A flurry of deceitful marketing Claim Against PFAS Raises “Personal and Advertising-related Injury” Questions of Coverage JD

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Consumer products companies in a variety of industry are now facing allegations accusing them of having deceitfully advertised their products as sustainable and safe but, in fact they are allegedly containing dangerous and harmful concentrations of chemical compounds called per- and poly-fluoroalkyl compounds, also known as “PFAS.” In the start of 2022 plaintiffs have brought class-action suits against several companies that sell cosmetics and fast food establishments as well as an anti-fogging spray firm and a major box department store, alleging that defendants have misrepresented the security and environmental impact of products containing PFAS such as cosmetics including foods packaging and anti-fogging spray and even disposable tableware, bags for food storage. Other industries like athletic wear might be next to suffer.

In a similar fashion to the assertions made by producers of talcum powder that is believed to be asbestos-containing These deceitful commercial claims suggest that PFAS pose a threat to the health of humans and the environment. They are not claiming that certain people suffered specific injuries to their bodies or that particular properties were affected. In fact, they assert consumers wouldn’t buy PFAS-containing items for the amount they were charged had they not been misinformed regarding the quality of these items.

Since deceitful claims in marketing do not need customers to show that they did in fact suffer bodily injury or sustained property damage or that PFAS derived from particular items caused particular damages or injuries, but only that the deceitful marketing enticed consumers to buy goods at prices they should normally have avoided, they avoid certain types of scientifically-intensive causation problems that bodily injuries and damages claims typically raise. Additionally, as the science-based knowledge of PFAS is in its early stages the causation issue are a major issue in the case of PFAS plaintiffs. Therefore, while consumers who have been putting forth false marketing claims could eventually claim bodily injury or damages to property the deceptive marketing claims could be the largest section of PFAS litigants within the context of consumer products for the near term.


Important Coverage Problems



“Personal as well as Advertisement Injuries”


In the case of commercial general liability insurance who have policyholders facing deceptive marketing claimsinstead of or on top of physical injury or property damage lawsuits (which can create different coverage questions) The most important concern with regard to coverage is whether the claims involve personal or advertising-related injury under the terms of CGL policy.

There are a variety of crimes that are included in those of “personal and advertising injuries,” the one that is the most serious regarding deceptive claims in marketing is usually “[o]ral or published publication at any time or form, that defame or insults a person or an organization, or discredits an individual’s or company’s products and services, or products.”

Insurance companies have claimed that misleading marketing that merely praises their own products such as products or services, such in marketing that boasts of products that contain PFAS as being healthy and environmentally sustainable — does not amount to discrediting within the definition of “personal or advertising-related injury” as it doesn’t necessarily denigrate the quality of any goods such as products or services. However, policyholders claim that the marketing implicitly discriminates against competitors’ products such as products, services and other goods because it places those services as well as services and products in an unfair position.

The courts have had varying opinions to the argument. A majority of courts have rejected claim of the policyholders and rather, demanded an explicit or implicit mention of a good item or product. In the case of the case of Dollar Phone Corporation v. St. Paul Fire & Marine Insurance Company in the Eastern District of New York decided that “the clear meaning of the word “disparage” within the advertising injuries section of [a CGL policy] demands either an assertion that the advertisement made a specific reference to products of competitors or promoted one’s own goods as superior to the products of their counterparts.” 2012. U.S. Dist. LEXIS 45591, at *26 (E.D.N.Y. Mar. 9 Mar. 9, 2012), report and recommendation approved the 9th of March, 2012. U.S. District. LEXIS 45652 (E.D.N.Y. Mar. 30, 2012), aff’d, 514 F. App’x 21 (2d Cir. 2013, 2013); see also, e.g., Total Call International, Inc. (v. Peerless Insurance Company 181 Cal. App. 4th 161, 171 (Cal. App. 2d Dist. 2d Dist.) (requiring “specific specific” to an alternative good or product, or service). In this way it is not appropriate for a court to consider a misrepresentation by a policyholder of its own product containing PFAS as being as secure and long-lasting as discrediting it in the CGL policy’s term of “personal and advertising harm.”

