Insurance contract terms are ambiguous if they are “susceptible [to] more than one reasonable 10 interpretation.” Minkler, 232 P.3d at 617. If a term is ambiguous, it should be “interpret[ed] to 11 protect the objectively reasonable expectations of the insured.” Id. at 616 (internal citation and 12 quotation marks omitted). Basic coverage provisions follow this general rule and “are construed 13 broadly in favor of affording protection,” while “clauses setting forth specific exclusions from 14 coverage are interpreted narrowly against the insurer.” Id.; see also Kunde Enters., Inc. v. Nat’l 15 Sur. Corp., 608 F. Supp. 3d 883, 892 (N.D. Cal. 2022) (same). 16 Additionally, to give effect to an exclusion clause, the language must be “clear and 17 unmistakable” and “understandable from the standpoint of a layperson,” not merely unambiguous. 18 Kunde Enters., 608 F. Supp. 3d at 892 (quoting MacKinnon, 31 Cal. 4th at 648). The insurer has 19 the burden “to phrase exceptions and exclusions” in a clear and understandable way. Id. (quoting 20 MacKinnon, 31 Cal. 4th at 648). 21 Finally, as the insured, Foster has the initial burden to demonstrate that the conduct 22 forming the basis for the claim falls within the within the basic scope of the insurance policy. 23 Waller, 11 Cal. 4th at 16. Foster has done so by pointing to the Policy’s broad coverage for 24 antitrust claims. See Policy, Insuring Clause § I.E, as modified by Endorsement No. 21. The 25 burden now shifts to Everest to prove that the claim is excluded under a provision of the policy. 26 See Waller, 11 Cal. 4th at 16.; see also Raychem Corp. v. Fed. Ins. Co., 853 F. Supp. 1170, 1175 27 (N.D. Cal. 1994) (“[T]he insurer bears the burden at trial of proving that a statutory or policy 1 exclusion or limitation applies.”).9 2 II. THE SME IS NOT AMBIGUOUS 3 First, I assess whether the SME is ambiguous. The parties address each phrase in the SME 4 together but because the terms “based upon,” “same,” “related to,” and others have distinct 5 meanings and applications, I address each of these sections of the SME in turn. 6 A. Based Upon, Arising Out Of, or Attributable To 7 First, I assess whether the SME provision excluding claims that are “based upon, arising 8 out of, or attributable to” the Chicken Antitrust Suits or interrelated wrongful acts is ambiguous. 9 See Pension Tr. Fund, 307 F.3d at 950. If it is not ambiguous, I assign to the provision its plain 10 meaning, Hartford Cas. Ins. Co., 326 P.3d at 259, based on the parties’ mutual intent, L.A. Lakers, 11 869 F.3d at 801. 12 In insurance contracts, the clause “arising from” is “consistently given a broad 13 interpretation” and “broadly excludes from coverage claims with ‘a minimal causal connection or 14 incidental relation’” to the noted actions or allegations. L.A. Lakers, 869 F.3d at 801 (citations 15 omitted). “Arises from” means the claim “originat[es] from, ha[s] its origin in, grow[s] out of, . . . 16 flow[s] from, . . . [is] incident to, or ha[s] connection with” something else. Id. (citations omitted). 17 “It is settled that this language does not import any particular standard of causation or theory of 18 liability into an insurance policy.” Assoc’d Indus. Ins. Co., Inc. v. Mt. Hawley Ins. Co., 309 F. 19 Supp. 3d 812, 816 (N.D. Cal. 2018) (emphasis added) (quoting Acceptance Ins. Co. v. Syufy 20 Enters., 69 Cal. App. 4th 321, 328 (1999)). But California courts have clarified that some causal 21 connection is necessary, though a broad interpretation of causation is all that is required. 22 Acceptance Ins. Co., 69 Cal. App. 4th at 328-30; see also Fireman’s Fund Ins. Co. v. Discover 23 Prop. & Cas. Ins. Co., No. C 08-03079 WHA, 2009 WL 2591394, at *3 (N.D. Cal. Aug. 21, 2009) 24 9 Foster argues that because Everest has a duty to defend, it must defend claims that are even 25 potentially covered by the policy and so it has the burden to show no claims are even potentially covered. P. Mot. 9:19-11:23. It is not clear that the plain language of the Policy provides for a 26 duty to defend in addition to the clear duty to advance costs, though Everest does not contest this directly. However, because I find that the SME does not preclude coverage of the Turkey 27 Antitrust Suits, the specific burden does not affect the outcome of the case, and I do not address it 1 (“Although the phrase ‘arising out of’ should be broadly read to require only a minimal causal 2 connection, it requires more than ‘but for’ causation.” (citation omitted)). 3 In California, the clause “based upon” is given “the same broad reading as ‘arising out 4 of.’” L.A. Lakers, 869 F.3d at 801 (citation omitted). And given the similarities between the plain 5 meanings of these terms and “attributable to,” see Hartford Cas. Ins. Co., 326 P.3d at 259 (looking 6 first to the plain meaning of a provision when interpreting insurance contracts), it is logical that 7 this provision too is given a similarly broad reading. 