The High Court has ruled on how several US shareholder claims against Perrigo Company plc should be treated under the company’s directors’ and officers’ insurance policies. It found that one alleged misrepresentation in the Roofers Complaint was similar or related to the acts in an earlier Mylan counterclaim and therefore aggregated to the 2014 policy. Other wrongful acts in later claims did not aggregate to that policy.
Mr Justice Twomey delivered the judgment on 11 January 2024 after a seven-day hearing. The dispute concerned whether allegations made in separate years should be treated as one claim under the 2014 policy, which had a $125 million limit, or considered under later policies. The judge stressed that the case was about insurance cover for the costs of defending alleged wrongdoing, not whether the allegations were true.
Mylan’s 2015 counterclaim had alleged that Perrigo made misleading statements to shareholders to defeat Mylan’s takeover offer. Under the 2014 policy’s aggregation clause, later claims could be treated as first made during that policy period if they arose from similar or related wrongful acts. The court held that the Roofers Complaint’s allegation that the Mylan offer substantially undervalued Perrigo was similar or related to the earlier allegation about the offer’s value.
The court reached a different conclusion on allegations that Perrigo overstated its expected organic growth and concealed difficulties integrating an acquisition. It also found that allegations about Tysabri royalty accounting, generic-drug pricing and pricing pressures were not similar or related to the specific acts in the Mylan counterclaim. Those allegations in the Keinan, amended Roofers and Carmignac complaints therefore did not aggregate back to the 2014 policy. The judgment said wrongful acts within a complaint could be treated differently under different policy periods.
The judge also ruled that a 2019 shareholder derivative action was covered by an endorsement to the 2014 policy. Although Perrigo was named only as a nominal defendant, the action sought to pursue claims on the company’s behalf, which the endorsement covered.
Finally, the court held that an exclusion in the 2016 policy for the original Roofers Complaint did not extend to new allegations added in the amended complaint. The judgment did not set out a final order on all outstanding matters: it directed the parties to try to agree the order and provide a draft to the Registrar. The case was provisionally listed for mention a week later, with the listing to be cancelled if unnecessary.