Hartford Casualty Insurance v. Swift Distribution, Inc.
59 Cal. 4th 277
| Cal. | 2014Background
- Hartford issued a CGL policy to Swift/Ultimate covering personal and advertising injury; Dahl sued Ultimate in federal court for patent/trademark infringement, misrepresentation, and related claims, including alleged misleading ads.
- Hartford denied defense, arguing the Dahl action did not allege disparagement of Dahl or the Multi-Cart; the Court of Appeal agreed, disagreeing with Charlotte Russe’s reasoning.
- Dahl’s complaint alleged that Ultimate’s product design/name was similar to the Multi-Cart, plus advertising claims about superiority; Dahl asserted patent/trademark claims and related misrepresentations.
- Hartford filed a declaratory judgment action seeking to determine no duty to defend or indemnify; the trial court granted Hartford summary judgment, and the Court of Appeal affirmed.
- The central issue is whether the Dahl action contained a claim of disparagement within the Hartford policy’s ‘personal and advertising injury’ coverage, given the policy’s lack of a defined term for disparages.
- The Supreme Court of California held that disparagement requires (i) a statement that specifically refers to the plaintiff’s product or business and (ii) clearly derogates that product or business, either expressly or by clear implication; the Dahl action did not meet these requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend for disparagement claim | Hartford contends Dahl alleges disparagement; potential coverage exists. | Swift argues no potential disparagement; no clear derogation of Multi-Cart. | No duty to defend; no potential disparagement. |
| Specific reference requirement for disparagement | Disparagement can be shown by implied references in the complaint or record facts. | Disparagement requires explicit or reasonably implied reference to the plaintiff’s product; not shown here. | Dahl failed to allege express or reasonably implied disparagement of the Multi-Cart. |
| Effect of catalog/puffery on disparagement claim | Catalog assertions of superiority could imply the Multi-Cart’s inferiority. | Statements are generic puffery, not specific disparagement of Dahl or the Multi-Cart. | Catalog phrases were not sufficiently specific to disparage the Multi-Cart. |
Key Cases Cited
- Total Call Internat., Inc. v. Peerless Ins. Co., 181 Cal.App.4th 161 (Cal. Ct. App. 2010) (applies specific reference requirement to disparagement claims)
- Charlotte Russe Holding, Inc. v. People’s United Ins. Co. (implied), 207 Cal.App.4th 969 (Cal. Ct. App. 2012) (distinguishes disparagement scope from price-related inferences)
- Blatty v. New York Times Co., 42 Cal.3d 1033 (Cal. 1986) (injurious falsehood must be of and concerning plaintiff; First Amendment considerations)
- Hofmann Co. v. E. I. Du Pont de Nemours & Co., 202 Cal.App.3d 390 (Cal. Ct. App. 1988) (applies Blatty reasoning to commercial disputes)
- Nichols v. Great American Ins. Co., 169 Cal.App.3d 766 (Cal. Ct. App. 1985) (defines disparagement in context of injurious falsehood and product concerns)
- Atlantic Mut. Ins. Co. v. Lamb, Inc., 100 Cal.App.4th 1017 (Cal. Ct. App. 2002) (disparagement includes statements about a competitor’s goods that are untrue or misleading)
- Aetna Cas. & Surety Co. v. Centennial Ins. Co., 838 F.2d 346 (9th Cir. 1988) (disparagement not satisfied by mere copying; not automatically covered)