Trailer Bridge, Inc. v. Illinois Nat’l Ins. Co. (11th Cir. (Fla.) Sept. 19, 2011)
The Eleventh Circuit ruled last week that an insured was not entitled to defense or indemnity from its commercial liability insurer in an underlying antitrust action because the complaint did not allege “personal and advertising injury” within the meaning of the policy.
In 2008, various entities sued the insured for conspiring to fix prices for cabotage services between the United States and Puerto Rico in violation of the Sherman Antitrust Act. The underlying complaint alleged that the insured and codefendants affirmatively concealed their unlawful activity and that they had met in secret and issued materially false public statements about the reasons for rate and surcharge increases. As an example, the underlying complaint alleged that the insured’s CEO noted in an interview “that customer decisions were drive by ‘[p]rice in an all-inclusive sense, which starts with the freight rate,’ implying that Defendants could not rig bids or set and increase rates, surcharges or fees, and therefore were not doing so, or otherwise acting anti-competitively.”
The insured’s commercial liability insurer denied coverage for the claim on the ground that the underlying complaint did not allege “personal and advertising injury” within the meaning of the policy. The policy defined “personal and advertising injury” as “injury, including consequential ‘bodily injury,’ arising out of … [t]he use of another’s advertising idea in your ‘advertisement.’” In the ensuing declaratory judgment action, the insured argued that the underlying complaint did, in fact, trigger the insurer’s duty to defend because its CEO’s interview was an “advertisement” within the meaning of the policy and that the CEO’s statement deployed the “advertising idea” of “another” because the CEO’s misleading justifications for price increases must have originated with the insured’s competitors (and alleged co-conspirators).
The district court granted summary judgment in favor of the insurer and the Eleventh Circuit affirmed. Specifically, the Eleventh Circuit adopted the district court’s order, which concluded that (1) the CEO’s allegedly misleading statement—made in an interview aimed at investors and described general market conditions—was not an “advertisement” for the company; (2) even if the statement amounted to an “advertisement,” the CEO’s brief description of market conditions did not involve the use of an “advertising idea”; (3) even if the CEO’s statement was an advertising idea, the antitrust complaint failed to allege that the advertising idea “belonged to another”; and (4) even if the antitrust complaint alleged an advertising injury under the policy, the injury did not cause the antitrust plaintiffs’ damages because the antitrust plaintiffs sought relief only for antitrust violations, not for misappropriation of an advertising idea.
For a copy of the decision, click here