Dish Network Corp. v. Arch Specialty Insurance
989 F. Supp. 2d 1137
D. Colo.2013Background
- DISH (DISH Network Corp. and DISH Network LLC) incurred claims in the Katz patent litigation alleging misappropriation of advertising ideas and related conduct; DISH sought defense/indemnity from multiple insurers (primary and excess/umbrella).
- The Tenth Circuit reversed the district court’s earlier grant of summary judgment for insurers, holding the Katz complaint might arguably allege an "advertising injury" and remanded for consideration of additional defenses raised by excess insurers.
- Insurers’ policies contain standard ISO "business" exclusions barring "advertising injury" arising out of conduct by an insured whose business is "advertising, broadcasting, publishing or telecasting."
- DISH describes its service as a subscription direct-broadcast satellite TV provider; insurers produced corporate materials and broker recommendations showing DISH represented itself as a broadcaster and was warned that broadcaster exclusions applied.
- The district court on remand held (1) DISH is primarily in the business of broadcasting/telecasting, so the business exclusion bars advertising-injury coverage; (2) National Union’s umbrella policy also fails because its "solely out of advertising activities" causation requirement is not met; (3) XL’s and other excess/umbrella provisions likewise do not provide coverage; no bad-faith liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Katz complaint may trigger insurers' duty to defend as an "advertising injury" | Tenth Circuit already held Katz complaint may arguably fall within advertising-injury coverage | Insurers argue independent defenses (business exclusion, sole-causation, exhaustion) preclude any duty | Court: Tenth Circuit left these defenses open; business exclusion and other defenses preclude duty to defend on remand |
| Whether DISH’s activities constitute "broadcasting"/"telecasting" for exclusion | DISH: subscription/satellite service is not "broadcasting" aimed at the indiscriminate public; rely on narrow FCC/statutory distinctions and some dictionary definitions | Insurers: common meaning of "broadcast" = transmission; DISH markets itself as a broadcaster and sells mass-market programming; broker warned coverage excluded | Held: "broadcasting" and "telecasting" in ordinary meaning include DISH’s satellite TV business; exclusion applies |
| Whether National Union’s umbrella policy covers Katz claim given its "sole causation" requirement | DISH: sole-causation conflicts with Occurrence definition and should not bar coverage; Katz alleges advertising-related harms | National Union: policy requires injury to arise "solely out of" advertising activities; Katz alleges broader uses beyond advertising | Held: Policy terms harmonize; Katz claims do not arise solely from advertising activities; National Union has no duty to defend |
| Whether excess/umbrella insurers must defend absent exhaustion of primary limits | DISH: excess/umbrella should defend if underlying complaint arguably covered; some XL language requires drop-down "as warranted" | Insurers: umbrella/XL require exhaustion or contain their own exclusions/follow-form endorsements; XL also excludes defense costs covered by underlying insurance | Held: No duty to defend — underlying primary coverage excluded by business exclusion; National Union/XL also lack coverage for independent reasons |
Key Cases Cited
- DISH Network Corp. v. Arch Specialty Ins. Co., 659 F.3d 1010 (10th Cir. 2011) (appellate holding that Katz complaint may arguably allege advertising injury and remanding to consider additional defenses)
- Pompa v. Am. Family Mut. Ins. Co., 520 F.3d 1139 (10th Cir. 2008) (extrinsic evidence and interpretation of policy terms; caution against creating ambiguity from dictionary variants)
- Novell, Inc. v. Fed. Ins. Co., 141 F.3d 983 (10th Cir. 1998) (summary-judgment review and duty-to-defend standards)
- Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294 (Colo. 2003) (insurer’s duty to defend under Colorado law; four-corners rule)
- Cotter Corp. v. Am. Empire Surplus Lines Ins. Co., 90 P.3d 814 (Colo. 2004) (protecting insured’s expectation of a defense under the complaint rule)
- Apodaca v. Allstate Ins. Co., 255 P.3d 1099 (Colo. 2011) (umbrella/secondary-insurer principles on duty to defend and exhaustion)
- Compass Ins. Co. v. City of Littleton, 984 P.2d 606 (Colo. 1999) (insurer’s heavy burden to prove that an underlying claim cannot fall within coverage)