Hanover Insurance Co v. Urban Outfitters Inc
806 F.3d 761
3rd Cir.2015Background
- Navajo Nation sued Urban Outfitters in 2012 for trademark infringement and related claims, alleging Urban Outfitters had used the “Navajo/Navaho” names and marks "since at least March 16, 2009" and continuously thereafter.
- Urban Outfitters had CGL and umbrella coverage that included "personal and advertising injury." OneBeacon insured before July 7, 2010; Hanover (via a fronting arrangement) provided coverage from July 7, 2010–July 7, 2011 and then directly from July 7, 2011–July 7, 2012.
- Hanover’s policies contained a "prior publication" exclusion: no coverage for personal/advertising injury "arising out of oral or written publication of material whose first publication took place before the beginning of the policy period."
- Hanover reserved rights, then sought a declaratory judgment that it had no duty to defend/indemnify Urban Outfitters based on that exclusion; the district court granted judgment on the pleadings for Hanover.
- The Third Circuit reviewed de novo and confined its analysis to the four corners of the underlying complaint, which repeatedly fixed March 16, 2009 (or earlier) as the start of the allegedly infringing conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hanover has a duty to defend Urban Outfitters under the policies’ personal/advertising-injury coverage | Complaint lacks date specificity; extrinsic evidence could show some alleged infringements occurred during Hanover’s policy period, so duty to defend exists | The complaint pleads first publication starting March 16, 2009 (pre-policy); the prior-publication exclusion therefore bars coverage | Held for Hanover: exclusion applies because complaint alleges continuous wrongful conduct beginning before Hanover’s policy period and post-policy ads are not alleged as separate "fresh wrongs" |
| Whether post-coverage publications in the complaint constitute "fresh wrongs" that fall outside the prior-publication exclusion | Post-coverage acts were different and could be new wrongs, so coverage should apply | The complaint shows a continuous course and a common advertising objective; post-coverage ads are variations, not new independent torts | Held: post-coverage publications are not "fresh wrongs" where complaint alleges the same, continuous wrongful scheme starting before coverage began |
| Whether extrinsic evidence may be considered to determine timing differences between pre- and post-coverage acts | Permissible to consider extrinsic evidence when complaint is not date-specific | Under Pennsylvania law, duty to defend is determined solely by complaint allegations, so extrinsic evidence is improper | Held: confined to the complaint; insurer bears burden to prove exclusion; no extrinsic inquiry required |
| Standard for distinguishing "fresh wrongs" from mere variations on the same wrongful course | Fresh wrongs require substantive differences between pre- and post-coverage publications | Focus on whether later publications manifest the same alleged wrong (common objective, no hiatus, no separate tort allegations) | Held: adopt a functional test—"fresh wrongs" are materially new acts not substantially similar to pre-coverage publications; here not met |
Key Cases Cited
- Donegal Mut. Ins. Co. v. Baumhammers, 938 A.2d 286 (Pa. 2007) (policy interpretation and duty-to-defend governed by complaint allegations)
- Kvaerner Metals Div. v. Commercial Union Ins. Co., 908 A.2d 888 (Pa. 2006) (duty-to-defend principles under Pennsylvania law)
- Street Surfing, LLC v. Great Am. E & S Ins. Co., 776 F.3d 603 (9th Cir. 2014) (defines "fresh wrongs" as post-coverage material not substantially similar to pre-coverage material)
- Taco Bell Corp. v. Cont’l Cas. Co., 388 F.3d 1069 (7th Cir. 2004) (alternative approach to prior-publication exclusion analyzed by Seventh Circuit)
- Matagorda Ventures, Inc. v. Travelers Lloyds Ins. Co., 203 F. Supp. 2d 704 (S.D. Tex. 2000) (principle that an insured cannot insure against known, already-begun wrongs)