Filed 11/06/17




                            CERTIFIED FOR PUBLICATION


             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             FOURTH APPELLATE DISTRICT

                                       DIVISION THREE


THE TRAVELER’S PROPERTY
CASUALTY COMPANY OF AMERICA
et al.,                                             G053749

    Plaintiffs and Respondents,                     (Super. Ct. No. 30-2014-00746842)

        v.                                          OPINION

ACTAVIS, INC., et al.,

    Defendants and Appellants.



                 Appeal from a judgment of the Superior Court of Orange County, William
D. Claster, Judge. Affirmed.
                 Blank Rome, Elizabeth B. Kim and James R. Murray for Defendants and
Appellants.
                 Dentons US, Ronald D. Kent, Joshua Kroot; Choate Hall & Stewart, Robert
A. Kole and Jean-Paul Jaillet for Plaintiffs and Respondents.


                                   *         *          *
                                     INTRODUCTION
                The United States faces an epidemic of addiction, overdosing, death, and
other problems brought on by the increasing use and abuse of opioid painkillers. This
epidemic has placed a financial strain on state and local governments dealing with the
epidemic’s health and safety consequences. To seek redress for the opioid epidemic, the
County of Santa Clara and the County of Orange brought a lawsuit (the California
Action) against various pharmaceutical manufacturers and distributors, including the
                           1
appellants in this matter. The California Action alleges Watson engaged in a “common,
sophisticated, and highly deceptive marketing campaign” designed to expand the market
and increase sales of opioid products by promoting them for treating long-term chronic,
nonacute, and noncancer pain—a purpose for which Watson allegedly knew its opioid
products were not suited. The City of Chicago brought a lawsuit in Illinois (the Chicago
Action) making essentially the same allegations.
                The issue presented by this appeal is whether there is insurance coverage
for Watson based on the allegations made in the California Action and the Chicago
Action. Specifically, do the Travelers Property Casualty Company of America (Travelers
                                                                            2
Insurance) and St. Paul Fire and Marine Insurance Company (St. Paul) owe Watson a
duty to defend those lawsuits pursuant to commercial general liability (CGL) insurance
policies issued to Watson?
                Travelers denied Watson’s demand for a defense and brought this lawsuit
to obtain a declaration that Travelers had no duty to defend or indemnify. The trial court,
following a bench trial based on stipulated facts, found that Travelers had no duty to


1
  Appellants are Actavis, Inc., Actavis LLC, Actavis Pharma, Inc., Watson
Pharmaceuticals, Inc., Watson Laboratories, Inc., and Watson Pharma, Inc. The parties
refer to the appellants collectively as Watson, and, for the sake of consistency, we shall
do the same.
2
    We refer to Travelers Insurance and St. Paul together as “Travelers.”

                                               2
defend because the injuries alleged were not the result of an accident within the meaning
of the insurance policies and the claims alleged fell within a policy exclusion for the
insured’s products and for warranties and representations made about those products.
              We conclude that Travelers has no duty to defend Watson under the
policies and therefore affirm. The policies cover damages for bodily injury caused by an
“accident,” a term which has been interpreted to exclude the insured’s deliberate acts
unless the injury was caused by some additional, unexpected, independent, and
unforeseen happening. The California Action and the Chicago Action do not create a
potential for liability for an accident because they are based, and can only be read as
being based, on the deliberate and intentional conduct of Watson that produced injuries—
including a resurgence in heroin use—that were neither unexpected nor unforeseen. In
addition, all of the injuries allegedly arose out of Watson’s products or the alleged
statements and misrepresentations made about those products, and therefore fall within
the products exclusions in the policies.

                                           FACTS
                                              I.
                                        The Policies
A. The St. Paul Policies
              Watson purchased primary CGL policies from St. Paul covering the period
from May 15, 2006 to May 15, 2010 (the St. Paul Policies). The St. Paul Policies provide
a duty to defend against any “suit for injury or damage covered by this agreement . . .
even if all of the allegations of the claim or suit are groundless, false, or fraudulent.” The
St. Paul Policies cover “damages for covered bodily injury or property damage” that are
“caused by an event.” The term “Event” is defined as an “accident, including continuous
or repeated exposure to substantially the same general harmful conditions.” The term




                                              3
“bodily injury” is defined as “any physical harm, including sickness or disease, to the
physical health of other persons.”
              The St. Paul Policies have an exclusion for “Products and Completed
Work,” stating, “[w]e won’t cover bodily injury or property damage that results from
your products or completed work.” The St. Paul Policies include, within the definition of
excluded products, “any statement made, or that should have been made, about the
durability, fitness, handling, maintenance, operation, performance, quality, safety or use
of the products.”
B. The Travelers Policies
              Watson purchased primary CGL policies from Travelers Insurance
covering the period from May 15, 2010 to May 15, 2013 (the Travelers Policies). The
Travelers Policies provide a duty to defend against any “suit” seeking damages “because
of ‘bodily injury’ or ‘property damage’” caused by an “occurrence.” The Travelers
Policies define “occurrence” in the same way as “event” is defined in the St. Paul
Policies, that is, as an “accident, including continuous or repeated exposure to
substantially the same general harmful conditions.” The Travelers Policies define
“bodily injury” as “[p]hysical harm, including sickness or disease, sustained by a person;
or . . . [m]ental anguish, injury or illness, or emotional distress, resulting at any time from
such physical harm, sickness or disease.” The Travelers Policies provide that “damages
because of ‘bodily injury’ include damages claimed by any person or organization for
care, loss of services or death resulting at any time from ‘bodily injury.’”
              The Travelers Policies have an exclusion for “Products-Completed
Operations Hazard-Medical and Biotechnology,” which bars coverage for “‘Bodily
injury’ or ‘Property damage’ included in the ‘products-completed operations hazard.’”
We will refer to the Products and Completed Work provision of the St. Paul Policies and
the Products-Completed Operations Hazard-Medical and Biotechnology provision of the
Travelers Policies as “the Products Exclusions.” The term “products-completed

                                               4
operations hazard” is defined to include “all ‘bodily injury’ and ‘property damage’
occurring away from premises owned by or rented or loaned to you and arising out of
‘your product’ or ‘your work.’” The term “your product” is defined as “[a]ny goods or
products . . . manufactured, sold, handled, distributed or disposed of by: [¶] . . . [y]ou.”
The term “your work” is defined to mean: “Warranties or representations made at any
time, or that should have been made, with respect to the fitness, quality, durability,
performance, handling, maintenance, operation, safety, or use of such goods or products.”
                                              II.
                      The California Action and the Chicago Action
              In May 2014, Santa Clara County and Orange County (the Counties) filed
                                       3
the California Action against Watson and other pharmaceutical companies in the
California Superior Court, Orange County. In December 2014, the Counties filed a
second amended complaint (the California Complaint), which is the operative pleading in
the California Action. In June 2014, the City of Chicago (the City) brought the Chicago
Action against Watson and other prescription drug distributors in Cook County, Illinois.
The Chicago Action was removed to federal court. In August 2015, the City filed a
second amended complaint (the Chicago Complaint), which is the operative pleading in
the Chicago Action.

