Illinois National Insurance Co. issued a commercial general liability policy to Trailer Bridge, Inc. The policy obligated Illinois National to defend Trailer Bridge in actions against it seeking damages for “personal and advertising injury.” The policy defined “personal and advertising injury” as “injury … arising out of … [t]he use of another’s advertising idea in your ‘advertising.’” The policy defined “advertisement” as “a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters.”
Based on this policy, Trailer Bridge filed an action in a Florida federal court against Illinois National, seeking coverage for class actions filed against Trailer Bridge and others that alleged that they had fixed prices in violation of the Sherman Act. Trailer Bridge alleged that the policy provided coverage for the antitrust litigation based on allegations in the antitrust complaints that the defendants, including Trailer Bridge, made false public statements justifying their price increases in an effort to conceal their alleged price fixing conspiracy. As these allegedly false public statements justifying its prices originated with its competitors (and alleged co-conspirators), Trailer Bridge asserted that these public statements were “advertisements” that used others’ “advertising ideas” and that the policy accordingly provided coverage.
The district court rejected Trailer Bridge’s positions, held that Illinois National had no duty to defend Trailer Bridge in the antitrust litigation, and entered summary judgment in favor of Illinois National. The district court held that under the terms of the policy, Trailer Bridge’s public statements justifying its price increases were not “advertisements” and did not involve the use of an “advertising idea.” It also held that even if the public statements were “advertisements” using an “advertising idea,” the antitrust complaints did not allege that the advertising ideas belonged to others. It further held, moreover, that even if the complaints alleged “advertising injury,” the complaints did not allege that advertising injury caused their antitrust damages, because they sought damages for violations of the Sherman Act, not for misappropriation of advertising ideas.
On appeal, the Eleventh Circuit Court of Appeals affirmed. The appeals court agreed with the district court’s reasoning and particularly “reject[ed] Trailer Bridge's contention that the use of a co-defendant's (and alleged co-conspirator's) idea—as opposed to the idea of a plaintiff in the underlying antitrust action—could qualify as an ‘offense’ under the Policy… The underlying plaintiffs sought only antitrust damages; they did not seek to impose any legal obligation upon the insured to pay them damages ‘because of ... advertising injury.’ No facts were alleged in the underlying complaint on the basis of which the underlying plaintiffs might have recovered damages ‘because of ... advertising injury’; and the underlying plaintiffs could not have recovered such damages because the allegedly misappropriated ‘advertising idea’ was not that of the underlying plaintiffs, but rather was alleged to have been the advertising idea of other parties altogether.” Trailer Bridge, Inc. v. Illinois Nat. Ins. Co., 2011 WL 4346579 (11th Cir. Sept. 19, 2011).
Trailer Bridge, Inc. may provide significant support for the position that insurance policies that provide coverage for “advertising injury” generally do not provide coverage for antitrust litigation. It also should be noted that the Eleventh Circuit in Trailer Bridge, Inc. relied in part on Rose Acre Farms, Inc. v. Columbia Cas. Co., 772 F.Supp.2d 994, 1003 (S.D.Ind.2011), in which the district court granted an insurer summary judgment after holding that a policy providing coverage for “personal and advertising injury” did not provide coverage for antitrust litigation concerning alleged price fixing. The Seventh Circuit Court of Appeals heard oral argument in that case on September 26, 2011. A ruling in favor of the insurer by the Seventh Circuit would solidify the position that insurance policies providing coverage for “advertising injury” do not cover antitrust litigation. A ruling against the insurer, however, would muddy the waters and result in uncertainty going forward.