CASE BRIEFS

The insured's CGL carrier denied it had any duty to defend under the grounds that the complaint did not allege 'bodily injury' and that the damages alleged were not 'damages because of bodily injury.' Acknowledging the firmly rooted principle under Maryland law that subcellular reaction or dysfunction constitutes 'bodily injury,' Chantel Associates v. Mount Vernon Fire Insurance Co., 656 A.2d 779, 884 (Md. 1995), Lloyd E. Mitchell, Inc. v. Maryland. Casualty Co., 595 A.2d 469, 476-78 (Md. 1991), the Fourth Circuit held that: '[I]n alleging that persons using cell phones without headsets suffer from the radiation emitted by such phones, the Complaint alleges a 'bodily injury.” Turning to the carrier's argument that the complaint did not seek 'damages because of bodily injury,' the court held that, because the complaint sought 'compensatory damages including ' headsets,' the allegations were sufficient to claim 'damages 'because of' bodily injury,' even though the only relief articulated was the provision of headsets. In a coverage action regarding the same underlying suit, however, the Western District of Washington held both that the complaint did not allege covered, 'actual' bodily injury, but only uncovered, 'risk' of future injury, ignoring allegations in the complaint that subcellular injury occurred, and that no damages 'because of bodily injury' could be sought by definition, explicitly adopting the rationale of the district court decision vacated by the Fourth Circuit. VoiceStream Wireless Corp. v. Federal Ins. Co., No. C02-1415P (W.D. Wash. Jan. 21, 2003), appeal docketed, No. 03-35158 (9th Cir. Feb. 20, 2003).

The carrier also argued that, even if the complaint could be read as seeking covered damages, extrinsic evidence demonstrated that the underlying plaintiffs did not actually seek 'damages because of bodily injury.' The Fourth Circuit held that it could not consider the extrinsic evidence relied upon by the carrier because the underlying plaintiffs' legal memorandum that qualified the scope of the damages sought, upon which the carrier relied, did not constitute a binding judicial admission. Moreover, even if the extrinsic evidence was properly admissible, the court held, the claims were within the policy's coverage because, although the complaint did not seek 'traditional compensation,' the underlying plaintiffs were seeking 'relief designed to eliminate already existing bodily injuries.

'Advertising' Requires Widespread Promotion to Trigger Duty to Defend

In Hameid v. National Fire Insurance, 2003 LEXIS 4420 (Cal. July 3, 2003), the California Supreme Court addressed the question of whether an insured's use of a competitor's customer list to solicit customers was a misappropriation of advertising ideas covered under the 'advertising injury' provision of a CGL policy. The court held that 'the term 'advertising injury' as used in the CGL policy requires widespread promotion to the public such that one-on-one solicitation of a few customers does not give rise to the insurer's duty to defend the underlying lawsuit.' The court noted that the meaning of 'advertising' in a CGL policy 'has presented a problem for courts interpreting coverage.' However, it decided to adopt what it characterized as the 'majority approach' and interpret the term 'advertising' as used in CGL policies 'to mean widespread promotional activities usually directed to the public at large.' The court explained that small businesses could still obtain coverage for 'advertising injury' 'if they place spots on the radio or television, buy space on billboards or bus benches, or take out advertisements in newspapers directed to the public at large, and their content caused advertising injury.' The court specifically refused to follow the line of cases that called for the determination of whether activities are 'advertising' on a case-by-case basis. It stated: 'Due to the pervasiveness of CGL policies, and of advertising, if we adopted [the] malleable definition, we likely would encourage litigation. Giving identical policy language different meanings for different insureds would eliminate the clarity and the certainty that is essential to the insurance industry. Standardization of policy terms is important to insurers and insureds alike. It enables insurers to compare losses and calculate rates and premiums so that rates remain stable and not based on the stabilizing ad hoc views of a particular coverage. It also gives effect to the parties' mutual intent as it existed at the time of contracting, so far as that intent is ascertainable and lawful. ' In other words, the majority view defines 'advertising' to mean the widespread distribution of promotional materials to the public at large because it interprets the contractual term under its ordinary and popular meaning. It allows uniformity in interpretation under different factual circumstances that may or may not lead to coverage.'

Based on this reasoning, the court held that making telephone calls and sending mailers to another's customers constituted 'solicitation,' not 'advertising.'

Christopher L. LaFon of Spriggs & Hollingsworth and Kirk A. Pasich of Pasich and Kornfeld contributed this month's case briefs.