3
  The relationship among the Watson entities is alleged as: “Actavis PLC is a public
limited company incorporated in Ireland with its principal place of business in Dublin,
Ireland. Watson Pharmaceuticals, Inc. acquired Actavis, Inc. in October 2012 and the
combined company name was changed to Actavis, Inc. as of January 2013. The
combined company then became a wholly[-]owned subsidiary [of] Actavis PLC in
October 2013. Watson Laboratories, Inc. is a Nevada corporation with its principal place
of business in . . . California, and is a wholly[-]owned subsidiary of Actavis, Inc. . . . a
Nevada Corporation with its principal place of business in . . . New Jersey. Actavis
Pharma, Inc. is a Delaware corporation with its principal place of business in New Jersey,
and was formerly known as Watson Pharma, Inc. Actavis LLC is a Delaware limited
liability company with its principal place of business in . . . New Jersey. Each of these
defendants is owned by Actavis [PLC], which uses them to market and sell its drugs in
the United States.” (Some capitalization omitted.)

                                              5
              The California Complaint and the Chicago Complaint are based on
allegations that Watson and the other defendants engaged in a fraudulent scheme to
promote the use of opioids for long-term pain in order to increase corporate profits. Both
complaints allege that Watson had by the 1990’s developed the ability to cheaply produce
opioid painkillers, but the market for them was small. Defendants knew that opioids
were an effective treatment for short-term postsurgical pain, trauma-related pain, and
end-of-life care and knew that, except as a last resort, “opioids were too addictive and too
debilitating for long-term use for chronic non-cancer pain.” Defendants knew the
effectiveness of opioids decreases with prolonged use, requiring increases in dosages and
“markedly increasing the risk of significant side effects and addiction.”
              The California Complaint and the Chicago Complaint allege: “In order to
expand the market for opioids and realize blockbuster profits, Defendants needed to
create a sea-change in medical and public perception that would permit the use of opioids
for long periods of time to treat more common aches and pains, like lower back pain,
arthritis, and headaches. [¶] . . . Defendants, through a common, sophisticated, and
highly deceptive marketing campaign that began in the late 1990s, deepened around
2006, and continues to the present, set out to, and did, reverse the popular and medical
understanding of opioids.” Defendants are alleged to have spent millions of dollars
developing seemingly scientific materials, studies, and guidelines that misrepresented the
risks, benefits, and superiority of opioids to treat chronic pain and distributed those
materials, studies, and guidelines to physicians to encourage them to prescribe opioids to
treat chronic, noncancer pain.
              To increase prescription sales of their opioid drugs, Watson and the other
defendants allegedly “(a) overstated the benefits of chronic opioid therapy, promised
improvement in patients’ function and quality of life, and failed to disclose the lack of
evidence supporting long-term use and the significant risks associated with such use; (b)
trivialized or obscured their serious risks and adverse outcomes, including the risk of

                                              6
addiction, overdose, and death; and (c) overstated their superiority compared with other
treatments, such as other non-opioid analgesics, physical therapy, and other alternatives.”
              Central to the scheme were representations made by Watson that opioids
are rarely addictive. Watson allegedly “persuaded doctors and patients that what they
had long known—that opioids are addictive drugs, unsafe in most circumstances for
long-term use—was untrue, and quite the opposite, that the compassionate treatment of
pain required opioids.”
              The California Complaint alleges that Watson and the other defendants
“took steps to avoid detection of and fraudulently conceal their deceptive marketing and
conspiratorial behavior” and “made, promoted, and profited from their
misrepresentations—individually and collectively—knowing that their statements
regarding the risks, benefits and superiority of opioids for chronic pain were untrue and
unproven.” Both the California Complaint and the Chicago Complaint allege that
Watson’s strategy was “first, to plant and promote supportive literature while burying
unfavorable evidence, and then to cite that same pro-opioid evidence in their promotional
materials, while failing to disclose evidence that contradicts those claims—are flatly
inconsistent with their legal obligations.” Those strategies were intended to, and did,
“distort the truth regarding the risks and benefits of opioids for chronic pain relief and
distorted prescribing patterns as a result.” Watson and the other defendants knew and
intended that their representations “would persuade doctors to prescribe and patients to
use opioids for chronic pain.”
              The California Complaint and the Chicago Complaint allege the efforts of
Watson and the other defendants were “wildly successful” so that “[t]he United States is
now awash in opioids.” The result, the complaints allege, has been “catastrophic” and a
nationwide “opioid-induced ‘public health epidemic.’” In addition, the complaints allege
the epidemic of opioid use has led to a resurgence in heroin use. The “dark side of opioid



                                              7
abuse and addiction” is that it can lead to abuse of and addiction to heroin, which
produces a “high” similar to opioids but at a lower cost.
              The California Complaint and the Chicago Complaint allege that the
Counties and the City have and will incur increased costs of care and services to their
citizens injured by prescription and illegal opioid abuse and addiction. The California
Complaint alleges: “The diversion of opioids into the secondary, criminal market and the
increase in the number of individuals who abuse or are addicted to opioids have increased
the demands on emergency services and law enforcement in California; [¶] . . . [¶] These
harms have taxed the human, medical, public health, law enforcement, and financial
resources of the People.”
              The Chicago Complaint alleges: “The City’s health plans have also paid
costs imposed by long-term opioid use, abuse, and addiction, such as hospitalizations for
opioid overdoses, drug treatment for individuals addicted to opioids, intensive care for
infants born addicted to opioids, long-term disability, and more. The City’s workers’
compensation program and health benefit plans have expended approximately $2.4
million on addiction treatment services from May 2013 to May 2015. . . . [¶] . . .
Defendants’ conduct has also imposed costs on the City beyond those incurred by its
health and workers compensation plans. These include costs of providing emergency
services in response to opioid-related deaths, overdoses, addiction, and other injury; costs
of funding addiction treatment, such as the prescription of additional drugs . . . and other
costs attendant to the epidemic of opioid use and abuse in the City.”
              The California Complaint asserts three causes of action: (1) false
advertising in violation of Business and Professions Code section 17500 et seq.;
(2) unfair competition in violation of Business and Professions Code section 17200; and
(3) public nuisance under Civil Code section 3479 et seq. Under the first cause of action,
the Counties seek injunctive relief, restitution, and civil penalties. Under the second
cause of action, the Counties seek civil penalties, and under the third cause of action seek

