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Tuesday, November 01, 2011

Ind. Decisions - One Indiana decision today from 7th Circuit

In Rose Acre Farms v. Columbia Casualty (SD Ind., Barker), a 9-page opinion, Judge Posner affirms the district court opinion, writing:

The plaintiff, Rose Acre, the nation’s second-largest producer of eggs, has along with other egg producers been charged in a number of class action suits with conspiring to fix the price of eggs, in violation of section 1 of the Sherman Act. (It has been embroiled in antitrust litigation before, perhaps because it has been so successful.) * * * Rose Acre asked its liability insurers to defend it in the class action suits, arguing that the complaints sought damages for what Rose Acre’s policies call “personal and advertising injury.” * * *

The insurer (for remember we’re pretending there’s just one) refused to defend Rose Acre, on the ground that the antitrust complaint alleged nothing that could be regarded as “personal and advertising injury.” This suit, a diversity suit governed by Indiana law, followed. The district court granted summary judgment in favor of the insurer.

The insurance policy defines “personal and advertising injury” as “injury . . . arising out of one or more of the following offenses,” and a list of torts follows that includes “the use of another’s advertising idea in your ‘advertisement.’ ” We’ll call this coverage “advertising injury.”

Rose Acre tries to connect its advertising to the antitrust suit in the following convoluted manner. * * *

But this suit would fail even if one could tease out of the antitrust complaint a charge that Rose Acre’s advertising was in furtherance of the alleged antitrust conspiracy. Coverage of liability for an “offense” defined as “the use of another’s advertising idea” in one’s own advertising cannot extend to using another’s advertising idea with that other’s consent. Suppose Rose Acre published on its website the following ad, written by its director of marketing: “We are socialists, we abhor profits, and we sell all our eggs at cost.” Although the ad might be thought in furtherance of the antitrust conspiracy, any antitrust liability that it created would not be “advertising injury” because the company’s marketing director is not “another.” What difference could it make if instead the ad had been written by Rose Acre’s advertising agency?

Antitrust liability, moreover, is a major business risk, especially for one of the largest companies in a major market. It is hardly likely that parties to an insurance contract would seek to cover such a serious risk indirectly through an “advertising injury” provision aimed at misappropriation and other intellectual-property torts. * * *

We note finally that the Eleventh Circuit, in a case decided a week before the oral argument in this case, rejected an identical claim by a firm represented by Rose Acre’s counsel in this case. Trailer Bridge, Inc. v. Illinois National Ins. Co., 2011 WL 4346579 (11th Cir. Sept. 19, 2011) (per curiam).

The judgment of the district court is AFFIRMED.

Posted by Marcia Oddi on November 1, 2011 12:33 PM
Posted to Ind. (7th Cir.) Decisions