Anticipated Decision in Heinz Rescission Litigation Upholds Ruling Voiding $25 Million Insurance Policy Due to Misrepresentations in the Application

In a much anticipated decision, the Third Circuit Court of Appeals upheld the rescission of H.J. Heinz Company’s $25 million production contamination insurance policy because Heinz made material misrepresentations concerning previous product contamination claims when it applied for the policy. H.J. Heinz Company v. Starr Surplus Lines Insurance Company, No. 16-1447 (3d Cir. Jan. 11, 2017).

The fact that Heinz’s application misrepresented its history of prior contaminations losses was clear. The insurer’s application asked Heinz to disclose past complaints, recommendations, fines or penalties by …

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Fax Blast From the Past: Third Circuit Denies Coverage in TCPA Action

The Third Circuit denied coverage for alleged violations of the Telephone Consumer Protection Act (TCPA), while also ruling on a jurisdictional question regarding the amount in controversy applicable to declaratory judgment actions when they emanate from a class action lawsuit. This case reminds that even without a TCPA exclusion, blast fax suits may not present covered property damage or advertising injury claims.

In Auto-Owners Insurance Co. v. Stevens & Ricci, Inc., No. 15-2080, 2016 U.S. App. LEXIS 16182, (3d Cir. Sep. 1, 2016), …

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Holy Stromboli! Grocer Loses Coverage and Bad Faith Battle Against Excess Carrier

In Charter Oak Insurance Company v. Maglio Fresh Foods, No. 14-4094, 2015 U.S. App. LEXIS 19268 (3d Cir. Nov. 4, 2015), the Third Circuit held that because the underlying lawsuit did not present a covered “advertising injury” claim, and there was no exhaustion of the primary policy, the insured’s excess carrier could not have acted in bad faith.

As background, the underlying plaintiff, Leonetti’s, a supplier and competitor of Maglio Fresh Foods, brought a lawsuit against Maglio. First, the “Maglio brand claim” alleged that …

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No Coverage for Consumer Privacy Claims Say Third Circuit and Seventh Circuit

In two recent cases, the Third Circuit and Seventh Circuit each found an absence of coverage under general liability policies resulting from consumer privacy claims, one for alleged violations of a state ZIP code statute and another for alleged violations of a state unauthorized recording statute. Since both cases involved coverage for class action lawsuits seeking statutory damages, these are big wins for insurers.

First, the Third Circuit in OneBeacon America Insurance Co. v. Urban Outfitters, Inc., No 14-2976, 2015 U.S. App. LEXIS 16399 …

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Bad Faith Decision Vacated as Insurer Not Responsible for Punitive Damages Where Insurance for Punitive Damages is Prohibited

In Jared Wolfe v. Allstate Property & Casualty Insurance Company, the insurer brought an appeal to the Third Circuit seeking to vacate a jury award against it for bad faith and breach of contract asserted by a plaintiff who was injured in a motor vehicle accident caused by the policyholder of the insurer. The Third Circuit agreed with the insurer and vacated the award, finding that the lower court made a mistake in allowing the plaintiff to introduce evidence of a punitive damages award …

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