8 Here, the policy language is not ambiguous because it clearly excludes from coverage 9 claims that arise from, are based upon, or are attributable to the Chicken Antitrust Suits, including 10 any facts, circumstances, acts, or omissions alleged in those suits. See L.A. Lakers, 869 F.3d at 11 801 (reaching a similar conclusion). That means that the SME precludes coverage of any claim 12 that originates from, grows out of, flows from, is incident to, or has connection with the Chicken 13 Antitrust Suits and alleged wrongful acts. See id.; see also Crown Cap. Sec., L.P. v. Endurance 14 Am. Specialty Ins. Co., 235 Cal. App. 4th 1122, 1130-31 (2015) (same). 15 None of the claims in the Turkey Litigation Suits originate from, grow out of, flow from, 16 are incident to, or have sufficient causal connection with the claims, facts, circumstances, acts, or 17 allegations in the Chicken Antitrust Suits. See Fireman’s Fund, 2009 WL 2591394, at *3 18 (affirming the requirement of a causal connection). For example, in Acceptance, the court 19 reasoned that an individual’s injury arose out of the work he was performing to repair a roof where 20 he was injured while leaving the job site through a roof hatch, because the job could not have been 21 done without passing through the hatch. 69 Cal. App. 4th at 328-29. The court explained that 22 relationship between the injury and the job performed was “more than incidental.” Id. at 328. In 23 contrast in Fireman’s Fund, the Honorable William Alsup reasoned that an injury did not “arise 24 out of” a bookstore’s ownership, maintenance, or use of leased premises because the bookstore 25 “was not instrumental in any of the acts that led to the injury” and indeed had no connection to or 26 control over the injury itself, which occurred at a temporary construction site nearby. 2009 WL 27 2591394, at *4. Accordingly, there was “neither a causal connection nor incidental relationship.” 1 Here, the allegations in the Turkey cases are independent from the facts and circumstances 2 of the Chicken cases. It is true that both cases contain allegations of using Agri Stats reports to 3 conspire with competitors, with the goal of coordinating production suppression to decrease 4 supply. But unlike in Acceptance, the alleged activities in the Turkey cases could have occurred 5 regardless of the alleged activities in the Chicken cases—there is nothing to indicate that the 6 alleged anticompetitive in the chicken market caused similar anticompetitive behavior in the 7 turkey market, particularly given that different individuals received the Agri Stats reports and were 8 responsible for making market-related decisions.10 Compare DPC ¶ 102; IPC ¶ 112 (CEOs and 9 CFOs) with Olean ¶¶ 13-15, 19 (sales and financial personnel as well as executives). Both suits 10 allege that chicken and turkey are not easily substituted, making it unlikely that changes in one 11 market would affect customers in the other. See DPC ¶ 255; IPC ¶ 265; Olean ¶ 106; Sandee’s 12 ¶ 105. There are no allegations, and the parties do not contend, that the decision makers for turkey 13 production were at all influenced by what they did or saw in the chicken market. Indeed, as in 14 Fireman’s Fund, there is nothing to suggest that the actors in either market had any control over 15 the actions, choices, or circumstances in the other market. Consequently, the Turkey Antitrust 16 Claims do not arise from, are not based upon, and are not attributable to the Chicken Antitrust 17 Claims. 18 This finding aligns with findings by other federal courts that have analyzed similar policy 19 language under California law. For example, the court in Millennium Laboratories, Inc. v. Allied 20 World Assurance Co. (U.S.), Inc., found that a policy provision excluding coverage for “any 21 Claim based upon, arising out of, directly or indirectly resulting from, in consequence of, or in any 22 way involving” certain prior lawsuits did preclude coverage for a subsequent government 23 investigation and lawsuit involving “exactly the same allegations” as those prior suits. 165 F. 24 Supp. 3d 931, 934-35 (S.D. Cal. 2016), aff'd, 726 F. App’x 571 (9th Cir. 2018) (emphasis 25 omitted). Here, while many of the allegations in the turkey and chicken suits seem similar at first 26 10 It is true that the Turkey Antitrust Suits assert that the alleged production cuts in the turkey 27 market ceased once the Chicken Antitrust Suits were filed, but that merely asserts that the chicken 1 blush, they involve different acts, actors, decisions, markets, timing, and consequences. As 2 discussed further below, they also involve different courses of conduct, different goals, and 3 different resulting injuries. Consequently, they are unlike the allegations in Millennium 4 Laboratories which were—literally—the same allegations. 