Insurers Have No Duty to Defend Antitrust Claims, Says New York Court

A New York federal court held that commercial general liability insurers have no duty under the advertising injury provision of their policies to defend a lawsuit alleging that the insured company publicly misstated that it had not engaged in certain anticompetitive conduct. Suwannee Am. Cement LLC v. Zurich Ins. Co., 2012 WL 3155879 (S.D.N.Y. Aug. 3, 2012).

In seeking coverage under CGL policies, the insured company argued that alleged misstatements about the company’s illegal conduct could be viewed as “advertisements” made in order to promote sales. The court rejected this notion, explaining that even if such statements could be construed as advertising, coverage under the advertising injury provision required the misappropriation of an advertising idea,not merely the act of advertising. The court further held that even if the idea of a false statement originated with a co-conspirator of the policyholder and not the policyholder itself, it was not “misappropriated” within the meaning of the policy. The court also found that the insurers’ duty to defend was negated by a criminal acts exclusion.

The decision comports with numerous other rulings holding that general liability insurers have no duty to defend antitrust claims under advertising injury coverage. Consistent with Suwannee American, courts have reasoned that construing advertising injury coverage to indirectly cover the risk of antitrust violations is unreasonable.