"Advertising Injury" Coverage Does Not Extend To Antitrust Allegations
ROSE ACRE FARMS v. COLUMBIA CASUALTY CO. (November 1, 2011)
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Rose Acre Farms is one of the largest egg producers in the country. It belongs to the United Egg Producers, a trade association. Rose Acre advertises that it complies with the UEP animal husbandry guidelines. Its website makes the same point. The website also states that it sells eggs from both caged and roaming chickens and that its eggs from roaming chickens cost more than regular eggs. A number of class-action suits were filed against Rose Acre, alleging it violated Section 1 of the Sherman Act and conspired to fix the price of eggs. Rose Acre tendered its defense to its insurance company under its "personal and advertising injury" coverage. The insurers declined to defend the company. Rose Acre brought suit for a declaration of coverage. Judge Barker (S.D. Ind.) granted summary judgment to the insurance companies. Rose Acre appeals.
In their opinion, Seventh Circuit Judges Cudahy, Posner, and Wood affirmed. Under the policy language, Rose Acre is covered for the offense of "the use of another's advertising idea in your ‘advertisement.’" the Court rejected Rose Acre’s contention that it was entitled to coverage because of its advertisements mentioning the high cost of egg production. First, the antitrust complaints do not mention the company's website and complain only about fixing the price of eggs from caged chickens. Second, the coverage extends only to using "another's" advertising idea. There is no "another" alleged here. Third, the history of this standard policy provision makes clear that it was intended to apply to cases of misappropriation. Finally, the policy contains an exclusion for an advertising injury that is caused by the insured with the knowledge that it would violate another's rights. The complaint’s deliberate participation in a conspiracy allegations fall within that exclusion.
Michael Rigney practices in the law offices of GVC Ltd. in Chicago. In this blog, he reports on select