A federal court in Pennsylvania has held that Liberty Mutual must defend its insured, Hershey Creamery Company, in an intellectual property infringement lawsuit because the suit raises claims that potentially implicate coverage under the policies’ personal and advertising injury coverages. The court further found that the alleged wrongful conduct was not subject to the policies’ IP infringement exclusion.

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The Southern District of Georgia recently ruled that Evanston Insurance Company is not entitled to summary judgment on whether its policies’ pollution exclusion bars coverage for the release of nitrogen into a warehouse. The case stems from an incident at Xytex Tissue Services, LLC’s warehouse, where Xytex stored biological material at low temperatures. Xytex used an on-site “liquid nitrogen delivery system” to keep the material properly cooled. This system releases liquid nitrogen, which would vaporize into nitrogen gas and cool the biological material. On February 5, 2017, a Xytex employee, Deputy Greg Meagher, entered the warehouse to investigate activated motion detectors and burglar alarms. Deputy Meagher was overcome by nitrogen gas and died as a result. Following Deputy Meagher’s death, his heirs filed suit against Xytex and other defendants. Evanston denied coverage based on the pollution exclusion in its policy. Evanston then brought a declaratory judgment action to confirm its coverage position.

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Policyholders facing any type of products liability scored a win in a recent decision from the District Court for the Northern District of Illinois.  The court found that an insurance company must defend its insured against claims arising out of a recall while simultaneously funding the insured’s affirmative claims for recovery.

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The Second Circuit has ruled a claim alleging an “offer for sale” infringed on a patent constitutes an advertising injury sufficient to trigger a defense under commercial general liability insurance.  In High Point Design LLC v LM Insurance Corporation, the plaintiff High Point brought a declaratory-judgment action against Buyer’s Direct, Inc. after the latter directed High Point to cease-and-desist in the sale of its Fuzzy Babba slippers.  Buyer’s Direct responded with a counterclaim alleging trade dress infringement, claiming that High Point’s offers for sale in retail catalogs infringed on Buyer’s Direct’s own slipper trade dress.  Buyer’s Direct sought discovery of all advertising, marketing and promotional materials related to High Point’s fuzzy footwear to substantiate its claims.

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The California Court of Appeal has affirmed that Lloyd’s of London and other insurers cannot escape coverage for $132.5 million in settlements arising from the 2008 Chatsworth train crash, in which 25 individuals were killed and more than 130 injured. In Those Certain Underwriters at Lloyd’s, London v. Connex Railroad LLC, No. B276373, 2018 WL 1871278 (Cal. App. 2d Dist. Apr. 19, 2018), the Second District Court of Appeal affirmed the Los Angeles Superior Court’s ruling, discussed in our November 9, 2015 blog post, that the insurers were obligated to indemnify Connex Railroad for the settlements.

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A federal court in New Jersey recently held that the construction of an ambiguous policy term is not a matter suitable for judgment on the pleadings, thus denying AIG from avoiding coverage for a $67 million antitrust settlement. Rather, the only way to establish the meaning of an ambiguous term, the court explained, is to ascertain the intent of the parties, which requires “meaningful discovery.”

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In football as in life, the best defense is often a good offense. But, that adage does not always play well in litigation. In Riddell, Inc. v. Superior Court, No. B275482, 2017 WL 3614305 (Cal. Ct. App. Aug. 23, 2017), the California Court of Appeal blew the whistle on such a tactic, holding that an insurer could not use discovery tools in a coverage dispute with its policyholder in order to prejudice the policyholder’s defense in an underlying lawsuit.

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On August 29, 2017, my colleagues Lawrence J. Bracken, Michael Levine, and Geoffrey Fehling published an article in Law360 discussing the Ninth Circuit’s recent decision rejecting coverage for the Los Angeles Lakers’ director’s and officer’s (D&O) insurance claim arising from a fan’s class action lawsuit under the Telephone Consumer Protection Act (TCPA), based on a broadly-worded invasion of privacy exclusion in the Lakers’ D&O insurance policy. A split Ninth Circuit panel held that “[b]ecause a TCPA claim is inherently an invasion of privacy claim, [the insurer] correctly concluded that [the claimant]’s TCPA claims fell under the Policy’s broad exclusionary clause.” The full article is available here.

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Liability insurance policies generally have an exclusion barring coverage for claims brought by the insured’s own employees. Many times, especially in the hospitality industry, a liability insurance policy provides coverage for various different companies. A common question is whether claims brought by an employee of one insured against another insured are covered under such a policy.

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