Antitrust and Consumer Protection Laws Exclusions Bar Coverage for Underlying Litigation

The United States District Court for the District of Minnesota, applying Minnesota law, has held that a media tech policy’s antitrust and consumer protection laws exclusions precluded coverage for the underlying litigation. Fair Isaac Corp. v. Certain Underwriters at Lloyd’s London Subscribing to Beazley AFB Media Tech Policy Number W100FC171201, Syndicates 2623 and 623, 2022 WL 17670081 (D. Minn. Dec. 14, 2022).

The insured, the creator of a credit-scoring model, was named as a defendant in ten putative class actions filed by purchasers of its credit scores. The lawsuits alleged that the insured charged monopolistic prices and falsely disparaged competing credit score models in aggressive advertising campaigns. The two consolidated class action complaints filed on behalf of direct purchasers and indirect purchasers asserted causes of action for violations of the Sherman Act, state antitrust laws, and state unfair and deceptive trade practices laws, as well as unjust enrichment.

The multimedia and advertising liability coverage provision of the insured’s media tech policy precluded coverage for claims “[f]or, arising out of or resulting from any actual or alleged antitrust violation, restraint of trade, unfair competition . . ., false or deceptive or misleading advertising or violation of the Sherman Antitrust Act, the Clayton Act, or the Robinson Patman Act, as amended.” The policy also excluded coverage for claims “[f]or arising out of or resulting from any actual or alleged false, deceptive or unfair trade practices, or violation of consumer protection laws.” Following the insurer’s denial of coverage on these grounds, the insured instituted coverage litigation in which the parties filed cross-motions for summary judgment.

In granting the insurer’s motion for summary judgment, the court held that the policy’s antitrust and consumer protection laws exclusions precluded coverage for the underlying litigation. The court found that the language in the exclusions was “sweeping,” particularly when combined with the broad “arising out of” lead-in language. According to the court, the underlying litigation asserted causes of action that “plainly could not exist but for the existence of excluded conduct: violations of the Sherman Act, violations of state antitrust laws, and violations of state consumer protection laws and unfair and deceptive trade practices laws.” Moreover, as the underlying claimants did not assert that their own products were disparaged, the allegations did not raise the possibility of recovery premised on non-excluded product disparagement. Because the underlying claimants could not prove and prevail on their claims without implicating acts excluded from coverage under the two exclusions, the court ruled that the insurer had no duty to defend or indemnify in connection with the underlying litigation.

Finally, the court concluded that coverage was not automatically available for the underlying litigation simply because the insurer had taken the position that it related back to a prior, covered claim. Instead, the court found that “related claims” provisions in claims-made policies serve a limited purpose: to determine what policy responds to a claim, the applicable limits, and the applicable retention. The court refused to broadly interpret the “related claims” provision to create a duty to defend a claim that was otherwise outside the policy coverage.

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