Wade Clark Mulcahy LLP

The Seventh Circuit Court of Appeals recently examined personal jurisdiction over worldwide insurance policies.  In <a href="https://www.wcmlaw.com/wp-content/uploads/2019/10/Lexington-v.-Hotai.pdf">Lexington v. Hotai</a>, the court held that an insurer for a bicycle manufacturer could not compel contribution from Taiwanese insurers over a cycling injury settlement.

The initial coverage dispute arose out of severe injuries that a Louisiana resident sustained while riding a Trek bike he rented in Texas.  When the front wheel detached, he fell causing paralysis in his arms and legs.  He sued Trek in Wisconsin's state court, the bicycle manufacturer, as well as Lexington, the insurance company that insures Trek through a commercial general liability and umbrella policy and defended Trek in the suit.  After the case settled, Lexington sued Zurich and Taian, two Taiwanese insurance companies, for reimbursement.  The District Court dismissed the case for lack of personal jurisdiction and Lexington appealed.

In affirming, the Seventh Circuit found that while Wisconsin’s long-arm statute reached the Taiwanese insurers, the suit failed to meet the Constitution’s due process requirement that the defendants have sufficient “minimum contacts” that they “purposefully availed” themselves to Wisconsin’s jurisdiction.  In so doing, the court rejected Lexington’s argument that this requirement was met by the policy’s “worldwide coverage” provisions, finding that foreseeability of a Wisconsin lawsuit alone is not enough.

This case carries big implications for those seeking jurisdiction over foreign companies, especially foreign insurers. It serves as a reminder that worldwide coverage does not necessarily mean worldwide jurisdiction.