5 In many ways the question here parallels that presented in an older Ninth Circuit case, 6 Eureka Federal Savings & Loan Association v. American Casualty Co. of Reading, Pennsylvania, 7 873 F.2d 229, 234 (9th Cir. 1989). There, an insurance policy provided a $20 million limit for a 8 single loss per year, and a $20 million limit per officer and director per year, but clarified that 9 “[c]laims based on or arising out of the same act, interrelated acts, or one or more series of similar 10 acts, of one or more Directors or Officers shall be considered a single loss.” Id. The insurer 11 argued that losses stemming from one case constituted a single loss under the policy because they 12 resulted from a single concerted strategy implemented by the insured to achieve a particular 13 outcome—“revers[ing] chronic operating losses.” Id. But the Ninth Circuit reasoned that the 14 losses were separate events and did not arise from (or relate to, see infra Part II.C) the same act, 15 despite originating from that single concerted strategy, because “numerous intervening business 16 decisions . . . took place after” the strategy was initiated which “required the exercise of 17 independent business judgement.” Id. at 235. Those independent business decisions caused the 18 losses, not the underlying strategy itself. Id. 19 Here, the use of Agri Stats to coordinate with other producers and decrease production to 20 increase prices parallels the concerted strategy and desired outcome in Eureka. But despite 21 apparent similarities, each strategy ultimately involved different acts and business decisions based 22 on different markets, different actors, different purchasers, and, of course, different products. 23 While Everest argues that the claims in Eureka were “far more diverse” than those here, D. Mot. 24 16:14-27, the point of that case was that the independent business decisions were what led to the 25 alleged injuries, not the underlying strategy itself. Indeed, the reports alleged in the Chicken 26 Antitrust Suits did not give rise to any liability in the Turkey Antitrust Suits, and the alleged 27 conferences and trade association meetings in the chicken cases did not cause the alleged unlawful 1 are not based upon the Chicken claims. 2 B. The Same or Substantially the Same 3 Next, I turn to whether the Turkey Antitrust Suits allege “the same or substantially the 4 same Wrongful Acts, Interrelated Wrongful Acts, facts, circumstances or situations underlying or 5 alleged in” the Chicken Antitrust Suits. Policy, Endorsement No. 15. As used in the provision, an 6 interrelated act is a “fact, circumstance, act or omission alleged” in the Chicken Antitrust Suits or 7 any wrongful act that is the same as or similar to wrongful acts in the chicken suits. Id., 8 Endorsement Nos. 15, 17. 9 Again, I first assess whether the provision is ambiguous. See Pension Tr. Fund, 307 F.3d 10 at 950. It is not: it clearly precludes coverage for claims that are “the same or substantially the 11 same” as the claims, acts, facts, circumstances, situations, or omissions in the Chicken Antitrust 12 Suits. Accordingly, I turn to the plain meaning of the provision. See Hartford Cas. Ins. Co., 326 13 P.3d at 259. 14 A layperson would not define the chicken and turkey suits as “the same.” See id. at 288. 15 As noted, and despite Everest’s contention that “the only distinction” between the suits is “the 16 type of poultry involved,” D. Mot. 13:24-25, the allegations involve different products, different 17 markets, different reports, different time periods, and different acts taken to decrease production.11 18 There are also no allegations that the acts in one market caused the acts in the other market, or that 19 the impact of the alleged anticompetitive behavior in either market affected the other market. To 20 Everest’s point, numerous allegations are similar at a high-level: an alleged conspiracy to decrease 21 production through use of Agri Stats reports, vertically integrated and inelastic markets, causes of 22 action under the Sherman Act, and, of course, poultry. But despite these high-level similarities, a 23 layperson would not understand these two sets of lawsuits—particularly given their very different 24 alleged details—to be “the same.” That conclusion is clear from the plain meaning of the text, and 25 11 Everest asserts that the only relevant question is whether the “wrongful acts” alleged in each suit 26 are the same or similar, and the comparison of the markets is irrelevant. D. Oppo. 6:15-28. First, I do consider whether the acts are the same or similar. Second, the plain language of the provision 27 refers to facts, circumstances, acts, or omissions, and so it is proper for me to also consider 1 no further analysis is needed. 