First Circuit Denies Insurance Coverage in Deceptive Pomegranate Ad Suits Against Welch

The First Circuit Court of Appeals has upheld a district court ruling that
Welch Foods, Inc. was not entitled to defense costs and indemnity under an
insurance contract which provided an exclusion for claims involving unfair
competition and deceptive trade practices. Welch Foods, Inc. v. Nat’l Union
Fire Ins. Co. of Pittsburgh, PA, No. 10-2261 (1st Cir., decided October 24,
2011). Welch was named as a defendant in two lawsuits alleging that the
company misrepresented its 100% Juice White Grape Pomegranate Flavored
Three Juice Blend® by featuring pomegranates on the product’s label because
the juice is primarily apple and grape juice.

The company sought defense costs and indemnity from three of its insurers, and two of them settled the claims. As to the third company, the court determined that while the exclusion terms “unfair competition” and “deceptive trade practice” were not defined in the insurance contract at issue, their plain meaning and reasonable interpretation applied to the claims asserted in the lawsuits filed by a competitor and consumers. So ruling, the court rejected Welch’s claim that the policy exclusion applied only to antitrust claims against it.