                                              8
an order of abatement and injunctive relief. Watson does not seek coverage based on the
first two causes of action.
              The Chicago Complaint asserts 10 counts: (I) Consumer Fraud—Deceptive
Practices; (II) Consumer Fraud—Unfair Practices; (III) Misrepresentations in Connection
with Sale or Advertisement of Merchandise; (IV) False Statements to the City; (V) False
Claims; (VI) Conspiring to Defraud By Getting False or Fraudulent Claims Paid or
Approved by the City; (VII) Recovery of City Costs of Providing Services;
(VIII) Insurance Fraud; (IX) Civil Conspiracy; and, (X) Unjust Enrichment. Of these,
counts I, II, III, IV, V, VII, VIII, and X are asserted against Watson. Against Watson, the
Chicago Complaint seeks injunctive relief, restitution, treble restitution, civil penalties,
disgorgement of profits based on unjust enrichment, treble damages, and costs incurred
by the City of Chicago that were related to the violations of state, federal, and local law.
                                             III.
                                  The Coverage Lawsuit
              In June 2014, Watson tendered the California Action and the Chicago
Action to Travelers. In September and December 2014, Travelers denied it had a duty to
defend Watson in connection with either action.
              In September 2014, Travelers filed this lawsuit to obtain a declaration it
had no obligation under the St. Paul Polices or the Travelers Policies to defend or
indemnify Watson in connection with the California Action or the Chicago Action.
Travelers filed an amended complaint in December 2014. Watson answered and filed a
cross-complaint for declaratory relief, breach of contract, and breach of the implied
covenant of good faith and fair dealing. Travelers and Watson stipulated to a stay of all
claims other than their respective declaratory relief claims on the duty to defend and
agreed to proceed with a trial on a statement of stipulated facts.
              A trial on stipulated facts was held in March 2016. The trial court issued a
proposed statement of decision finding that Travelers had no duty under the Policies to

                                              9
defend Watson. The court concluded (1) the California Complaint and the Chicago
Complaint do not alleged an “accident” as required by the definition of “occurrence”
                                                                             4
(Travelers Policies) or “event” (St. Paul Policies) to create a duty to defend and (2) the
                                                               5
Products Exclusions precluded coverage for Watson’s claims. The court deemed moot
the issue whether the California Action or the Chicago Action “seek damages for” or
“because of” potentially covered “bodily injury.”
              The proposed statement of decision became the final statement of decision
without objections or proposed additions. Travelers and Watson stipulated to a judgment
in favor of Travelers on claims not resolved by the statement of decision, including the
claim by Travelers it had no duty to indemnify Watson. Judgment was entered in favor
of Travelers and against Watson on all causes of action of the Travelers’ complaint and
Watson’s cross-complaint. Watson timely filed a notice of appeal.


4
  The trial court concluded: “In the case at hand, the theory of both the California and the
Chicago lawsuits is that Watson engaged in a well-orchestrated scheme to increase the
use and sales of its opioids notwithstanding their known but undisclosed addictiveness.
Both lawsuits emphasize the deliberate nature of Watson’s actions. Watson is accused of
a course of conduct designed to increase sales of its opioids by intentionally misleading
doctors and the public. It is further accused of fraudulently concealing its deceptive
marketing practices. Under Delgado [v. Interinsurance Exchange of Automobile Club of
Southern California (2009) 47 Cal.4th 302] and its progeny, the fact that Watson’s
allegedly intentional misconduct may have resulted in unintended consequences such as
an increase in heroin addiction does not transform the purported misconduct into an
‘accident’ as that term is used in the two insurance policies.”
5
  The trial court concluded: “All of the harm that is asserted in the lawsuits—narcotics
addiction, the public nuisance in the California action and the public health costs, etc.
highlighted in the Chicago [Action]—stem from Watson’s products and what Watson
said and did not say about the products. Put another way, to the extent that any ‘bodily
damage’ occurred, it directly arose from Watson’s products. Significantly, both the St.
Paul and Travelers Property Products Exclusion provisions encompass
statements/representations that were made or that should have been [made] regarding
Watson’s products. Such statements/misrepresentations are at the heart of the two
lawsuits—indeed, without the alleged scheme to inflate the sales of the opioids, there
would be no basis for the legal actions.”

                                            10
                                        DISCUSSION
                                               I.

                 An Insurer’s Duty to Defend: General Principles and
                                 Standard of Review
              The insurer’s duty to defend is broader than the duty to indemnify.
(Hartford Casualty Inc. Co. v. Swift Distributors, Inc. (2014) 59 Cal.4th 277, 287 (Swift);
Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 299 (Montrose).) An
insurer owes the insured a duty to defend against claims that create “a potential for
indemnity under the insurance policy,” and that duty arises even if the evidence suggests,
without conclusively establishing, that the loss is not covered. (Swift, supra, at p. 287;
Montrose, supra, at p. 299.)
              Determination of the duty to defend is made in the first instance by
comparing the allegations of the complaint and the terms of the insurance policy. (Swift,
supra, 59 Cal.4th at p. 287.) The duty to defend also may exist when facts extrinsic to
the complaint and known to the insurer suggest the claim might be covered. (Ibid.)
“‘Moreover, that the precise causes of action pled by the third party complaint may fall
outside policy coverage does not excuse the duty to defend where, under the facts
alleged, reasonably inferable, or otherwise known, the complaint could fairly be amended
to state a covered liability.’ [Citation.] Thus, ‘[i]f any facts stated or fairly inferable in
the complaint, or otherwise known or discovered by the insurer, suggest a claim
potentially covered by the policy, the insurer’s duty to defend arises and is not
extinguished until the insurer negates all facts suggesting potential coverage.’” (Ibid.)
Doubt about an insurer’s duty to defend generally must be resolved in the insured’s favor.
(Ibid.)
              The duty to defend, though broad, is measured by the nature and kinds of
risk insured by the policy. (Swift, supra, 59 Cal.4th at p. 288.) “In an action seeking
declaratory relief concerning a duty to defend, ‘the insured must prove the existence of a


                                               11
potential for coverage, while the insurer must establish the absence of any such potential.
In other words, the insured need only show that the underlying claim may fall within
policy coverage; the insurer must prove it cannot.’ [Citation.] Thus, an insurer may be
excused from a duty to defend only when ‘“the third party complaint can by no
conceivable theory raise a single issue which could bring it within the policy coverage.”’
[Citation.] In a ‘mixed’ action, where some claims are potentially covered while others
are not, ‘the insurer has a duty to defend as to the claims that are at least potentially
covered.’” (Ibid.)
              When the facts are undisputed or stipulated, the meaning and interpretation
of an insurance policy are reviewed de novo under rules of contract interpretation.
(Adamo v. Fire Ins. Exchange (2013) 219 Cal.App.4th 1286, 1293.) “‘The fundamental
rules of contract interpretation are based on the premise that the interpretation of a
contract must give effect to the “mutual intention” of the parties. “Under statutory rules
of contract interpretation, the mutual intention of the parties at the time the contract is
formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if
possible, solely from the written provisions of the contract. (Id., § 1639.) The ‘clear and
explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’
unless ‘used by the parties in a technical sense or a special meaning is given to them by
usage’ (id., § 1644), controls judicial interpretation. (Id., § 1638.)”’” (E.M.M.I. Inc. v.
Zurich American Ins. Co. (2004) 32 Cal.4th 465, 470.)
                                              II.

