Passing References Do Not a Covered Claim Make

"WRONGFUL ACT" – ANTITRUST LAWSUIT – DUTY TO DEFEND 

Carfax, Inc. v. Illinois National Ins. Co.
(1st Dept., 3/1/2018)

Carfax's policy with Illinois National covered loss "resulting from a Claim alleging a Wrongful Act."  The policy defined "Wrongful Act" as "any act, error, omission, ... misstatement or misleading statement by an Insured ... that results solely in ... defamation, libel, slander, product disparagement or trade libel or other tort related to disparagement or harm to character or reputation; including, without limitation, unfair competition" (emphasis added). The policy contained an exclusion from coverage for claims alleging antitrust violations.

Carfax sought coverage for an underlying antitrust lawsuit, contending that Illinois National owed it a defense because the suit alleged disparagement: 

"By contractually committing these two websites to include hyperlinks to Carfax VHRs (vehicle history reports) and to exclude VHRs of any other provider, Carfax has stigmatized any listing without such a link in the eyes of consumers who infer that the absence means that the car has a blemished history."  "Carfax also utilizes its inflated revenues to disparage and falsely malign dealers in order to mislead consumers into believing its VHRs are necessary and accurate."

The Appellate Division, First Department, rejected Carfax's claim that the underlying complaint, by mentioning disparagement, alleged a "wrongful act", triggering coverage:

These passing references to disparagement do not allege a "Wrongful Act." They were made "only in the context of the anti-trust claims, i.e. , as legal jargon pertinent to anti-trust and not as a means of even arguably alleging a separate claim for libel, slander or product disparagement" (see National Union Fire Ins. Co. of Pittsburgh, Pa. v Alticor, Inc. , 2005 WL 2206461, *3, 2005 US Dist LEXIS 29833, *9 [WD Mich 2005], affd 2007 WL 273339, 2007 US App LEXIS 22585 [6th Cir 2007]). In any event, coverage under the policy is barred by the antitrust exclusion, and the exceptions thereto are inapplicable. 

Passing references do not a covered claim or cause of action make.