One court has, however, interpreted “personal and advertising-related injury” as including damages caused by deceptive advertising regardless of whether the marketing did not take place in relation to another’s superior product or service, or even suggest that other’s product, good or service is inferior. The case of Safety Dynamics, Inc. and v. General Star Indemnity Company The Ninth Circuit held the underlying lawsuit alleged both personal and commercial damage because it claimed the product of the insured “made its product appear superior to a rival’sproduct.” 475 F. App’x 213, 213 (9th Circuit. 2012).

It is crucial to remember that the lawsuit that was underlying that was brought in Safety Dynamics was filed against the insurance company by a rival for what the court termed “a competition-related injury” and not by a customer who claimed that he or were misled into buying the item, product or product or. ID. at 213-14. Therefore, even courts who interpret disparagement in a broad way might not interpret it as wide as to be applicable to consumer-based claims like the ones which consumers recently filed against vendors of PFAS-based products.

Thus, regardless of that Safety Dynamics decision and in the majority of cases the consumer-deceptive marketing PFAS assertion will not be ensnared by any of the listed violations of personal injury and advertising as defined in a CGL policy.



The “Failure-to-Conform” Exclusion


If a court was to decide that the consumer’s claim does claim “personal or advertising-related injury” an additional important issue in determining coverage is what “failure-to-conform” exclusion would apply. This exclusion generally does not cover “personal and commercial damage” which “aris[esdue to the inability of products and services, whether they are products or goods, to be in accordance with any representation of performance or quality.” With respect to what courts have said about “personal or advertising-related injury” judges have used this exemption in different approaches.

A majority of the courts have ruled that the exclusion is completely void of the coverage of deceptive advertising about the policyholder’s own products and services even though the promotion may be a factor in putting competitors’ products, services or goods at a disadvantage. In one instance General Star Indemnity Company v. Driven Sports, Inc., the court utilized the failure-to-conform exclusion in the claims of a competitor because such assertions could not “be established without proof that the good, product or service] was not able to be in accordance with the insured’s advertising about its superiority.” 80 F. Supp. 3d 442, 454 (E.D.N.Y. 3d 442, 454 (E.D.N.Y.); see also, e.g., Harleysville Mutual Insurance Company v. Buzz Off Insect Shield, L.L.C., 364 N.C. 1, 28 (N.C. 2010) (similar).

The majority of the time, however, this strategy isn’t widely used. Safety Dynamics, Safety Dynamics, the same court which ruled that marketing that doesn’t explicitly or implicitly reference the quality of a product, service or service could nevertheless be used to discredit an excellent product or service, also did not apply the failure-to-conform exception to this type of marketing. Safety Dynamics, 475 F. App’x at 214. However, the court took place within the context of a case filed by the competitor, not in relation to the claim of consumers. It was. In reaching its conclusion, the court argued that “[thedamage claimed in the action underlying it doesn’t originate from the failure of the insured’s] product with its advertising. It is, instead, an incident that is competitive.” Id. Therefore an even court, such as one like the Safety Dynamics court might apply the exclusion to consumer claims such as those arising from fraudulent marketing PFAS lawsuits, which stem from the failure of the policyholder’s product, items or services to be in line with their ads. In fact, at the very least, one insured has compared the claims of competitors and claims from consumers in a statement that says the failure to conform exclusion “can be understood to be being in place to prevent the coverage of claims made that are made by consumers” but “not the claims of companies.” Total Call 181 Cal. App. 4th April at 172.

It is important to note that the claim that is made alleges “personal or advertising-related injury” or is not covered from the “failure-to-conform” exclusion is only two possible issues that deceitful marketing PFAS claims could lead to. Some policies may contain divergent language. In particular, certain policies could exclude “disparage[mentin] company’s or a person’s merchandise and services” in the meaning of “personal and advertising-related damage.” Certain policies may not provide coverage for “personal and advertising injuries” even if they do. Additionally, claims could assert various additional or different factual issues, for instance “competitive damages,” that could alter the analysis of coverage. Furthermore, there might arise issues regarding the possibility of “bodily injuries” or “property damages” claim ( e.g. when the claim of medical monitoring is claimed). In all cases, insurance companies that are facing claims related to an PFAS claim must carefully review the language of the policy in relation to the allegations and applicable case law. They should also think about retaining a coverage lawyer for assistance.

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