From 1991 to 1997, Covington represented Exxon Corporation, as it was then named, in its hotly contested, multi-forum claims for coverage of losses arising out of the grounding of the Valdez. In early 1997, this important coverage saga ended when Exxon and a consortium of international underwriters led by Lloyd's and various Scandinavian companies settled for $780 million.
The Exxon claims arose out of the company's Global Corporate Excess package of policies for 1988-89, which was characterized by high limits and high retentions. Exxon claimed coverage under various sections of the package, including the first-party property section's cover for removal of debris, the marine liability section's cover for cargo-owner pollution losses, and the general liability section's cover for pollution clean-up costs.
This coverage dispute involved many battles in several forums:
- A non-binding ADR procedure moderated by a London-based barrister before any litigation commenced.
- A Texas lawsuit filed by Exxon that the underwriters unsuccessfully sought three times to remove and that resulted in a jury verdict for Exxon on one of its three claims.
- An arbitration proceeding in New York.
- A federal declaratory judgment action in New York that the underwriters struggled to keep alive despite a dismissal and multiple trips to the Second Circuit and the Supreme Court on jurisdictional issues.
- Two settlements — one for $300 million before the Texas verdict and one for $480 million while the Texas verdict was on appeal and just before the arbitration hearing was to commence.
The dispute involved a wide array of complex coverage issues, important questions of federal jurisdiction, and the challenge of maintaining momentum as plaintiff in multiple, overlapping forums, not to mention a host of strategic and tactical questions in a case that involved significant activity in Texas, New York, London, and Oslo, among many other places.
Exxon's team at this firm was led by Robert N. Sayler, Mitchell F. Dolin, and Michael X. Imbroscio. They were not alone. The successful pursuit of Exxon's coverage claims involved extraordinary efforts by the company's executives, law department, and litigation support unit, as well as work by lawyers and paralegals at this and a number of other law firms throughout the country. In recognition of these efforts, Exxon team members at this and other firms, as well as the company, were cited for their "doggedness and sheer, cold persistence" and were dubbed "Commercial Prosecutors of the Year" in the May 1997 issue of International Commercial Litigation.
For a detailed discussion of the dispute, see Dolin's "An Overview of the Exxon Valdez Insurance Coverage Dispute," which appeared in the October 1997 issue of International Insurance Law Review.
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