Aurora Dairy Seeks Insurance Coverage for Consumer Class Actions

Aurora Dairy Corp., which is defending multidistrict litigation involving putative class claims that it sold its products as “organic” without following national organic program standards, has sued one of its insurance carriers in federal court seeking a declaration that the insurer has wrongly failed to provide defense coverage. Aurora Dairy Corp. v. Nationwide Agribusiness Ins. Co., No. 09-00346 (D. Colo., filed February 19, 2009). According to the complaint, “Aurora has been named in thirteen consumer class actions filed in the courts of six different states.” The claimants in those lawsuits allege a variety of causes of action including “that the milk provided by Aurora that they purchased allegedly exposed them, their families and their friends to pesticides, hormones, antibodies, and other chemicals and/or has
generally caused them injury or damage.” Additional details about the underlying lawsuits appear in issues 251, 279 and 286 of this Update.

Aurora claims that it has complied with its obligations under the insurance policy, which requires Nationwide to “defend Aurora in any suits seeking damage for ‘bodily injury,’ ‘property damage,’ or ‘personal or advertising injury.’” The dairy company seeks a declaration that Nationwide is required to provide its defense and, alleging breach of contract and bad faith breach of insurance contract, calls for judgment
for all of its costs of defense, interest and punitive damages. According to a news source, Aurora’s other liability insurers filed a suit for declaratory judgment in June 2008, claiming that the costs of the consumer class action lawsuits are exempt under the policies because the plaintiffs are either seeking damages or raise claims not covered by the policies. See Product Liability Law 360, February 23, 2009.