2 The two sets of suits are also not “substantially the same” given the term’s plain meaning. 3 See Hartford Cas. Ins. Co., 326 P.3d at 259. Again Everest argues that the allegations in the 4 Turkey Antitrust Suits are substantially the same as those in the Chicken Antitrust Suits because 5 they both allege that Foster used the same type of data from the same source with the same goal of 6 curtailing production, and that the turkey suits specifically referenced the Agri Stats data in the 7 chicken suits. D. Mot. 12:24-13:20. To be sure, these appear similar at a high level—but as 8 noted, the details of the modus operandi differed. The alleged production cuts took different 9 forms—in the chicken suits, Foster allegedly broke eggs, exported and destroyed breeder hens, 10 killed chicks, limited processing plant capacity, and reduced purchases of breeder hens, DPC 11 ¶¶ 116-17, 214, while the turkey suits state only that the defendant integrators were able to 12 exercise a remarkable level of industry-wide restraint in keeping the growth of turkey supply in 13 check” over the conspiracy period, Olean Suit ¶¶ 20, 108—and the actions occurred at different 14 times, with Foster allegedly colluding with different actors (turkey producers as opposed to 15 chicken producers), impacting different markets. The two sets of lawsuits also do not allege that 16 the production cuts in each market affected the same product or buyers, occurred at the same 17 facilities, or caused the same results. Consequently, the plain meaning of this provision does not 18 preclude coverage for the Turkey Antitrust Suits.12 19 C. In Any Way Related Directly or Indirectly, in Whole or in Part 20 Finally, I assess the ambiguity of the SME provision excluding claims that are “in any way 21 12 It appears that one of the only California cases to define “substantially the same” in insurance 22 contract interpretation arose in a very different factual context. See State Farm Fire & Cas. Co. v. Elizabeth N., 9 Cal. App. 4th 1232 (1992). In State Farm, the court reasoned that multiple acts of 23 negligence were “substantially the same” where the insured repeatedly failed to care for and supervise a child, and the child suffered repeated injury because of nearly identical repeated acts. 24 Id. at 1237-38. The court contrasted a prior case where individual customers each suffered a single injury from a single act—serving contaminated food—and that court had found those acts 25 of serving were not “substantially the same.” Id. at 1237 (citing Mason v. Home Ins. Co. of Ill., 177 Ill. App. 3d 454, 126 Ill. Dec. 841, 844, 532 N.E.2d 526, 529 (1988)). Though these cases are 26 factually distinct, they support my finding because the alleged acts in the turkey and chicken markets—including communicating with different producers, taking actions at different facilities, 27 receiving reports with different data, and impacting the production of different products—more 1 related directly or indirectly, in whole or in part, to” an interrelated act, defined as a “fact, 2 circumstance, act or omission alleged” in the Chicken Antitrust Suits or any wrongful act that is 3 the same as or similar to wrongful acts in the chicken suits. Policy, Endorsement No. 15; see 4 Pension Tr. Fund, 307 F.3d at 950. If it is not ambiguous, I assign to the provision its plain 5 meaning, Hartford Cas. Ins. Co., 326 P.3d at 259, based on the parties’ mutual intent, L.A. Lakers, 6 869 F.3d at 801. 7 As a preliminary matter, although the parties disagree over the scope of this provision, 8 their arguments do not indicate the provision is ambiguous.13 In Bay Cities Paving & Grading, 9 Inc. v. Lawyers’ Mutual Insurance Co., 5 Cal. 4th 854, 868-69, 855 P.2d 1263, 1271-72 (1993), 10 the California Supreme Court explained that courts must ask whether a “word is ambiguous in the 11 context of this policy and the circumstances of this case” and then determined that the word 12 “related” was not ambiguous in that case despite its potential for multiple meanings. The court 13 reasoned that “related” was a broad word, encompassing both logical and causal connections, but 14 that did not render the term ambiguous in the context of that policy. Id. at 1274-75. That 15 reasoning applies to this case. With respect to this Policy, the SME precludes coverage of claims 16 related to facts, circumstances, acts, omissions, or wrongful acts in the Chicken Antitrust Suits, 17 which means any claims that are logically or causally related. See id. That this provision is broad 18 does not render it ambiguous; indeed, the language is clear, especially because it is modified by 19 the Chicken Antitrust Suits and is contextualized by the broader Policy provision for general 20 antitrust coverage. Accordingly, the Policy precludes coverage of claims related to the Chicken 21 Antitrust Suits. This is not ambiguous. 22 Consequently, the plain meaning of “related” applies here to effect the parties’ mutual 23 intent. Under California law, the plain meaning of “related” encompasses both causal and logical 24 connections. See Bay Cities, 855 P.2d at 1271, 1274; see also Fin. Mgmt. Advisors, LLC v. Am. 25 Int’l Specialty Lines Ins. Co., 506 F.3d 922, 926 (9th Cir. 2007) (noting with approval the logical 26

