Merck & Co., Inc. et al. v. Ace American Insurance Co. et al.

Issue

The Plaintiff filed an insurance claim following incursions of malware. The Defendant denied the claim under the rarely-used war exclusion, arguing that the malware that infected the computer systems was a “hostile or warlike action” by a “government,” “military,” or agent of the Russian government.

May 6, 2022

The Restaurant Law Center and several other organizations filed a Brief of Amici Curiae in support of the Plaintiff, arguing that a proper exclusion for denial of the claim would have been a “cyber-related” exclusion, which was not present in the “All-Risk” insurance in question.

May 1, 2023

The appeals court ruled in favor of the Plaintiff making specific mention to amici’s briefing and argument in the decision. In considering the plain language of the war exclusion, and the context and history of its application, the court concluded the Insurers did not demonstrate the exclusion applied under the circumstances of this case, namely, that this cyberattack was a “hostile” or “warlike” action as contemplated under the exclusion. Furthermore, it agreed with the trial court that the plain language of the war exclusion did not include a cyberattack on a non-military company that provided accounting software for commercial purposes to non-military consumers, regardless of whether the attack was instigated by a private actor or a “government or sovereign power.”