United States District Court, S.D. Mississippi, Northern Division
P. JORDAN III CHIEF UNITED STATES DISTRICT JUDGE
Cross and Blue Shield of Mississippi (“Blue
Cross”) asks the Court to stay or dismiss this
declaratory judgment action due to underlying multi-district
litigation (“MDL”) involving over fifty antitrust
actions. The insurer, Allied World Surplus Lines Insurance
Company (“Allied”), opposes the request.
Cross is a defendant in multiple lawsuits filed by
subscribers and medical providers alleging that its business
practices violated federal antitrust laws. Am. Compl.  at
2. These lawsuits were consolidated and transferred to the
United States District Court for the Northern District of
Alabama, creating the MDL, In Re: Blue Cross Blue Shield
Antitrust Litigation. Id. at 3.
filed this declaratory-judgment action seeking a
determination of its coverage obligations under two policies
issued to Blue Cross. In very general terms, Allied takes the
position that it does not owe coverage for any losses or
defense expenses under either policy, primarily because the
MDL is related to a prior case. Id. at 18-20. Since
the filing of the declaratory-judgment action and the instant
motion, Allied advised Blue Cross of its determination that
no coverage exists under the policies and ceased advancing
defense expenses. June 14, 2017 Letter [18-1].
Cross presents essentially two arguments in favor of its
motion to stay or dismiss the declaratory-judgment action.
First, it says the parties' obligation to engage in
alternative dispute resolution prior to filing suit has not
been satisfied. Second, it argues that because the MDL is
ongoing, the question of Allied's indemnity obligations
is premature. The Court finds the second argument persuasive
but declines to dismiss the action. Instead, a stay is
power to stay proceedings is incidental to the power inherent
in every court to control the disposition of the causes on
its docket with economy of time and effort for itself, for
counsel, and for litigants.” Landis v. N. Am.
Co., 299 U.S. 248, 254 (1936). In the same vein, a
district court has broad discretion “whether and when
to entertain an action under the Declaratory Judgement
Act.” Wilton v. Seven Falls Co., 515 U.S. 277,
282 (1995); see also Id. at 287 (“We have
repeatedly characterized the Declaratory Judgment Act as
‘an enabling Act, which confers a discretion on the
courts rather than an absolute right upon the
litigant.'” (quoting Public Serv. Comm'n of
Utah v. Wycoff Co., 344 U.S. 237, 241 (1952))). And
district courts have routinely opted to stay a declaratory
judgment action, or otherwise decline to rule on coverage
issues, while the underlying lawsuit is pending. This is
particularly true with respect to the duty to indemnify.
See Greenwich Ins. Co. v. Capsco Indus., Inc., No.
1:14-CV-297, 2015 WL 12697093, at *2 (S.D.Miss. Apr. 13,
2015) (staying declaratory-judgment action during pendency of
underlying state-court action); Deviney Constr. Co. v.
Ace Util. Boring & Trenching, LLC, No. 3:11-CV-468,
2014 WL 2932169, at *7 (S.D.Miss. June 30, 2014) (denying
summary judgment as to the duty to indemnify, noting
“the Court cannot tell whether [the insured] has
incurred liability in any of the underlying cases” and
“[a] determination on [the insurer's] indemnity
obligations necessarily awaits the outcome of the underlying
lawsuits”); Nationwide Mut. Ins. Co. v. Kavanaugh
Supply, LLC, No. 2:11-CV-232, 2013 WL 704924, at *4
(S.D.Miss. Feb. 26, 2013) (denying summary judgment as to the
duty to indemnify, noting no judgment had been entered in the
underlying state-court action); see also Estate of
Bradley v. Royal Surplus Lines Ins. Co., 647 F.3d 524,
531 (5th Cir. 2011) (“Unlike the duty to defend, which
can be determined at the beginning of the lawsuit, an
insurer's duty to indemnify generally cannot be
ascertained until the completion of litigation, when
liability is established, if at all.”).
the parties disagree as to whether the duty to indemnify
depends on facts yet to be developed in the MDL action. But
even Allied admits in a footnote “that issues related
to whether any settlement or judgment in the MDL Action
constitutes Loss . . . cannot yet be wholly determined”
and concedes that it would not oppose a stay “as to
those issues.” Resp.  at 11 n.2. Staying some-but
not all-claims usually raises more disputes than it resolves.
And it bears repeating that Allied discontinued payment of
defense expenses, minimizing the risk of prejudice resulting
from a stay of the declaratory-judgment action.
the Court exercises its discretion to stay the instant
declaratory-judgment action, pending further development of
the MDL antitrust action. Blue Cross's motion to stay
 is granted.
ORDERED AND ADJUDGED.