Manpower, Incorporated v. Insurance Company of the State
732 F.3d 796
| 7th Cir. | 2013Background
- Manpower (parent) sued ISOP under a worldwide "master" DIC policy after its French subsidiary Right Management lost access to leased Paris offices when the building partially collapsed and authorities barred occupancy.
- Right’s local AIG‑Europe policy paid €250,000 for lack of access; ISOP’s master policy paid an additional $250,000 under a $500,000 sublimit for lack‑of‑access; Manpower sought ≈€7.5M more for business interruption, extra expense, replacement of business personal property, and improvements and betterments under the master policy.
- The district court held the master policy covers business interruption and property losses in principle, but later excluded Manpower’s damages expert (forensic accountant Eric Sullivan) as unreliable on revenue projections and entered summary judgment for ISOP on business‑interruption damages for lack of evidence.
- The district court also held the local French policy (an all‑risks policy) covered the loss of access to property (i.e., replacement value of business personal property and improvements), so the master DIC policy did not trigger until local coverage was exhausted; the court therefore denied recovery under the master policy for property losses.
- On appeal, the Seventh Circuit reversed exclusion of the expert (vacating summary judgment on business interruption) and affirmed the district court’s interpretation that the local policy covered the property losses, precluding master policy recovery absent exhaustion.
Issues
| Issue | Plaintiff's Argument (Manpower) | Defendant's Argument (ISOP) | Held |
|---|---|---|---|
| Admissibility of damages expert (Sullivan) | Sullivan used policy‑prescribed formula and a standard growth‑rate extrapolation based on recent revenue; his inputs were reasonable and jury‑worthy | Sullivan’s revenue projection relied on an unrepresentative 5‑month growth rate and manager statements, so methodology/application unreliable under Rule 702/Daubert | Reversed exclusion: methodology (growth‑rate extrapolation) was reliable and disputes about data/inputs go to weight, not admissibility; Sullivan may testify subject to other objections on remand |
| Whether master policy covers business interruption here | Master BI provision applies because collapse damaged building systems/commons necessary for Right’s use; loss was caused by collapse, not solely the civil‑authority order | Only lack‑of‑access sublimit applies because offices themselves were not physically damaged; interruption caused by government closure, not covered "direct physical loss or damage" | District court previously found BI coverage; appellate decision vacated expert exclusion and remanded to allow jury determination of damages; BI coverage standing was not overturned on appeal |
| Whether local French policy covers loss (not just physical damage) of business personal property and improvements | "Les dommages matériels" means only "physical damage," so local policy does not cover mere loss/inaccessibility — master DIC should respond | Local policy’s language and "all risks" structure covers loss of property (loss by inaccessibility/theft analog); exclusions show drafters expected "loss" to be covered unless specifically excluded | Affirmed: local policy covers the loss/replacement value of items in inaccessible premises; master DIC not triggered until local coverage exhausted |
| Whether district court should stay proceedings pending French litigation over local policy | Manpower wanted to await French court’s interpretation/exhaustion determination | ISOP argued U.S. court could interpret local policy and proceed; stay unnecessary | District court declined stay; Seventh Circuit accepted its decision to resolve local policy interpretation in this forum and affirmed judgment on property claim |
Key Cases Cited
- Schultz v. Azko Nobel Paints, Inc., 721 F.3d 426 (7th Cir.) (expert‑testimony/summar y judgment standard)
- Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) (gatekeeping requirement for expert testimony)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (Daubert principles apply to non‑scientific experts)
- Stollings v. Ryobi Techs., Inc., 725 F.3d 753 (7th Cir.) (data‑input challenges go to weight, not admissibility)
- Bielskis v. Louisville Ladder, Inc., 663 F.3d 887 (7th Cir.) (expert opinion must be reasoned and founded on data)
- Tuf Racing Prods. v. Am. Suzuki Motor Corp., 223 F.3d 585 (7th Cir.) (CPA may project future earnings using company data and assumptions)
- General Elec. Co. v. Joiner, 522 U.S. 136 (1997) (limits of expert extrapolation)
- Bazemore v. Friday, 478 U.S. 385 (1986) (selection of variables in regression typically goes to probative weight)