(Los Angeles) – Akin Gump scored a major victory at the California Supreme Court on behalf of Hartford Casualty Insurance Company in Hartford Casualty Insurance Co. v. Swift Distribution, Co., a case that substantially narrowed an insurer’s duty to defend its policyholders under commercial general liability insurance policies that cover claims for disparaging a person or organization’s product or services.
When Swift, the policyholder, which sells a cart marketed to musicians to load and transport their equipment, was sued by a company that sells a similar cart, it tendered the defense to Hartford, asserting the suit against it was for disparagement. The Court disagreed, stating that a claim against a policyholder does not constitute disparagement and does not trigger the insurer’s duty to defend unless the claim alleges a false or misleading statement that, by express mention or clear implication, specifically refers to the plaintiff’s product or business and clearly derogates that product or business.
Applying the standard noted above, the Court ruled that Swift did not disparage the plaintiff’s product and held that to conclude otherwise would transform commonplace, routine advertising into fodder for litigation and raise serious First Amendment concerns. The Court also held there was no claim for disparagement in the plaintiff’s allegations that Swift named and designed its cart to mimic the plaintiff’s cart. The Court said those allegations may support a claim for patent or trademark infringement, but they did constitute a claim for disparagement.
Rex Heinke, co-head of Akin Gump’s Supreme Court and appellate practice, conducted the oral argument with senior counsel Michael Small providing assistance. David Simantob and Elizabeth Musser of Tressler LLP and Michael Barnes of Dentons were co-counsel.
To read the Court’s ruling, please click here.