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Council for Responsible Nutrition v. Hartford Casualty Insurance Co.

July 12, 2007

COUNCIL FOR RESPONSIBLE NUTRITION, ET AL., PLAINTIFFS,
v.
HARTFORD CASUALTY INSURANCE CO., DEFENDANT.



The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge

MEMORANDUM OPINION

When an insured is sued for negligent, reckless, and malicious defamation, does the insurer have a duty to defend where the insurance policy excludes coverage for injuries "expected" by the insured? The answer to this question is "yes" under District of Columbia law. Council for Responsible Nutrition and its President, Annette Dickinson, (collectively "CRN") seek insurance coverage under a policy issued by Hartford Casualty Insurance Company ("Hartford"). The parties have filed cross motions for summary judgment on the issue of whether Hartford had a duty to defend CRN in an underlying defamation lawsuit. Because the underlying complaint stated a claim covered by the policy and because the exclusion clause is construed narrowly, Hartford had a duty to defend. Accordingly, CRN's motion for summary judgment will be granted, and Hartford's motion for summary judgment will be denied.

I. FACTUAL BACKGROUND

Council For Responsible Nutrition is a trade association that represents ingredient suppliers and manufacturers in the dietary supplement industry. Def.'s Statement of Material Facts ("Def.'s Facts") ¶ 1. Both the Council and Ms. Dickinson, as its President, were insured under a commercial business liability policy number 42 SBA FT4964 (the "Policy"), issued by Hartford. Compl. ¶¶ 7-8. The Policy covers "personal and advertising injury" as follows:

We will pay on behalf of the Insured those sums that the insured becomes legally obligated to pay as damages because of . . . "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking damages. However, we will have no duty to defend the insured against any "suit" . . . to which this insurance does not apply.

Def.'s Ex. 1, Policy ¶ 1. The Policy defines "personal and advertising injury" as:

injury, including consequential "bodily injury" arising out of one or more of the following offenses: . . .

d. Oral, written or electronic publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services.

Id., Policy ¶ 15(d). However, the Policy also excludes coverage for "expected" injury:

This insurance does not apply to:

a. Expected or Intended Injury

(2) "Personal and advertising injury" arising out of an offense committed by, at the direction of or with the consent or acquiescence of the insured with the expectation of inflicting "personal and advertising injury."

Id., Policy § B ¶ 1(a)(2) (emphasis added).

CRN brought this suit against Hartford seeking insurance coverage for a suit brought against CRN by ConsumerLab in New York state court (the "Underlying Complaint"). The Underlying Complaint, captioned ConsumerLab.com LLC v. Council for Responsible Nutrition, No. 05-04998 (N.Y. Sup. Ct. Westchester Co.), was filed on April 5, 2005. See Def.'s Ex. 2, Underlying Compl. The Underlying Complaint alleged that on January 12, 2005, CRN filed a request for investigation with the Federal Trade Commission ("FTC") alleging that ConsumerLab engaged in unfair business practices and requesting that the FTC investigate and bring an enforcement action against ConsumerLab. Underlying Compl. ΒΆ 15. CRN's request for investigation alleged that ConsumerLab engaged in a deceptive scheme whereby ConsumerLab required manufacturers of nutritional supplements to pay a fee to obtain favorable publicity for positive test results or to avoid unfavorable publicity for negative test results. Id. Manufacturers who refused to pay the fee allegedly received no publicity if their tests were positive, and ConsumerLab excluded their products from the list of "passing" products. Id. ...


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