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On Feb. 18, 2005, President Bush signed into law the Class Action Fairness Act of 2005 ("CAFA"). The primary purpose of this legislation was to reduce forum shopping in class action-friendly state courts by granting federal courts greater jurisdiction over class action lawsuits. It is this primary purpose that received most of the attention in the mainstream media and in legal analyses of this legislation.

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We were there at the beginning. Members of Shook, Hardy &amp; Bacon's Public Policy Group were seated at the table with others in the business community when plans were first discussed to create a law that would change the jurisdiction of the federal courts so that cases that were truly interstate in nature were resolved in those courts, and not in what has been referred to as state "Judicial Hellholes". (A full explanation and description of Judicial Hellholes is located at <i>www.atra.org</i>.)

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The Supreme Court's recent unanimous decision in <i>Grable &amp; Sons Metal Products, Inc. v. Darue Engineering &amp; Manufacturing</i>, 125 S. Ct. 2363 (2005), put to rest almost 20 years of uncertainty regarding the scope of federal question jurisdiction. Responding to a split within the Courts of Appeals, the Supreme Court at long last addressed its holding in <i>Merrell Dow Pharmaceuticals Inc. v. Thompson</i>, 478 U.S. 804 (1986), that continued to baffle lower federal courts and legal scholars ' namely, whether <i>Merrell Dow</i> required a federal cause of action as a condition for exercising federal question jurisdiction. <i>Grable &amp; Sons</i> not only responded with a resounding "no," concluding that federal question jurisdiction does not require a federal private right of action, but it also reaffirmed the Court's longstanding commitment to the broader and more flexible <i>Smith v. Kansas City Title &amp; Trust Co.</i>, 255 U.S. 180 (1921), approach to federal question jurisdiction.

Highlights of the latest insurance cases from around the country.

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In an insurance coverage dispute, it is crucial to gain access to the insurance company's claim files that reflect the insurer's investigation and handling of the claim. These materials are often the best source of information for determining whether an insurer fulfilled its contractual obligation to investigate and handle the claim in good faith. Because the ultimate success of a policyholder's claim may depend on how much of this information the policyholder is able to obtain, insurers often attempt to shield their investigations and claims handling behind the wall of the attorney-client privilege and/or the work product doctrine. However, courts largely have rejected efforts by insurance companies to use privilege as a shield to deny discovery of investigation and claims handling material or information.

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As directors' and officers' insurance is intended to provide coverage for claims by third parties, most, if not all, D&amp;O policies contain an exclusion commonly referred to as an "insured v. insured exclusion." The exclusion bars coverage for claims brought by one insured against another insured. Historically, the exclusion was drafted in response to "friendly" and collusive lawsuits arising out of the savings and loan bank crisis in the early to mid-1980s. Essentially, friendly lawsuits were being filed by the failed banks against their directors and officers in an effort to recoup loan losses from the proceeds of D&amp;O policies. Thus, the primary purpose in drafting the insured v. insured exclusion was &mdash; and continues to be &mdash; to prevent a corporation from suing its own directors and officers to obtain the benefits of coverage for itself, rather than third parties.

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Since 2001, numerous insurance companies have sought to impose on asbestos liability claims so-called "Documentation Requirements" ("DRs"), seeking to limit coverage provided by its policies to those claims that meet certain criteria. Those insurance companies assert that the DRs are necessary to counter the growing number of unsubstantiated asbestos-related bodily injury claims brought against policyholders. Generally, the DRs require a policyholder to provide medical documentation and data to show each asbestos injury for each claimant, as well as provide product identification and exposure history. <i>See</i> Scott Moser, Mealey's Seminar, 16 <i>Mealey's Litig. Rep.</i> 12 (Dec. 11, 2001) (an attorney for Equitas speaking about the documentation requirements). The policyholders, on the other hand, see the DRs as unreasonable conditions to coverage that are not found anywhere in the policy language. They argue that in many cases it may be reasonable for them or for their primary carriers to settle or to have settled claims for which there is not yet fully developed information, to avoid, <i>inter alia</i>, increased defense costs and the possibility of a much higher judgment if the information developed is unfavorable.

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The Federal Circuit piqued the interest of the patent bar when it issued its decision granting Edward H. Phillips' petition for rehearing <i>en banc</i>. <i>Edward H. Phillips v. AWH Corp. et al.</i>, 376 F.3d 1382 (Fed. Cir. 2004) ("<i>Phillips I</i>"). Patent practitioners expected that the court would finally provide the bar with a clear understanding of how claims should be interpreted and construed. The court's guidance would help not only patent prosecutors so that claims could be crafted with appropriate scope to provide maximum coverage for a client's invention, but also aid patent litigators so that efforts could be focused on specific disputed claim terms and their construction rather than scatter shot attacks on every possible claim term in the hope that one of the shots would hit home. Whether the Federal Circuit provided any guidance to the bar has yet to be determined. However, it is clear that despite the fervent hope of the patent bar, no new law was made with the <i>Phillips en banc</i> decision.