Vitamin Health, Inc. v. Hartford Casualty Insurance Co.
685 F. App'x 477
| 6th Cir. | 2017Background
- Vitamin Health (insurer: Hartford) sold AREDS2-style eye supplements and was sued by Bausch & Lomb for patent infringement and false advertising alleging Vitamin Health misrepresented zinc content and marketed its product as AREDS 2-compliant.
- Vitamin Health tendered defense to Hartford under commercial policies covering "personal and advertising injury;" Hartford denied coverage for the false advertising claim.
- Vitamin Health sued Hartford in federal court (E.D. Mich.) seeking declaratory relief and breach of contract limited to the false advertising claim.
- The district court granted summary judgment to Hartford, holding the false advertising claim did not "arguably" fall within the policy’s disparagement-based "personal and advertising injury" coverage and, alternatively, would be excluded by policy exclusions.
- Vitamin Health appealed; the Sixth Circuit affirmed, reasoning the claim was false advertising about the insured’s own product (not disparagement of a competitor) and therefore not covered; because no coverage, exclusions need not be reached.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the underlying false advertising claim arguably falls within the policy’s "personal and advertising injury" disparagement coverage | Bausch & Lomb’s complaint could be read to allege implied disparagement (Vitamin Health’s labeling implies competitors’ products are inferior), so Hartford must defend | The complaint alleges false statements about Vitamin Health’s own product, not disparagement of a competitor; no duty to defend | Held for Hartford: no arguable disparagement coverage; duty to defend not triggered |
| Whether disparagement-by-implication is recognized such that Vitamin Health’s facts would be covered | Even if recognized, Vitamin Health’s facts do not show an implication that disparages Bausch & Lomb | Disparagement requires a false, derogatory communication about a competitor or a claim that necessarily refers to a competitor | Court declined to decide recognition but held Vitamin Health’s allegations insufficient under either approach |
| Whether Hartford had a duty to indemnify for the underlying claim | If duty to defend exists, duty to indemnify would follow later | No duty to defend, so no duty to indemnify | Held: no duty to indemnify because no coverage/duty to defend established |
| Whether policy exclusions bar coverage if claim otherwise covered | Plaintiff did not reach exclusions if coverage exists | District court found alternative exclusions would apply | Court affirmed without deciding exclusions because it found no coverage |
Key Cases Cited
- Wuliger v. Manufacturers Life Ins. Co., 567 F.3d 787 (6th Cir.) (summary-judgment review standard)
- American Bumper & Mfg. Co. v. Hartford Fire Ins. Co., 550 N.W.2d 475 (Mich. 1996) (duty to defend arises if underlying allegations even arguably fall within coverage)
- Northland Ins. Co. v. Stewart Title Guaranty Co., 327 F.3d 448 (6th Cir.) (duty to defend depends on underlying complaint allegations)
- S. Bertram, Inc. v. Citizens Ins. Co. of Am., [citation="657 F. App'x 477"] (6th Cir. 2016) (disparagement claim requires false or derogatory communications about a competitor’s product)
- E.piphany, Inc. v. St. Paul Fire & Marine Ins. Co., 590 F. Supp. 2d 1244 (N.D. Cal.) (example recognizing disparagement-by-implication where insured’s superiority claims necessarily implied competitor inferiority)
- Hartford Casualty Ins. Co. v. Swift Distribution, Inc., 326 P.3d 253 (Cal. 2014) (disparagement-by-implication recognized where a claim to be the "only" producer necessarily derogates competitors)