The Supreme Court of Delaware recently held in First Solar v. National Union Fire Ins. Co. of Pittsburgh, Pa., 2022 WL 792158 (Del. March 22, 2022), that the issue of whether two claims are "related" for purposes of insurance coverage must be analyzed under the plain language of the insurance policies at issue, rather than the onerous "fundamentally identical" standard that was understood to be applicable under Delaware law in recent years. First Solar is a significant decision that puts the focus of the analysis of whether claims are related in its proper place, the actual terms of the insurance contract entered into between the insured and the insurer.

Background

In United Westlabs v. Greenwich Ins. Co., 2011 WL 2623932 (Del. Super. July 1, 2011), the Delaware Superior Court, in the context of determining when two sets of underlying counterclaims that were filed against an insured by the same counterclaimant in different calendar years should be deemed "first made" for purposes of two "claims made" insurance policies (which generally cover only those claims made or deemed to have been first made during a specified policy period) issued for different policy periods, concluded that the "Wrongful Acts" at issue in both sets of counterclaims were "fundamentally identical." That dicta from United Westlabs was seized upon in several subsequent Delaware Superior Court cases and turned into a standard under which underlying claims could not be related unless they were found to be "fundamentally identical," irrespective of explicit policy terms addressing how claims shall be deemed related.

Underlying Litigation Against First Solar

The First Solar case arose out of a dispute concerning insurance coverage for two putative securities class actions brought by stockholders of First Solar, a manufacturer of solar panels. The first case was filed in 2012 and alleged violations of federal securities laws by First Solar and its directors and officers during a putative class period of April 30, 2008 to Feb. 28, 2012 based upon purportedly false and misleading public disclosures, including disclosures concerning First Solar's efforts and ability to reduce manufacturing costs in order to make solar power competitive with fossil fuels (the Smilovits Action).