Conspiracy Theory: Coverage for Claims Involving Allegations of Conspiracy

Plaintiffs in mass tort cases always have had a knack for expanding the universe of potential defendants, seeking the maximal number of deep pockets in each case. Historically, doctrines such as market-share liability and concert of action have been relied upon by plaintiffs to access all the participants in an industry, based on the acts of only some of the participants therein. Recently, as those theories of broadened liability have begun to meet with judicial resistance, plaintiffs have turned to an ancient common law doctrine through which to expand the number of available defendants in mass tort suits: the conspiracy theory. The focus of this article is on the question of whether industry participants accused of participating in such an alleged conspiracy can and should properly expect their liability insurers to defend such suits and indemnify any loss resulting therefrom. As shown below, there is no categorical bar to coverage for conspiracy liability in standard-form comprehensive general liability policies ("CGL"). Instead, coverage turns on the object of the alleged conspiracy and the injury suffered. Although many courts have shown great hostility to coverage for conspiracy-only claims, in many circumstances arising in the context of traditional mass tort suits insureds should be entitled to a defense (certainly) and indemnity (depending on the facts).