                There Is No Potential for Coverage Because the Claims
                  Arise Only Out of Watson’s Deliberate Conduct.
A. “Accident” and “Deliberate” Acts: Background
              In deciding whether Travelers had a duty to defend Watson, we compare
the allegations of the complaint and the terms of the insurance policies. (Swift, supra, 59
Cal.4th at p. 287.) The St. Paul Policies provide coverage for an “event,” and the


                                              12
Travelers Policies provide coverage for an “occurrence,” each defined as “an accident,
including continuous or repeated exposure to substantially the same general harmful
conditions.”
               “In the context of liability insurance, an accident is ‘“an unexpected,
unforeseen, or undesigned happening or consequence from either a known or an
unknown cause.”’ [Citations.] ‘This common law construction of the term “accident”
becomes part of the policy and precludes any assertion that the term is ambiguous.’”
(Delgado v. Interinsurance Exchange of Automobile Club of Southern California, supra,
47 Cal.4th at p. 308 (Delgado).) “Under California law, the word ‘accident’ in the
coverage clause of a liability policy refers to the conduct of the insured for which liability
is sought to be imposed on the insured.” (Id. at p. 311.) “The term ‘accident’ in the
policy’s coverage clause refers to the injury-producing acts of the insured, not those of
the injured party.” (Id. at p. 315.)
               “‘An accident does not occur when the insured performs a deliberate act
unless some additional, unexpected, independent, and unforeseen happening occurs that
produces the damage.’ [Citations.] An accident may exist if ‘“any aspect in the causal
series of events leading to the injury or damage was unintended by the insured and a
matter of fortuity.”’ [Citation.] However, ‘[w]here the insured intended all of the acts
that resulted in the victim’s injury, the event may not be deemed an “accident” merely
because the insured did not intend to cause injury.’” (Navigators Specialty Ins. Co. v.
Moorefield Construction, Inc. (2016) 6 Cal.App.5th 1258, 1275 (Navigators).)
               In Navigators, the insured, a general contractor, made the deliberate
decision to have flooring tiles installed in a building despite knowing that the concrete
slab on which the tiles were to be installed emitted moisture vapor in excess of
specifications. (Navigators, supra, 6 Cal.App.5th at pp. 1262, 1266-1268.) The insured
knew the excess moisture vapor could cause the flooring tiles to fail, but believed there
was low to no risk of that happening. (Id. at p. 1267.) The flooring tiles failed and repair

                                             13
costs were $377,404. (Id. at pp. 1262, 1268-1269.) The insurer provided the insured a
defense in the underlying litigation under a reservation of rights, paid the policy limits in
settlement, and, after learning the insured had made the order to install the flooring tiles
on a moist concrete slab, brought a lawsuit seeking a declaration it had no duty to defend
or indemnify the insured. (Id. at pp. 1272-1273.)
              The trial court concluded the insurer had no duty to indemnify the insured,
and a panel of this court affirmed. (Navigators, supra, 6 Cal.App.5th at pp. 1262-1263.)
The insured acted deliberately in directing the installation of the flooring tiles and knew
the moisture vapor emission rate from the concrete slab exceeded specifications. (Id. at
p. 1276.) The excess moisture caused the tiles to fail and there was no “‘additional,
unexpected, independent, and unforeseen happening’” that produced the damage. (Ibid.)
The insured’s mistaken belief that there was little to no risk in installing the flooring tiles
did not transform the insured’s deliberate act into an accident. (Id. at p. 1277.) We did
conclude, however, the insurer had a duty to defend because the complaint in the
underlying action alleged facts that created the potential for coverage; i.e., that the
flooring tiles failed for reasons other than excess moisture vapor emitted from the
concrete slab. (Id. at p. 1285.)
              In State Farm General Ins. Co. v. Frake (2011) 197 Cal.App.4th 568
(Frake), the insured struck his friend, John King, in the groin while the two were engaged
in horseplay. (Id. at p. 571.) King sustained injuries and sued the insured, who tendered
his defense to the insurer under a liability provision of a renter’s policy. (Ibid.) The
insurer sued the insured for a declaration regarding the duty to defend. (Ibid.) The Court
of Appeal, reversing the trial court, held the insurer had no duty to defend because the
insured engaged in an intentional act. (Id. at pp. 582-583.) The Court of Appeal
confirmed that under Delgado, supra, 47 Cal.4th 302, “the term ‘accident’ does not apply
where an intentional act resulted in unintended harm.” (Frake, supra, at p. 582.)



                                              14
              In Fire Ins. Exchange v. Superior Court (2010) 181 Cal.App.4th 388, 396
(Fire Ins. Exchange), the insureds intentionally constructed a home that extended across
the property line under the mistaken belief they owned a five-and-one-half-foot strip of
land and had the legal right to build on it. Faced with a lawsuit for quiet title, declaratory
relief, and fraud, the insureds tendered defense to their insurer under a homeowners
policy. (Id. at p. 391.) After the insurer refused to defend on the ground there was no
potential for coverage, the insureds sued for breach of contract and bad faith. (Ibid.) The
trial court denied the insurer’s motion for summary judgment. (Ibid.)
              The Court of Appeal held that the trial court erred and directed it to grant
the insurer’s motion for summary judgment. (Fire Ins. Exchange, supra, 181
Cal.App.4th at p. 390.) The Court of Appeal concluded the act of constructing the home
was intentional and, therefore, not an accident under the policy, even though the insureds
acted under a mistaken belief they had the right to do so. (Id. at p. 396.) No unexpected
and unintended event occurred between the time of the intentional construction and the
time of the encroachment on the neighbor’s property. (Ibid.) Although the insureds
believed they had the legal right to take the action they did, their “mistaken belief in their
legal right to build does not transform their intentional act of construction into an
accident.” (Ibid.)

B. The California Complaint and the Chicago Complaint Do Not Allege the
   Potentiality of Liability Based on an Accident.
              The claims of the California Complaint and the Chicago Complaint are
based on allegations that Watson engaged in deliberate conduct. The allegations that
Watson and the other defendants engaged in “a common, sophisticated, and highly
deceptive marketing campaign” aimed at increasing sales of opioids and enhancing
corporate profits can only describe deliberate, intentional acts. Claims involving
intentional or negligent misrepresentations do not constitute an accident under a liability
policy. (Miller v. Western General Agency, Inc. (1996) 41 Cal.App.4th 1144, 1150 [no


                                              15
duty to defend claims for fraud, deceit, and negligent misrepresentation in connection
with the advertising and sale of a home because the underlying claims did not allege an
accident]; Dykstra v. Foremost Ins. Co. (1993) 14 Cal.App.4th 361, 367 [no duty to
defend because “coverage was provided for accidents only and not for intentional or
negligent misrepresentations”]; Genesis Ins. Co. v. BRE Props. (N.D. Cal. 2013) 916
F.Supp.2d 1058, 1073 [no duty to defend because a “misrepresentation is not an accident,
and so it does not fall within the policy’s definition of an occurrence”].)
              Because the California Complaint and the Chicago Complaint allege that
Watson engaged in deliberate conduct, there could be no insurable “accident” under the
policies unless “‘some additional, unexpected, independent, and unforeseen happening’”
produced the injuries for which the complaints seek a remedy. (Navigators, supra, 6
Cal.App.5th at p. 1275.) Were the injuries alleged, as Watson asserts, “indirect
unintended results” caused by “mere negligence or fortuities outside Watson’s control”?
Or were the injuries alleged, as Travelers asserts, the direct result of “the flood of opioids
that entered the market” resulting from Watson’s alleged scheme to increase the sale of
opioid products?
              In resolving this question, we emphasize that whether Watson intended to
cause injury or mistakenly believed its deliberate conduct would not or could not produce
injury is irrelevant to determining whether an insurable accident occurred. (Navigators,
supra, 6 Cal.App.5th at pp. 1275, 1277; see Albert v. Mid-Century Ins. Co. (2015) 236
Cal.App.4th 1281, 1291 [“When an insured intends the acts resulting in the injury or
damage, it is not an accident ‘merely because the insured did not intend to cause
injury’”].) Instead, we look to whether the California Complaint and the Chicago
Complaint allege, directly or by inference, it was Watson’s deliberate conduct, or an
additional, unexpected, independent, and unforeseen happening, that produced the
alleged injuries.



