Insurer Seeks Declaration of No Duty to Defend or Indemnify Maker of Four Loko®

Selective Insurance Co. of South Carolina has filed a declaratory judgment action against Phusion Projects, Inc., which makes and sells the caffeinated alcohol beverage Four Loko®, claiming that it owes no duty to defend or indemnify Phusion in a number of pending lawsuits. Selective Ins. Co. of S. Car. v. Phusion Projects Inc., No. 11-03378 (N.D. Ill., filed May 19, 2011). The lawsuits involve claims that the product was responsible for teenagers’ deaths or injury, its promotions violated consumer protection laws, and the product’s packaging infringed trade dress. According to the insurer, (i) its policy was not in effect as to some of the plaintiffs, whose alleged injuries occurred either before the policy took effect or after the insurer cancelled the policy; and (ii) the policy’s terms expressly or unambiguously preclude coverage for certain claims, including those involving intoxication. The insurer seeks a declaration that the policy does not provide coverage for Phusion and that it has no duty to defend or indemnify Phusion.