27 13 In its motion, Foster argues that “[a]t a minimum, the Specific Matter Exclusion is ambiguous 1 and causal connection explained in Bay Cities). Because there are no allegations, claims, facts, or 2 other circumstances that suggest anything in the Chicken Antitrust Suits caused the actions and 3 facts alleged in the Turkey Antitrust Suits, I focus on whether there is a logical connection 4 between the two. In reviewing many California and federal cases interpreting the word “related,” 5 the Honorable Edward Chen emphasized that different acts are “logically related” when they are 6 “part of a single course of conduct or a single plan.” Liberty Surplus Ins. Corp. v. Samuels, 562 F. 7 Supp. 3d 431, 441-41 (N.D. Cal. 2021). The Ninth Circuit has also noted the importance of 8 different acts causing “the same injury” when finding claims are logically related, and that acts 9 causing “separate” or “independent” losses may not be related. Fin. Mgmt. Advisors, 506 F.3d at 10 926. 11 Though the parties cite no cases with parallel facts and circumstances that define “related” 12 in an exclusionary provision, and I could find no such cases, many courts throughout California 13 and this circuit have analyzed the word “related” in the insurance context and all provide insight to 14 assess the term’s plain meaning here. The cardinal California case addressing the word “related” 15 is Bay Cities, in which the California Supreme Court found that two different acts were “related” 16 as provided in the relevant insurance policy where an attorney made two independent errors that 17 led to one injury for one client. 855 P.2d at 873. Although neither error caused the other, the 18 court reasoned that the acts were related because they “arose out of the same specific transaction,” 19 happened to the same client, were “committed by the same attorney,” and resulted in the same 20 injury, so “[n]o objectively reasonable insured . . . could have expected” the claims to constitute 21 unrelated acts given the policy language. Id. at 1275. 22 Similarly, in Liberty Surplus, 562 F. Supp. at 435-36, a client hired a law firm to seek 23 damages from a construction company that reneged on promises and left the client with a 24 defective final project. That law firm initiated four separate lawsuits, all with the goal of obtaining 25 compensation for its client due to the defective construction—a collection action, an indemnity 26 action, one related to the construction company’s bankruptcy proceedings, and one against a third- 27 party manufacturer. Id. at 436. Most of these did not pan out for the client, and the client sued its 1 firm’s insurer, Liberty Surplus, noted the $2 million per claim limit in its insurance policy, but the 2 client asserted that each of the four underlying lawsuits constituted four separate claims because 3 they were four separate instances of attorney misconduct. Id. at 434, 442-43. Judge Chen 4 disagreed and found that at least two of those suits arose from “related acts” and so constituted a 5 single claim under the relevant policy because they were “part of a single course of conduct or a 6 single plan”--to obtain compensation for the client from the insurance defects. Id. at 442-43. 7 The present case differs from Bay Cities and from Liberty Surplus. The attorney in Bay 8 Cities caused one injury through two errors and the law firm in Liberty Surplus sought one 9 outcome across four lawsuits. Here, the Chicken Antitrust Suits allege that chicken purchasers 10 were injured and that Foster acted to increase profits in the chicken market, and separately and 11 distinctly the turkey suits allege that turkey purchasers were injured and that Foster acted to 12 increase profits in the turkey market. Both suits assert that the products are inelastic and that 13 purchasers of each product either do not or cannot switch to other products, DPC ¶¶ 114, 252, 255; 14 IPC ¶¶ 124, 262, 265; Olean Suit ¶ 106; Sandee’s Suit ¶ 105; Gnemi Suit ¶ 102—meaning the 15 chicken-related injuries are wholly unrelated to the turkey-related injuries in that they did not 16 cause, could not prevent, and were therefore not connected to the other. Consequently, the two 17 alleged courses of conduct—the use of Agri Stats to conspire and increase profitability in the 18 chicken market and in the turkey market—did not cause a single injury and were not motivated by 19 a single goal. They are not related under the reasoning in these cases. 