                                             16
              The injuries alleged by the California Complaint and the Chicago
Complaint are: (1) a nation “awash in opioids”; (2) a nationwide “opioid-induced ‘public
health epidemic’”; (3) a resurgence in heroin use; and (4) increased public health care
costs imposed by long-term opioid use, abuse, and addiction, such as hospitalizations for
opioid overdoses, drug treatment for individuals addicted to opioids and intensive care
for infants born addicted to opioids.
              None of those injuries was additional, unexpected, independent, or
unforeseen. The complaints allege Watson knew that opioids were unsuited to treatment
of chronic long-term, nonacute pain and knew that opioids were highly addictive and
subject to abuse, yet engaged in a scheme of deception in order to increase sales of their
opioid products. It is not unexpected or unforeseen that a massive marketing campaign to
promote the use of opioids for purposes for which they are not suited would lead to a
nation “awash in opioids.” It is not unexpected or unforeseen that this marketing
campaign would lead to increased opioid addiction and overdoses. Watson allegedly
knew that opioids were highly addictive and prone to overdose, but trivialized or
obscured those risks.
              It also is not unexpected or unforeseen that promoting the use of opioids
would lead to a resurgence in heroin use. The California Complaint alleged: “The
pain-relieving properties of opium have been recognized for millennia. So has the
magnitude of its potential abuse and addiction. Opioids, after all, are closely related to
illegal drugs like opium and heroin.” Both the California Complaint and the Chicago
Complaint allege: “Defendants had access to scientific studies, detailed prescription data,
and reports of adverse events, including reports of addiction, hospitalization, and
deaths—all of which made clear the significant adverse outcomes from opioids and that
patients were suffering from addiction, overdoses, and death in alarming numbers.”
              Watson argues the alleged injuries are not the “normal consequences of the
acts alleged” and, for its opioid products to end up in the hands of abusers, it was

                                             17
necessary for doctors to prescribe the drugs to abusers. The test, however, is not whether
the consequences are normal; the test is whether an additional, unexpected, independent,
and unforeseen happening produced the consequences. The role of doctors in
prescribing, or misprescribing, opioids is not an independent or unforeseen happening.
The California Complaint and the Chicago Complaint allege: “Nor is Defendants’ causal
role broken by the involvement of doctors, professionals with the training and
responsibility to make individualized medical judgments for their patients. Defendants’
marketing efforts were ubiquitous and highly persuasive. Their deceptive messages
tainted virtually every source doctors could rely on for information and prevented them
from making informed treatment decisions.”
C. Coverage Decisions Arising from West Virginia Litigation
              Pharmaceutical companies, including Watson, also are the target of
litigation in West Virginia for their alleged role in the opioid crisis. In two decisions,
Liberty Mut. Fire Ins. Co. v. JM Smith Corp. (4th Cir. 2015) 602 Fed.Appx. 115 (JM
Smith) and Cincinnati Ins. Co. v. Richie Enterprises, LLC (W.D. Ky. 2014, Civ. A. No.
1:12-CV-00186-JHM-HBB) 2014 U.S.Dist Lexis 27306 (Richie), courts have concluded
the insurer had a duty to defend the pharmaceutical companies in the West Virginia
lawsuit. Watson argues those decisions support imposing on Travelers a duty to defend
Watson in the California Action and the Chicago Action. The allegations in the West
Virginia lawsuit are, however, appreciably different from those in the California
Complaint and the Chicago Complaint, and the state law governing those decisions is
different from California law.
              JM Smith and Richie both arose out of the same complaint brought by the
State of West Virginia against 13 pharmaceutical drug distributors. (JM Smith, supra,
602 Fed.Appx. at p. 117; Richie, supra, 2014 U.S.Dist Lexis 27306 at pp. *1-2.) As
described in JM Smith, the West Virginia complaint alleged: “[T]he drug distributors
were contributing to a well-publicized prescription drug abuse epidemic in West Virginia

                                              18
by failing to identify, block, and report excessive drug orders. It identified ‘pill mills’—
physicians, pharmacists, and distributors of controlled substances who write and fill
excessive prescriptions—as responsible for increased abuses. The complaint also
charged the drug distributors with ‘substantially contributing to’ the epidemic by failing
to maintain sufficient controls that would flag suspicious orders as required by West
Virginia law, all while the distributors were on notice that the epidemic was a current and
growing problem.” (JM Smith, supra, 602 Fed.Appx. at p. 117.) As described in Richie,
the West Virginia complaint alleged the drug distributors “illegally distributed controlled
substances by supplying physicians and drugstores with drug quantities in excess of
legitimate medical need.” (Richie, supra, 2014 U.S.Dist. Lexis 27306 at p. *2.)
               In JM Smith, supra, 602 Fed.Appx. at page 116, the Fourth Circuit Court of
Appeals held that the insurer had a duty to defend a pharmaceutical distributor in the
West Virginia lawsuit because the claims alleged created a possibility of coverage under
the CGL policy. The court scrutinized, count by count, the allegations of the West
Virginia complaint and concluded they alleged claims based on negligence and did not
allege intentional harm. (Id. at p. 120.) Further, under South Carolina law applicable to
the policies, “accidents require that either the act or the injury resulting from the act be
unintentional”; that is, a deliberate act is an accident if the resulting injury is
unintentional. (Ibid., italics added.) Under California law, in contrast, a deliberate act is
not an accident, even if the injury is unintentional, unless the injury was produced by an
additional, unexpected, independent, and unforeseen happening.
               The court in Richie likewise found that the West Virginia complaint
included allegations of negligent conduct that would trigger coverage under the
“‘occurrence’” provision of the policies. (Richie, supra, 2014 U.S.Dist. Lexis 27306 at p.
*14.) In addition, under Kentucky law, a loss or harm is “fortuitous”—i.e. accidental—if
unintended by the insured. (Id. at p. *11.) The court found the West Virginia complaint
“sets forth allegations that the alleged harm is fortuitous and properly deemed