In Hameid v. National Fire Insurance, 2003 LEXIS 4420 (Cal. July 3, 2003), the California Supreme Court addressed the question of whether an insured's use of a competitor's customer list to solicit customers was a misappropriation of advertising ideas covered under the 'advertising injury' provision of a CGL policy. The court held that 'the term 'advertising injury' as used in the CGL policy requires widespread promotion to the public such that one-on-one solicitation of a few customers does not give rise to the insurer's duty to defend the underlying lawsuit.' The court noted that the meaning of 'advertising' in a CGL policy 'has presented a problem for courts interpreting coverage.' However, it decided to adopt what it characterized as the 'majority approach' and interpret the term 'advertising' as used in CGL policies 'to mean widespread promotional activities usually directed to the public at large.' The court explained that small businesses could still obtain coverage for 'advertising injury' 'if they place spots on the radio or television, buy space on billboards or bus benches, or take out advertisements in newspapers directed to the public at large, and their content caused advertising injury.' The court specifically refused to follow the line of cases that called for the determination of whether activities are 'advertising' on a case-by-case basis. It stated: 'Due to the pervasiveness of CGL policies, and of advertising, if we adopted [the] malleable definition, we likely would encourage litigation. Giving identical policy language different meanings for different insureds would eliminate the clarity and the certainty that is essential to the insurance industry. Standardization of policy terms is important to insurers and insureds alike. It enables insurers to compare losses and calculate rates and premiums so that rates remain stable and not based on the stabilizing ad hoc views of a particular coverage. It also gives effect to the parties' mutual intent as it existed at the time of contracting, so far as that intent is ascertainable and lawful. ' In other words, the majority view defines 'advertising' to mean the widespread distribution of promotional materials to the public at large because it interprets the contractual term under its ordinary and popular meaning. It allows uniformity in interpretation under different factual circumstances that may or may not lead to coverage.'

Based on this reasoning, the court held that making telephone calls and sending mailers to another's customers constituted 'solicitation,' not 'advertising.'

Christopher L. LaFon of Spriggs & Hollingsworth and Kirk A. Pasich of Pasich and Kornfeld contributed this month's case briefs.

Insurer Must Defend Class Action Alleging Cell Phone Radiation

In Northern Insurance Company of New York v. Baltimore Business Communications, Inc., No. 02-1358, 2003 U.S. App. LEXIS 12318 (4th Cir., June 19, 2003), the Fourth Circuit recently held in an unpublished decision that an insurance carrier has a duty to defend a class action suit seeking to require a cell phone retailer to supply headsets for its products.

The insured is a defendant in a class action suit asserting that the insured and other defendants supplied, sold or leased cell phones that emitted dangerous levels of radiation. The complaint alleges that radiation emanating from cell phones causes biological injury at the cellular level when the phones are used without headsets and that 'the biological injury caused by the cell phones creates an increased health risk that the [defendants] could have eliminated or significantly mitigated by providing cell phone purchasers with headsets and appropriate warnings.' For each cause of action, the complaint seeks 'compensatory damages including but not limited to amounts necessary to purchase a [cell phone] headset ' for each class member.'

The insured's CGL carrier denied it had any duty to defend under the grounds that the complaint did not allege 'bodily injury' and that the damages alleged were not 'damages because of bodily injury.' Acknowledging the firmly rooted principle under Maryland law that subcellular reaction or dysfunction constitutes 'bodily injury,' Chantel Associates v. Mount Vernon Fire Insurance Co. , 656 A.2d 779, 884 (Md. 1995), Lloyd E. Mitchell, Inc. v. Maryland. Casualty Co. , 595 A.2d 469, 476-78 (Md. 1991), the Fourth Circuit held that: '[I]n alleging that persons using cell phones without headsets suffer from the radiation emitted by such phones, the Complaint alleges a 'bodily injury.” Turning to the carrier's argument that the complaint did not seek 'damages because of bodily injury,' the court held that, because the complaint sought 'compensatory damages including ' headsets,' the allegations were sufficient to claim 'damages 'because of' bodily injury,' even though the only relief articulated was the provision of headsets. In a coverage action regarding the same underlying suit, however, the Western District of Washington held both that the complaint did not allege covered, 'actual' bodily injury, but only uncovered, 'risk' of future injury, ignoring allegations in the complaint that subcellular injury occurred, and that no damages 'because of bodily injury' could be sought by definition, explicitly adopting the rationale of the district court decision vacated by the Fourth Circuit. VoiceStream Wireless Corp. v. Federal Ins. Co., No. C02-1415P (W.D. Wash. Jan. 21, 2003), appeal docketed, No. 03-35158 (9th Cir. Feb. 20, 2003).