20 The parties also cite cases that analyzed whether lawsuits against investment advisors were 21 “related.” In Financial Management Advisors, the Ninth Circuit addressed two underlying 22 lawsuits where former clients alleged that the insured made misrepresentations to induce those 23 clients into making certain investments. 506 F.3d at 924-25. The alleged misrepresentations were 24 made by the same financial advisor and concerned at least one of the same investment products, 25 but the Ninth Circuit held the suits were not “related” under the relevant insurance policy. Id. at 26 925-26. The court reasoned that the cases concerned unrelated investors with unique investment 27 objectives who were advised on separate dates, and that despite the similar allegations concerning 1 suits, including that one asserted the misrepresentations were based on failure to disclose 2 information and the other asserted the misrepresentations were based on affirmative written 3 statements. Id. at 925-26. The opinion specifically distinguished Bay Cities, noting that case 4 involved a single injury caused by two acts and either act alone would have caused the injury, 5 whereas Financial Management Advisors involved “separate” and “independent” losses. Id. at 6 926. 7 A court in the Central District reached a different conclusion when addressing whether 8 multiple lawsuits were related in Liberty Insurance Underwriters, where one real estate firm and 9 several specific named attorneys made similar false representations to investors that the sellers 10 paid commissions while in reality the purchase price was marked up to include commissions. 11 Liberty Ins. Underwriters, Inc. v. Davies Lemmis Raphaely L. Corp., 162 F. Supp. 3d 1068, 1071- 12 73 (C.D. Cal. 2016), aff’d, 708 F. App’x 374 (9th Cir. 2017). Though all alleged 13 misrepresentations were made under the guise of helping investors avoid capital gains liability 14 through participation in a “section 1031 ‘like-kind exchange,’” the investments themselves were 15 made by different entities on different dates and under different terms. Id. at 1071, 1073. The 16 court found the lawsuits were related because they “all allege[d] the same misrepresentations and 17 omissions . . . in the same form relating to similar or identical investments and properties” and 18 because the acts all arose from “a single course of conduct, a unified policy of making alleged 19 affirmative misrepresentations to investors in order to induce them to invest in commercial real 20 estate.” Id. at 1078. The court distinguished Financial Management Advisors by explaining that 21 that case involved “different types of wrongdoing related to different types of investments” while 22 the case at hand involved “similar or identical acts of wrongdoing which were part of a general 23 course of conduct aimed at the same goal of inducing investors to participate in transactions 24 related to section 1031 like-kind exchanges.” Id. at 1079. 25 The present case more closely parallels Financial Management Advisors. Like that case, 26 here there are different underlying products—chicken and turkey, paralleling the different 27 investment products—and the alleged wrongful acts are distinct. While the chicken suits allege 1 exported chicks, DPC ¶¶ 116-17; IPC ¶¶ 126-27, the turkey suits assert that the turkey producers 2 decreased turkey supply by “exercis[ing] . . . industry-wide restraint” and engaging in certain 3 coordinated production cuts. Olean Suit ¶¶ 20, 108; Sandee’s Suit ¶¶ 20, 107; Gnemi Suit ¶¶ 20, 4 104. Financial Management Advisors distinguished between allegations of affirmative 5 misrepresentations versus failure to disclose, while here the chicken suits assert many specific 6 affirmative acts related to production cuts but the turkey suits—to the extent they offer specifics— 7 focus on “restraint.” These are different wrongful acts, involving different products. And unlike 8 Liberty Insurance, where specific attorneys carried out the misrepresentations, here Foster 9 provides evidence that the actions in each set of suits would have been carried out by different 10 employees or executives. See Feeny Decl. ¶¶ 16, 19. The chicken suits also allege specific acts of 11 collusion at Agri-Stats conferences, like confirming identities of competitors, DPC ¶ 103; IPC 12 ¶ 113, while the turkey suits seem to assert that the industry conferences and councils involved 13 anticompetitive behavior distinct from Agri-Stats, Olean ¶¶ 127-29. These are also different acts. 14 And while it is true that both sets of suits assert that Foster affirmatively used Agri Stats reports to 15 coordinate production changes, given the reasoning in Financial Management Advisors and 16 Liberty Insurance Underwriters, those are not related acts, facts, or circumstances because they 17 concerned different products. 