The California Supreme Court gave notice this week that it will review a Court of Appeal decision which held that an insurer whose policy provided coverage for an advertising injury had no duty to defend an insured whose advertisement did not disparage the plaintiff’s product.
The Court of Appeal’s (Second Appellate District) unanimous ruling in Hartford Casualty Insurance Company v. Swift Distribution, Inc. was summarized in the November 2, 2012 ACIC Weekly Report. Hartford’s liability policy promised to defend Swift against any lawsuit that sought damages for an advertising injury. The policy defined “advertising injury” as an injury arising from the publication of material that disparages a person’s product. Swift was sued for damages that allegedly resulted from advertisements Swift published. Swift asked Hartford to defend the lawsuit. Hartford denied coverage.
The Court of Appeal ruled in favor of Hartford because it concluded that the Swift’s advertisement did not disparage the plaintiff’s product. The court held that in order for disparagement to exist, there must be an injurious falsehood which specifically refers to the derogated product. In this case, Swift’s advertisement made no mention of the plaintiff’s product. Thus, no disparagement was alleged; as a result, Hartford had no duty to defend Swift.
On February 13, the Supreme Court granted Swift’s petition for review of the Court of Appeal’s decision.