                                               19
‘accidental’ since Richie did not intend for the alleged drug addiction to occur.” (Id. at p.
*14.) Here, as we have explained, under California law “the term ‘accident’ does not
apply where an intentional act resulted in unintended harm.” (Frake, supra, 197
Cal.App.4th at p. 582.)
D. There Is No Potential for Liability Based on Negligence.
              Watson argues the duty to defend was triggered because the California
Complaint and the Chicago Complaint “permit the possibility that Watson will be held
liable, if at all, for conduct or omissions that are negligent.” In particular, Watson argues
its liability under the public nuisance cause of action of the California Complaint (the
only cause of action of that complaint for which Watson seeks coverage) can be based on
negligent conduct or omissions.
              A “nuisance” is “[a]nything which is injurious to health” (Civ. Code,
§ 3479), and a “public nuisance” is “one which affects at the same time an entire
community or neighborhood, or any considerable number of persons” (id., § 3480). Both
are remediable by civil suit or abatement. (Id., §§ 3491, 3493, 3494.) The public
nuisance statutes do not require a finding that the nuisance was created or furthered by
intentional acts. However, “it is not the form or title of a cause of action that determines
the carrier’s duty to defend, but the potential liability suggested by the facts alleged or
otherwise available to the insurer.” (CNA Casualty of California v. Seaboard Surety Co.
(1986) 176 Cal.App.3d 598, 609.) The duty to defend is triggered by allegations on the
face of the complaint and from extrinsic information available to the insurer and whether
those allegations and facts create a potential for coverage under the terms of the policy.
(Low v. Golden Eagle Ins. Co. (2002) 99 Cal.App.4th 109, 113.)
              The facts alleged in the California Complaint and the Chicago Complaint
suggest potential liability based only on Watson’s intentional conduct. But to the extent
the complaints create a potential for liability against Watson based on unintentional
conduct, the claims fall within the Products Exclusions.

                                              20
                                             III.

                 The Claims Fall Within the Products Exclusions and
                      Therefore Are Excluded From Coverage.
A. Products Exclusions: Background
              The Products Exclusions exclude coverage for bodily injury “arising out
of” (Travelers Policies) or that “results from” (St. Paul Policies) “[a]ny goods or products
. . . manufactured, sold, handled, distributed or disposed of by: [¶] . . . [y]ou.” The
Products Exclusions also exclude coverage for bodily injury that arises out of or results
from “[w]arranties or representations made at any time, or that should have been made,
with respect to the fitness, quality, durability, performance, handling, maintenance,
operation, safety, or use of such goods or products.” Thus, the Products Exclusions bar
coverage for bodily injury that arises out of or results from (1) goods or products
manufactured, sold, handled, distributed, or disposed of by Watson and (2) warranties or
representations made with respect to the fitness, quality, durability, performance,
handling, maintenance, operation, safety, or use of those goods or products.
              The trial court found the allegations of the California Complaint and the
Chicago Complaint come within the Products Exclusions because “[a]ll of the harm that
is asserted in the lawsuits—narcotics addiction, the public nuisance in the California
action and the public health costs, etc. highlighted in the Chicago [Action]—stem from
Watson’s products and what Watson said and did not say about the products.”
              Policy exclusions must be construed narrowly, and the insurer has the
burden of demonstrating an exclusion precludes coverage. (Waller v. Truck Ins.
Exchange, Inc. (1995) 11 Cal.4th 1, 16; Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th
758, 777; see Atlantic Mutual Ins. Co. v. J. Lamb, Inc. (2002) 100 Cal.App.4th 1017,
1039 [“an insurer that wishes to rely on an exclusion has the burden of proving, through
conclusive evidence, that the exclusion applies in all possible worlds”].)



                                              21
              The “bodily injury” alleged by the California Complaint and the Chicago
Complaint falls into two categories. The first category relates to use and abuse of opioid
painkillers and includes injuries such as overdose, addiction, death, and long-term
disability. The second category relates to use and abuse of heroin, the resurgence of
which is alleged to have been triggered by use and misuse of opioids.
              California courts have interpreted the terms “arising out of” or “arising
from” broadly: “It is settled that this language does not import any particular standard of
causation or theory of liability into an insurance policy. Rather, it broadly links a factual
situation with the event creating liability, and connotes only a minimal causal connection
or incidental relationship.” (Acceptance Ins. Co. v. Syufy Enterprises (1999) 69
Cal.App.4th 321, 328.) Watson does not argue the term “results from” (used in the St.
Paul Policies) should be interpreted differently from the term “arising out of.” (See
Pension Trust Fund v. Federal Ins. Co. (9th Cir. 2002) 307 F.3d 944, 952-953 [“‘as a
result of’” and “‘arising out of’” should be interpreted in the same way].)
              This broad interpretation of “arising out of” applies to both coverage
provisions and exclusions. (Crown Capital Securities, L.P. v. Endurance American
Special Ins. Co. (2015) 235 Cal.App.4th 1122, 1131 [applying definition to policy
exclusion]; Jon Davler, Inc. v. Arch Ins. Co. (2014) 229 Cal.App.4th 1025, 1035-1036
[applying definition to policy exclusion]; Southgate Recreation & Park Dist. v.
California Assn. for Park & Recreation Ins. (2003) 106 Cal.App.4th 293, 300 [arising out
of “‘broadly links’ the exclusionary operative events with the exclusion” and is
“generally equated” with “‘origination, growth or flow from the event’”]; Medill v.
Westport Ins. Corp. (2006) 143 Cal.App.4th 819, 829-830 [broad interpretation of the
term “arising out of” applies to breach of contract exclusion]; Aloha Pacific, Inc. v.
California Ins. Guarantee Assn. (2000) 79 Cal.App.4th 297, 318-319 [broad
interpretation given to term “‘arising out of’” in trademark exclusion in general liability
insurance policy]; Fibreboard Corp. v. Hartford Accident & Indemnity Co. (1993) 16

                                             22
Cal.App.4th 492, 503 [“California courts generally have given the term ‘arising out of’ or
‘arising from’ their commonsense meaning, concluding that they connote more than mere
causation”]; see Trenches, Inc. v. Hanover Ins. Co. (9th Cir. 2014) 575 Fed.Appx. 741,
751 [“In California, the phrase ‘arising out of’ is construed broadly, even if in an
                6
exclusion”].)
                As to the first category of bodily injury, as Travelers argues, the alleged
opioid epidemic and attendant ills arise out of Watson’s opioid products because, simply
and irrefutably, “narcotics addiction and abuse ‘arise out of’ narcotics.” In addition, the
complaints allege a direct connection between the statements and representations made
by Watson in its alleged campaign to increase sales of its opioid products and the abuse,
addiction, death, and other injuries caused by those products. Indeed, this campaign,
which allegedly misrepresented the efficacy of opioid painkillers, overstated their
benefits, and trivialized their risks, is the very basis on which liability against Watson is
premised. Those statements and misrepresentations are alleged to have been made to
create a “new and far broader market for [Watson’s] potent and highly addictive drugs,”
and induce physicians to prescribe opioid painkillers for purposes to which they were
unsuited. The success of Watson’s marketing campaign was what is alleged to have led
to the epidemic of opioid misuse.
                The second category of bodily injury, the alleged resurgence in heroin use,
also arises out of Watson’s products. Heroin is not, of course, a product made or
distributed by Watson, but that fact is not dispositive. The Products Exclusions extend,
as we have explained, to bodily injury arising out of warranties or representations made
by Watson in connection with its products. The complaints allege a direct causal
connection between those warranties and representations and the resurgence in heroin

6
 Watson urges us to use the present case as a vehicle for narrowing the meaning of
“arising from” or “arising out of” in an exclusion. We agree with the definition of
“arising from” or “arising out of” given in the cases cited.