18 Finally, the parties both cite to Eureka, 873 F.2d 229, which despite its age is most 19 factually similar to the present case. There the Ninth Circuit assessed whether different insurance 20 claims arose from the same act or were sufficiently related so as to be considered a single loss. Id. 21 at 234. Underlying the case were multiple lawsuits alleging that the insured’s former officers 22 breached their fiduciary duties to clients, and the court reasoned that even though all alleged 23 breaches of duty arose from a single strategy—a particularly aggressive lending policy designed to 24 “reverse chronic operating losses”—the claims were not related because “there were numerous 25 intervening business decisions that took place after the loan policy was initiated that required the 26 exercise of independent business judgment.” Id. at 231, 234-35. Indeed, it was not “the decision 27 to implement the aggressive loan policy” that caused the losses but rather the officers’ alleged 1 The reasoning in Eureka explains that even if the use of Agri Stats to increase profitability 2 constitutes the same general course of conduct with the same goal (it does not), the claims are not 3 related where they involve many intervening decisions made after the single strategy or policy is 4 implemented. 873 F.2d at 234-35. As in Eureka, here there are allegations of separate and unique 5 business decisions made after the Agri Stats data was used. Especially salient are the allegations 6 about how production was decreased: in the chicken market, it was by destroying eggs, exporting 7 breeder hens, and decreasing purchase of new chickens from genetics companies to hinder 8 production in the long term. DPC ¶¶ 116-17, 165; IPC ¶¶ 126-27, 175. Not only are these 9 allegations unique to the chicken market and made only in the chicken suits, but also it is not clear 10 whether any of these actions could be taken in the turkey market or whether they would have the 11 same effect on the market. See generally Feeny Decl. (explaining differences in Foster’s approach 12 to marketing, pricing, supply, and production in each market). Additionally, the turkey suits 13 allege that turkey producers conspired at some conferences apparently separate and apart from 14 their use of Agri-Stats, see Olean ¶¶ 127-29, which is distinct from the allegations in the chicken 15 cases. As in Eureka, then, here it is not the receipt of Agri Stats reports that caused the alleged 16 injuries but rather the decreased production—resulting from different business decisions—that 17 was what ultimately increased prices for purchaser-plaintiffs. Where the decreases to production 18 themselves are distinct and result from independent business decisions, the claims are not related. 19 See Eureka, 873 F.2d at 234-35. 20 Importantly, I consider the plain meaning and definition of “related” in a broad sense and 21 in the context of the policy as a whole. See Minkler, 232 P.3d at 616. What Everest seems to 22 request is to look beyond the clear language and read into the SME a provision that excludes any 23 claims where Foster is sued for its use of Agri Stats data in production decisions.14 But that is not 24 what the SME says, despite both parties having the opportunity to add or adjust language. Indeed, 25 14 Everest points out that it agreed to provide coverage of the Jien suit, which includes allegations 26 about Foster’s use of Agri Stats. See D. Oppo. 13:5-14:7. While Everest is correct that this shows it does not read the SME to exclude all claims at all related to Agri Stats, this does not further 27 Everest’s argument here because, of course, the SME does not have language that implies it 1 that interpretation would conflict with the Policy’s broad provision for general antitrust coverage, 2 which does not exclude particular kinds of antitrust cases or modus operandi besides the wrongful 3 acts listed in the SME. See P Mot. 12:10-13:10. 4 I note too that a layperson would not understand the two sets of lawsuits to be “related.” 5 See Hartford Cas. Ins. Co., 326 P.3d at 259. At the most basic level, no layperson would think 6 that chicken and turkey are related. Though both lawsuits allege the use of Agri Stats reports to 7 conspire with competitors, they are related only in that both involve poultry—and a layperson, 8 reading the provision in the context of the Policy as a whole, see Minkler, 232 P.3d at 616, would 9 not read the provision precluding coverage of claims “related” to the chicken suits as applying to 10 claims concerning turkey because the Policy does not specify poultry, Agri Stats, or even 11 conspiracies. 12 Accordingly, I find that the Turkey Antitrust Suits are not related to the Chicken Antitrust 13 Suits given the term’s construction in the policy. 