The carrier also argued that, even if the complaint could be read as seeking covered damages, extrinsic evidence demonstrated that the underlying plaintiffs did not actually seek 'damages because of bodily injury.' The Fourth Circuit held that it could not consider the extrinsic evidence relied upon by the carrier because the underlying plaintiffs' legal memorandum that qualified the scope of the damages sought, upon which the carrier relied, did not constitute a binding judicial admission. Moreover, even if the extrinsic evidence was properly admissible, the court held, the claims were within the policy's coverage because, although the complaint did not seek 'traditional compensation,' the underlying plaintiffs were seeking 'relief designed to eliminate already existing bodily injuries.

'Advertising' Requires Widespread Promotion to Trigger Duty to Defend

In Hameid v. National Fire Insurance, 2003 LEXIS 4420 (Cal. July 3, 2003), the California Supreme Court addressed the question of whether an insured's use of a competitor's customer list to solicit customers was a misappropriation of advertising ideas covered under the 'advertising injury' provision of a CGL policy. The court held that 'the term 'advertising injury' as used in the CGL policy requires widespread promotion to the public such that one-on-one solicitation of a few customers does not give rise to the insurer's duty to defend the underlying lawsuit.' The court noted that the meaning of 'advertising' in a CGL policy 'has presented a problem for courts interpreting coverage.' However, it decided to adopt what it characterized as the 'majority approach' and interpret the term 'advertising' as used in CGL policies 'to mean widespread promotional activities usually directed to the public at large.' The court explained that small businesses could still obtain coverage for 'advertising injury' 'if they place spots on the radio or television, buy space on billboards or bus benches, or take out advertisements in newspapers directed to the public at large, and their content caused advertising injury.' The court specifically refused to follow the line of cases that called for the determination of whether activities are 'advertising' on a case-by-case basis. It stated: 'Due to the pervasiveness of CGL policies, and of advertising, if we adopted [the] malleable definition, we likely would encourage litigation. Giving identical policy language different meanings for different insureds would eliminate the clarity and the certainty that is essential to the insurance industry. Standardization of policy terms is important to insurers and insureds alike. It enables insurers to compare losses and calculate rates and premiums so that rates remain stable and not based on the stabilizing ad hoc views of a particular coverage. It also gives effect to the parties' mutual intent as it existed at the time of contracting, so far as that intent is ascertainable and lawful. ' In other words, the majority view defines 'advertising' to mean the widespread distribution of promotional materials to the public at large because it interprets the contractual term under its ordinary and popular meaning. It allows uniformity in interpretation under different factual circumstances that may or may not lead to coverage.'

Based on this reasoning, the court held that making telephone calls and sending mailers to another's customers constituted 'solicitation,' not 'advertising.'

Christopher L. LaFon of Spriggs & Hollingsworth and Kirk A. Pasich of Pasich and Kornfeld contributed this month's case briefs.

In Hameid v. National Fire Insurance, 2003 LEXIS 4420 (Cal. July 3, 2003), the California Supreme Court addressed the question of whether an insured's use of a competitor's customer list to solicit customers was a misappropriation of advertising ideas covered under the 'advertising injury' provision of a CGL policy. The court held that 'the term 'advertising injury' as used in the CGL policy requires widespread promotion to the public such that one-on-one solicitation of a few customers does not give rise to the insurer's duty to defend the underlying lawsuit.' The court noted that the meaning of 'advertising' in a CGL policy 'has presented a problem for courts interpreting coverage.' However, it decided to adopt what it characterized as the 'majority approach' and interpret the term 'advertising' as used in CGL policies 'to mean widespread promotional activities usually directed to the public at large.' The court explained that small businesses could still obtain coverage for 'advertising injury' 'if they place spots on the radio or television, buy space on billboards or bus benches, or take out advertisements in newspapers directed to the public at large, and their content caused advertising injury.' The court specifically refused to follow the line of cases that called for the determination of whether activities are 'advertising' on a case-by-case basis. It stated: 'Due to the pervasiveness of CGL policies, and of advertising, if we adopted [the] malleable definition, we likely would encourage litigation. Giving identical policy language different meanings for different insureds would eliminate the clarity and the certainty that is essential to the insurance industry. Standardization of policy terms is important to insurers and insureds alike. It enables insurers to compare losses and calculate rates and premiums so that rates remain stable and not based on the stabilizing ad hoc views of a particular coverage. It also gives effect to the parties' mutual intent as it existed at the time of contracting, so far as that intent is ascertainable and lawful. ' In other words, the majority view defines 'advertising' to mean the widespread distribution of promotional materials to the public at large because it interprets the contractual term under its ordinary and popular meaning. It allows uniformity in interpretation under different factual circumstances that may or may not lead to coverage.'

Based on this reasoning, the court held that making telephone calls and sending mailers to another's customers constituted 'solicitation,' not 'advertising.'

Christopher L. LaFon of Spriggs & Hollingsworth and Kirk A. Pasich of Pasich and Kornfeld contributed this month's case briefs.