                                               23
use: Watson’s warranties and representations made as part of this campaign to increase
the sales of highly addictive opioid painkillers allegedly had the intended effect of
increasing their sales, use, and addiction, which led to a dramatic increase in the use of
heroin as a cheaper alternative. The California Complaint alleges: “It is hard to imagine
the powerful pull that would cause a law-abiding, middle-aged person who started on
prescription opioids for a back injury to turn to buying, snorting, or injecting heroin, but
that is the dark side of opioid use and addiction.”
B. Federal and Out-of-State Cases
              Several federal and out-of-state cases support our conclusion the Products
Exclusions bar coverage here. Travelers Property Casualty Co. of America v. Anda, Inc.
(11th. Cir. 2016) 658 Fed.Appx. 955 (Anda) addressed the application of the same
exclusions to allegations of bodily injury caused by the opioid epidemic in West Virginia.
The State of West Virginia sued insured pharmaceutical companies (including Watson
Pharmaceuticals, Inc.) alleging they “knowingly or negligently flooded the West Virginia
market with commonly-abused drugs.” West Virginia alleged it suffered many kinds of
harm, including increased crime and congested hospitals, as a result of the over-supply of
the insureds’ products on the market. (Id. at p. 956.) Anda, Inc. (a pharmaceutical
distributor) and Watson Pharmaceuticals, Inc. (together, Anda) sought defense and
indemnification under CGL polices issued by Travelers and St. Paul. (Id. at
pp. 956-957.) Those policies had the same products exclusions as found in the Travelers
Policies and the St. Paul Policies here. (Id. at pp. 957-958.)
              The Eleventh Circuit Court of Appeals, applying California law, concluded
the injuries alleged had, at a minimum, a connection with the insureds’ products and
therefore fell within the products exclusion. (Anda, supra, 658 Fed.Appx. at p. 958.)
The court explained: “In [the West Virginia] action, the State seeks to enjoin the way
Anda distributes its products. It also seeks monetary damages arising from the injuries—
whether they be ‘bodily’ or not—caused by these products. At bottom, the State claims

                                             24
that Anda and other pharmaceutical distributors have so flooded the market with their
products that West Virginia suffers from an opioid epidemic. As a result of that
epidemic, the State has suffered monetary losses that it now seeks to recover. The causal
connection between Anda’s products and the injuries alleged by the State is sufficient to
meet the low bar set by California law. Accordingly, we conclude that all the underlying
claims, if covered at all, are embraced within the Travelers and St. Paul Products
Exclusions, which render any coverage inapplicable.” (Id. at pp. 958-959.)
              The only significant difference between Anda and this case is that the
California Complaint and the Chicago Complaint also allege liability for a resurgence in
heroin use allegedly triggered by Watson’s products. But as we have explained, although
heroin is not a Watson product, the alleged resurgence in heroin use arises out of
Watson’s opioid products and the statements and representations Watson made about
them.
              The Florida Supreme Court, in Taurus Holdings v. U.S. Fidelity (Fla. 2005)
913 So.2d 528 (Taurus) addressed whether CGL insurance policies excluded coverage
for lawsuits brought by municipalities against gun manufacturers to recover the costs of
medical and other services incurred as a result of gun violence. The court held there was
no coverage because the claims fell within exclusions for “‘bodily injury and property
damage . . . arising out of your product.’” (Id. at p. 530.) The court interpreted the term
“‘arising out of’” broadly to mean “‘“originating from,” “having its origin in,” “growing
out of,” “flowing from,” “incident to” or “having a connection with.”’” (Id. at pp.
532-533, 536.) The court then applied this broad interpretation and concluded the
policies excluded claims against the gun manufactures when the injuries alleged were
caused by guns manufactured by the insured. The court explained: “The provision at
issue excludes coverage for ‘all bodily injury and property damage . . . arising out of your
product.’ The underlying complaints allege damages for increased health care costs and
the increased costs for police and emergency medical services due to gun violence, and

                                             25
the costs associated with the prosecution of gun-related crimes. The allegations in the
complaints all ‘concern off-premises conduct arising out of (not merely incidentally
related to) firearms products.’ [Citation.] The bodily injuries alleged all originated from
[the insured]’s products—that is, the discharge of their manufactured guns. (Id. at
p. 540.)
              Three federal court decisions, all cited by the Florida Supreme Court in
Taurus, reached the same conclusion. (Brazas Sporting Arms v. American Empire
Surplus (1st Cir. 2000) 220 F.3d 1; Beretta U.S.A. Corp. v. Fed. Ins. Co. (4th Cir. 2001)
17 Fed.Appx. 250; Mass. Bay Ins. Co. v. Bushmaster Firearms (D.Me. 2004) 324
F.Supp.2d 110.) In each case, the court concluded that a products exclusion provision
operated to exclude coverage for claims against a gun manufacturer for injuries allegedly
caused by the guns the insured had manufactured.
C. Watson’s Arguments
       1. The Conduct Alleged Was Connected With the Products.
              Watson argues the Products Exclusions do not apply because the alleged
harm was caused by “conduct sufficiently independent of the product’s design and
manufacture.” In support of this argument, Watson cites Aetna Casualty & Surety Co. v.
Richmond (1977) 76 Cal.App.3d 645 (Richmond) and McGinnis v. Fidelity & Casualty
Co. (1969) 276 Cal.App.2d 15 (McGinnis).
              In Richmond, supra, 76 Cal.App.3d at page 648, the insured, a sporting
goods store, was sued by a customer who was injured when ski bindings she bought at
the insured’s store failed to release properly. Based on a products exclusion (called a
completed operations or products hazard), the insurer denied the insured’s demand for
defense and indemnification. (Ibid.) Although the insured did not manufacture the ski
bindings, an employee of the insured adjusted the bindings and affixed them to the skis.
(Ibid.) The Court of Appeal concluded the insurer had no duty to defend or indemnify
because the products exclusion included workmanship on the products. (Id. at p. 654.)

