One of the perennial D&O insurance coverage issues is the question of whether two or more claims are or are not interrelated. Under the operation of provisions typically found in most D&O insurance policies, if two or more claims are interrelated within the meaning of the policy, they are deemed to be a single claim first made when the first of the claims was filed. This seemingly technical determination can have important implications for the determination of which of the two potentially related insurance programs applies to a claim.

These recurring issues arose in connection with a dispute over which of two potentially applicable D&O insurance programs apply to the securities class action lawsuit filed against Alexion Pharmaceuticals. Insurers in the different towers argued over whether an earlier SEC subpoena, issued to Alexion during an earlier policy period, was related to the later securities suit, which was filed during a later period. In an interesting February 15, 2024, opinion (here), Delaware Superior Court Judge Paul R. Wallace, applying Delaware law, held that, despite some overlap, the subpoena and the securities suit were not related.


Alexion is a pharmaceutical company. In May 2015, the company was served with an SEC subpoena seeking documents related to the company’s compliance with the FCPA. The subpoena also requested documents pertaining to recalls of one of the company’s products, Soliris. In July 2020, Alexion settled with the SEC; in its summary of findings, the agency noted that its investigation arose out of the company’s violations of the books and records provisions of the FCPA. The SEC found that the company had made improper payments to government officials in Turkey and Russia to obtain beneficial treatment of Soliris. The SEC also found that the company had internal control deficiencies that had led to books and records violations concerning certain payments in Brazil and Colombia.

In December 2016, Alexion was sued in a securities class action lawsuit alleging that the company had misled investors about the company’s sales practices concerning Soliris, and that contrary to the company’s disclosures, the company had employed illegal and unethical sales practices to promote the use of Soliris. As the court in the coverage action later noted, the securities complaint specially referenced, among many other allegations, the company’s sales practices in Brazil, in which the company used a patient advocacy group to manipulate Brazil’s pharmaceutical reimbursement policies and to maximize the company’s reimbursement recoveries from the Brazilian government.

The Insurance Issues

At relevant times, Alexion maintained programs of D&O insurance. The court in the coverage action identified the two relevant programs as the 2014-2015 program (the one in force at the time the SEC served its subpoena) and the 2015-2017 program. Each of these programs consisted of a layer of primary D&O insurance and several layers of excess D&O insurance.

The lineup of insurers on the two programs was largely identical; however, three of the excess insurers were on the 2015-2017 program, but not on the 2014-2015 program. These three excess insurers contended that the subsequent securities lawsuit was related to the prior SEC subpoena and therefore that the later securities should be deemed first at the time of the subpoena – that is, during the policy period of the 2014-2015 program and not during the applicable periods of the 2015-2017 program. Coverage litigation ensued. The parties filed cross-motion for summary judgment on the question of whether or not the earlier subpoena and the later securities suit are or are not related.

The relevant policy language defines the term Interrelated Wrongful Acts as “all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of related facts, circumstances, situations, events, transactions or causes.”

The February 15, 2024, Opinion

In a detailed February 15, 2024, Opinion, Judge Paul R. Wallace granted Alexion’s motion for summary judgment, holding that, because the subpoena and the securities lawsuit are not “materially linked,” the subpoena and the securities suit are not related; the securities suit does not relate back to the subpoena; and therefore the 2015-2017 program is the one that applies to the securities suit.

In determining the relatedness issue, Judge Wallace first noted that in reviewing the relatedness issue that Delaware’s courts have previously reviewed “nearly identical” language, and that in these prior instances, the courts reached that the standard applicable to relatedness issues is whether or not there is a “meaningful linkage” between the claims at issue. Though the policy definition refers to “a common nexus,” Judge Wallace said that this phrase has “a similar meaning in this context.”

Having determined that the “meaningful linkage” standard applied to the relatedness issue, the court then went on to examine whether or not such a link exists between the subpoena and the securities suit, noting that under applicable Delaware Supreme Court precedent, in order for two matters to be related, the “linkage must be meaningful, not tangential.”

Judge Wallace determined that, in his view, the subpoena and the securities suit are not “meaningfully linked.” To be sure, as he noted, both the subpoena and the lawsuit involved the company’s activities in Brazil, but, Judge Wallace found, that “tangential link” was not enough to make them related. The subpoena, Judge Wallace said, was broadly concerned with Alexion’s FCPA compliance, and while Brazil was mentioned, so too were Japan, Turkey, and Russia. While the SEC’s ultimate findings mentioned the company’s activities in Brazil, those finding related to the company’s failure to maintain internal controls and books and records, matters that are, Judge Wallace said, “wholly different” from the unethical and illegal product sales practices on which the securities complaint was based.

Judge Wallace concluded by saying that “at bottom, the factual connection between the SEC Subpoena and the Securities Action is insufficient to make them related.” The new matters involve different parties; overlapping but not identical time periods; raise entirely different theories of liability; rely on different evidence; and seek different relief. In short, the supposed “nexus” of Alexion’s conduct in Brazil is “too insubstantial” to make the subpoena and the securities suit related for coverage purposes.


The factual context of this insurance coverage dispute is interesting because it shows how vexing relatedness questions can sometimes be. Clearly there was some connection between the SEC subpoena and the securities suit; the connection was not just that both mentioned Brazil — the connection was that the securities suit specifically referenced the investigation of the company’s activities in Brazil. It is not the case that there is no connection between the two; the question is whether the connection, such as it was, was sufficient to make the two related.

At the core of this dispute is the perennial question of amount and type of connectedness is sufficient to make two matters related. The question is not obvious; to the contrary, the relevant policy language arguably makes even slight connections sufficient to establish relatedness. The language is broad, requiring only a “common nexus” of “any fact, circumstance, situation, transaction, cause or series of related facts, circumstance, situations, events, transactions or causes.” I can certainly see how the excess carriers involved here believed they had substantial ground on which to argue that the subpoena and the securities suits had various facts and circumstances in common.

The acknowledged factual and circumstantial commonality between the subpoena and the securities suits was held not involved a sufficient connection. In so concluding, Judge Wallace, in reference to prior Delaware case law interpreting relatedness issues, relied on the “meaningfully linked” standard. While Judge Wallace applied the “meaningfully linked” standard with the confidence that it is well-established, it is worth noting that until quite recently, Delaware’s courts had, in some cases, applied different standards to relatedness issues. Indeed, as recently as March 2022, the Delaware Supreme Court (as discussed here), in the First Solar case, rejected the trial court’s application of a standard requiring two matters to be “fundamentally identical” in order for two matters to be deemed related.

The analytic standard that is applied to relatedness issues makes a difference. The now-rejected “fundamentally identical” standard could well produce a different outcome, particularly in cases where there is overlap between two matters. But even the “meaningfully linked” standard leaves significant areas for dispute; in a sense, it changes the question of what makes something “related” into a question of whether a link is “meaningful.”

As I have said before in my meditations on relatedness issues, relatedness is an issue that recedes away from you the more you try to think about it. It is very hard to generalize about the court decisions in this area, as they are so often a reflection of the specific policy language at issue and the specific fact pattern involved. Parties and courts will continue to struggle as they try to decide what connection between two matters is sufficient to make them related.

Special thanks to a loyal reader for providing me with a copy of Judge Wallace’s opinion.