14 III. EVEN IF THE PROVISION WERE AMBIGUOUS 15 Finally, even if the language were ambiguous—it is not—the interpretation would favor 16 Foster. Exclusion clauses with ambiguous language are “interpreted narrowly against the insurer.” 17 Minkler, 232 P.3d at 617; Kunde Enters., 608 F. Supp. 3d at 892. As discussed, even broad 18 readings of the “arising out of” and the “related” language show the Turkey Antitrust Suits are not 19 excluded. Any interpretation of “same” or “substantially the same” does not extend to include 20 different lawsuits arising out of different acts and decisions, made by different industry actors, 21 influenced by different Agri Stats reports, with different goals. And a narrow interpretation of 22 “related” emphasizes that, despite apparently similar modus operandi, the wrongful acts and 23 affected products are sufficiently different so as to render the cases unrelated. 24 Additionally, exclusion clauses with ambiguous language are interpreted “to protect the 25 objectively reasonable expectations of the insured.” Minkler, 232 P.3d at 616; see also In re K F 26 Daires, Inc. & Affiliates, 224 F.3d 922, 926 (9th Cir. 2000) (same). Here, it was objectively 27 reasonable for Foster to expect that the SME would not preclude coverage for a separate set of 1 goals and acts taken to decrease production—both because Everest’s chosen language in this 2 section of the SME provision did not clearly exclude coverage based on poultry or use of Agri- 3 Stats and because Foster intentionally sought out a policy providing coverage for future antitrust 4 threats. Cf. Liberty Surplus Ins., 562 F. Supp. 3d at 442 (finding there was “evidence that an 5 objectively reasonable insured would have expected” the claims to be related). This expectation is 6 reasonable particularly viewing the policy “as a whole, and in the circumstance of th[is] case.” 7 Bay Cities Paving, 5 Cal. 4th at 867. Consequently, even if the language were ambiguous, the 8 proper interpretation of the SME does not preclude coverage of the Turkey Antitrust Suits. 9 A few other arguments merit discussion.15 First, while the Illinois district court’s denial of 10 the motion to relate these cases is well-reasoned, it was conducted for different reasons, under a 11 different standard, and applying different legal rules, and so I do not rely on that reasoning in this 12 Order. The same is true of the case Perdue Farms, Inc. v. National Union Fire Insurance Co. of 13 Pittsburg, PA, 517 F. Supp. 3d 458 (D. Md. 2021). The district court in Maryland did not apply 14 California contract law, so its thorough analysis is not applicable here. 15 Finally, the SME is not rendered meaningless, as Everest asserts, by this Order. See D 16 Mot. 19:1-20:15. Merely because these lawsuits are not covered by the provision does not mean 17 other claims beyond those stemming directly from the Chicken Antitrust Suits would not be 18 covered. Indeed, this Order clarifies how claims “related” to the chicken suits are broader than 19 just those directly arising from the chicken suits, which inherently gives meaning to both the SME 20 and the prior written notice provision. For the same reason, the policy section precluding claims 21 that were “based upon, arising out of, or attributable to any fact, circumstance or Wrongful Acts 22 which have been the subject of any written notice” is not rendered illusory by this interpretation of 23 the SME. See Policy, Exclusions § IV, as modified by Endorsement No. 17. That section clearly 24 excludes claims from the Chicken Antitrust Suits (and other wrongful acts outlined in the SME) 25 but as described, the SME provides a broader exclusion than that provision, even though it does 26 15 Everest argues in part that some of Foster’s evidence impermissibly provides legal conclusions 27 and should not be considered. D. Oppo. 5:19-8. To the extent that these documents provide legal 1 not exclude the turkey claims. 2 Accordingly, Everest has failed to show that the SME precludes coverage of the Turkey 3 || Antitrust Suits.!° 4 CONCLUSION 5 For those reasons, Foster’s motion is GRANTED and Everest’s motion is DENIED. It is 6 || DECLARED that the Policy does not preclude coverage of the Turkey Antitrust Suits and that 7 Everest has a duty to reimburse past costs and an ongoing obligation to defend the suits up to the 8 || Policy limit. 9 This resolves all of the issues in this case. Foster is directed to prepare a proposed form of 10 || Judgment and to file it by May 1, 2023, after seeking Everest’s approval as to form. If there is any 11 disagreement regarding the form of the Judgment, the parties may submit a joint letter of no more 12 || than four pages explaining the disagreement. 5 13 IT IS SO ORDERED. 14 |] Dated: April 24, 2023 .

illiam H. Orrick 17 United States District Judge 18 19 20 21 22 23 24 25 26 27 '6 Foster does not move for summary judgment on its breach of contract claim, which is mooted 2g || by this Order.