                                            26
“The critical issue,” the court stated, “is whether the product was defective with respect
to its intended use.” (Ibid.) If the product was defective, the fact that the negligence of
insured’s employee in adjusting the bindings “contributed to the existence of the defect”
did not take the cause of action alleged out of the products exclusion. (Id. at
pp. 654-655.) “Only where negligent service of the insured constitutes ‘an act
sufficiently removed from the quality of the product in question [will it] escape the
exclusionary clause.’” (Id. at p. 655.)
              In McGinnis, supra, 276 Cal.App.2d at page 16, a boy was injured when
gunpowder purchased at the insured’s gun and ammunition store exploded. The insurer
disclaimed liability under the policy based on an exclusion for bodily injury arising out of
“[g]oods or products manufactured, sold, handled or distributed by the insured.” (Id. at
pp. 16-17.) The Court of Appeal concluded the claim fell outside the exclusion because
the injury was not caused by a defective product: “The powder did exactly what it was
designed to do, and what everyone expected it to do; it exploded when detonated.
Consequently this is not a products liability case because no negligence can be attributed
to the manufacturer. Stated another way, [the insured] was negligent in selling to the
minor, and his negligence was a proximate cause of the accident.” (Id. at p. 17.)
              According to Watson, Richmond and McGinnis correctly state a rule that a
products exclusion does not apply if the bodily injury is caused by conduct sufficiently
independent or removed from the product’s design and manufacture. In that situation, the
products exclusion would not bar coverage because there would be a potential for
coverage based on a nonexcluded cause—the insured’s conduct.
              As we see it, Richmond and McGinnis support the conclusion the Products
Exclusions bar coverage here. In Richmond, the Court of Appeal concluded that the
conduct of the insured’s employee in adjusting the bindings and attaching them to the
skis did not take the claim out of the products exclusion because that negligent conduct
was connected with the bindings’ defects. Here, although the Watson’s opioid products

                                             27
are not alleged to be defective, Watson’s statements and representations about them were
closely connected with (“not sufficiently removed from”) the claims they were
overprescribed and misused. Watson’s alleged liability arises out of allegations that
Watson launched a marketing campaign to sell a nondefective product for a purpose for
which it was unsuited. In Cravens v. Dargan & Co. v. Pacific Indem. Co. (1972) 29
Cal.App.3d 594, 599, the Court of Appeal, distinguishing McGinnis, concluded that a
claim for injury from the insured’s insecticide product fell within a products exclusion.
Although the insecticide was not defective, the insured knew its proper purpose but
recommended and sold the product for an unsuitable use. (Ibid.) This case is the same:
Although Watson’s opioid products are not alleged to be defective, it is alleged Watson
marketed and sold them for a purpose for which Watson knew they are not suited, i.e.,
treatment of long-term, chronic, nonacute pain.
       2. The Products Exclusions Are Not Limited to Defective Products.
              Although Watson does not expressly state as much, its argument is
premised on the proposition that products exclusions, such as those in Travelers Policies
and the St. Paul Policies, exclude only injuries caused by defective products. Here, the
Products Exclusions by their terms are not limited to defective products but quite plainly
exclude bodily injury arising out of “[a]ny goods or products . . . manufactured, sold,
handled, distributed or disposed of by: [¶] . . . [y]ou.” (Italics added.)
              The California Supreme Court has not addressed whether the term “any
product” in a Products-Completed Operations Hazard exclusion is limited to defective
products. In Taurus, supra, 913 So.2d 528, the Florida Supreme Court addressed that
issue in a case involving the same exclusion found in the policies in this case. The
Florida Supreme Court acknowledged a split of authority among jurisdictions and listed
both cases limiting the exclusion to defective products and those holding the exclusion
applies more broadly. (Id. at p. 536.) The Florida Supreme Court concluded the
exclusion did not apply only to defective products: “We do not believe that a fair reading

                                              28
of the exclusion at issue here would apply it only to defective products. Certainly the
word ‘defective’ is found nowhere in the exclusion. The language is much broader,
applying the exclusion to ‘all bodily injury and property damage . . . arising out of your
product.’ The term ‘your product’ is defined as ‘any goods or products . . .
manufactured, sold, handled, distributed or disposed of by’ Taurus. The word ‘any’
before ‘goods or products’ connotes a scope extending beyond merely defective products.
Therefore, nothing in the text of the exclusion suggests it applies only to defective
products. . . . The plain language of the exclusion in this case excludes coverage for all
product-related injuries, not merely defective products.” (Id. at pp. 536-537.)
              We agree with the analysis of the Florida Supreme Court and likewise
conclude the term “any product” in the Product Exclusions of the Travelers Policies and
the St. Paul Policies is not limited to defective products. Thus, whether or not the opioid
products manufactured, sold, or distributed by Watson were defective is not alone
decisive of the issue whether the Products Exclusions apply. We are not bound by
Richmond or McGinnis (see Sarti v. Salt Creek (2008) 167 Cal.App.4th 1187, 1193
[“there is no horizontal stare decisis in the California Court of Appeal”]), and we disagree
with those decisions to the extent they state a different rule.
       3. “Arising Out Of” Does Not Equate to Tort Causation.
              Even if Watson’s products were a cause of the harm, Watson contends the
Products Exclusions do not apply because there are other, concurrent proximate causes of
the harm alleged that are independent of the design and manufacture of the opioid drugs.
The terms “arising out of” and “arising from” do not regulate the standard of causation.
(Fibreboard Corp. v. Hartford Accident & Indemnity Co., supra, 16 Cal.App.4th at pp.
504-505.) Instead, those terms “identif[y] a core factual nucleus, i.e., products
manufactured, sold or distributed by the insured, and links that nucleus to the bodily
injury or property damage covered under the policy. This link is not made in terms of
tort causation.” (Id. at p. 505.)

                                              29
              Moreover, the California Complaint and the Chicago Complaint allege,
expressly or by inference, lack of concurrent proximate causation. The reason that
doctors and other medical professionals misprescribed opioid painkillers is alleged to
have been the successful marketing efforts by Watson. The California Complaint alleges:
“Nor is Defendants’ causal role broken by the involvement of doctors, professionals with
the training and responsibility to make individualized medical judgment for their patients.
Defendants’ marketing efforts were ubiquitous and highly persuasive. Their deceptive
messages tainted virtually every source doctors could rely on for information and
prevented them from making informed treatment decisions.” The allegations of the
complaints thereby foreclose the potential of proximate concurrent causation.
       4. The Products Exclusions Are Not Ambiguous.
              Watson argues the Products Exclusions are ambiguous due to an exception
in section 2.d(3) of the Travelers Policies. The exception in section 2.d(3) is for
“products or operations for which the classification, listed in the Declarations or in a
policy schedule, states that products-completed operations are subject to the General
Aggregate Limit.” This exception, like so many provisions in a CGL policy, takes some
effort to understand, but that does make it ambiguous. We agree with the explanation
given by Travelers that “if the parties elected to exempt any particular products or
operations from the Products Exclusion, they were required to list the relevant
classification on the Declarations page or on a policy schedule, and note that the products
or operations within that classification are subject to the General Aggregate Limit.”
              Here, neither the Declarations page nor any policy schedule states that any
classification of products claims were subject to the general aggregate limit. The
Declarations page states that the Travelers Policies have a general aggregate limit that
applies to claims “[o]ther than Products-Completed Operations.” Because no
classification of products claims is listed on the Declarations page or a policy schedule,
all products and operations are subject to the Products Exclusions.

                                             30
                                  DISPOSITION
            The judgment is affirmed. Respondents shall recover costs on appeal.




                                              FYBEL, J.

WE CONCUR:



BEDSWORTH, ACTING P. J.



MOORE, J.




                                         31
