The United States District Court for the Northern District of California recently denied several commercial general liability insurers’ motions to dismiss, holding that the insurers may be required to defend the makers of Bluetooth Headsets against suits alleging negligent design and unfair marketing even though the suits do not allege that the plaintiffs suffered any physical injuries. Plantronics, Inc. v. American Home Assurance Co., et al., C 07-6038-PVT (October 20, 2008).

The complaints in each of the underlying putative class action suits against the insured bluetooth headset manufacturer allege that headsets can cause “noise induced hearing loss [NIHL] and that the packaging lacks any warning about such potential hearing loss.” The only damages sought in the complaints are for refunds of the purchase price of the headsets. However, the Court noted that (1) the insured might be required to pay damages if it lost the underlying suits; and (2) plaintiffs could amend their complaints at any time to allege damages due to hearing loss.

Therefore, the Court ruled that, under California law, the extrinsic evidence that the plaintiffs could potentially present in the underlying case, which they are not required to present on a motion to dismiss, might implicate the insurers’ duty to defend. Thus, the Court found that, as the underlying actions potentially seek damages within the coverage of the policy, dismissal was not warranted.

For a full copy of the decision, please click here.