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ACE American Insurance Co. v. RC2 Corporation, Inc.

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ARGUED DECEMBER 10, 2009

Before POSNER, MANION, and HAMILTON, Circuit Judges.

RC2 Corporation, Inc. and related entities (collectively “RC2″) design and market toys that are primarily manufactured in China. ACE American Insurance Company issued commercial general liability policies to RC2 covering the period from August 1, 2003 to November 1, 2007. The policies excluded coverage of occurrences that took place within the United States. Notwithstanding this exclusion, the district court found that the policies potentially extended coverage to injuries that occurred in the United States, if some negligent act in the process of the product’s manufacturing that caused the harm occurred in another country. The court thus ruled that ACE had a duty to defend RC2 against class action lawsuits brought against it for products sold and used exclusively in the United States but manufactured in China. Because we hold that, under Illinois law, the insurance policies unambiguously excluded coverage for the alleged harm caused by exposure to defective products that occurred in the United States, regardless of where antecedent negligent acts took place, we reverse.

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