Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 1 of 30
`
`
`
`Michael A. Guadagno, OSB #131676
`E-mail: michael.guadagno@bullivant.com
`BULLIVANT HOUSER BAILEY PC
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`Facsimile: 206.386.5130
`Attorneys for Defendants
`
`
`UNITED STATES DISTRICT COURT
`
`DISTRICT OF OREGON
`
`PORTLAND DIVISION
`
`Civil No.: 3:20-cv-00844-AC
`
`
`DEFENDANTS OHIO SECURITY
`INSURANCE COMPANY AND THE
`OHIO CASUALTY INSURANCE
`COMPANY’S MOTION FOR
`SUMMARY JUDGMENT
`
`Oral Argument Requested
`
`FORBIDDEN FRUIT CIDERHOUSE, LLC,
`dba 2 TOWNS CIDERHOUSE, an Oregon
`limited liability company,
`
`
`
`
`Plaintiff,
`
`
`
`v.
`
`
`OHIO SECURITY INSURANCE
`COMPANY, a New Hampshire insurance
`company; and THE OHIO CASUALTY
`INSURANCE COMPANY, a New
`Hampshire insurance company,
`
`
`Defendant.
`
`
`
`
`
`
`
`Defendants Ohio Security Insurance Company (“Ohio Security”) and The Ohio
`
`Casualty Insurance Company (“Ohio Casualty”) (collectively, “Ohio”) submit this Motion for
`
`Summary Judgment. Pursuant to LR 7-1(a), counsel for Ohio certifies that the parties have
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 1
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 2 of 30
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`conferred in a good faith effort to resolve the issues addressed in the motion but have been
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`unable to do so.
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`I. MOTION
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`Pursuant to Fed. R. Civ. P. 56, Ohio respectfully requests that the Court enter an order
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`granting its Motion for Summary Judgment and dismissing the Complaint for Declaratory
`
`Relief and Brief of Contract (Dkt. 1) filed by Plaintiff Forbidden Fruit Ciderhouse, LLC d/b/a
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`2 Towns Ciderhouse (“Forbidden Fruit”) with prejudice.
`
`II. INTRODUCTION
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`This lawsuit involves a dispute over liability coverage for underlying false advertising
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`and consumer protection claims stemming from Forbidden Fruit’s marketing of its hard cider
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`products. Last year, Forbidden Fruit was named as the defendant in a class action lawsuit
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`alleging that it had violated the California False Advertising and Unfair Business Practices
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`Laws by advertising its products as containing “no artificial flavors” when in fact they contain
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`DL-Malic Acid. On behalf of a class of consumers, the class action complaint alleges that
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`Forbidden Fruit knew DL-Malic Acid was not a natural flavor and deliberately misrepresented
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`its products as containing no artificial ingredients for the purpose of deceiving consumers. It
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`further alleges that the class members sustained damages “including” lost money and
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`deprivation of a “legally protected interest” in “choos[ing]” the foods and ingredients they buy
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`and ingest. It does not, however, allege that any class member ever actually ingested Forbidden
`
`Fruit’s product. Nor does it allege that DL-Malic Acid is harmful, or that any class member
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`sustained injury as a result of ingesting it.
`
`
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 2
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 3 of 30
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`Following service of process, Forbidden Fruit tendered the class action complaint to
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`Ohio Security. As set forth more fully therein, Coverage A of the commercial general liability
`
`(“CGL”) coverage part in the commercial package insurance policy issued by Ohio Security
`
`affords coverage for damages because of “bodily injury” caused by an “occurrence[,]” with
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`“bodily injury” defined as “physical injury, sickness or disease” and “occurrence” as an
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`“accident . . . .” The class action complaint does not allege that DL-Malic Acid is physically
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`harmful, however, or that any class member ever sustained injury as a result of consuming it.
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`The class action complaint also does not allege an accidental event. Accordingly, Ohio
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`Security advised Forbidden Fruit that Coverage A was not triggered and, therefore, no defense
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`or indemnity was owed under the commercial package policy.1 Forbidden Fruit thereafter filed
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`this lawsuit, seeking declaratory relief and alleging breach of contract.
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`Forbidden Fruit’s claims should be dismissed. Under Oregon law, a liability carrier’s
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`duty to defend is determined by comparing the allegations within the four corners of the
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`underlying complaint with the terms of the insurance policy. Here, the policy clearly and
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`unambiguously requires, among other things, “physical injury, sickness or disease” to trigger
`
`coverage for bodily injury. The class action complaint alleges no such injury. It does not
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`allege that DL-Malic Acid is in any way physically harmful. Rather, it seeks recovery solely
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`for economic injuries and the deprivation of a protected “interest” in making an informed
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`buying decision. These allegations make clear that the class representative is not seeking
`
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`1 Ohio also concluded that Coverage B of the CGL coverage part of the commercial package policy did not
`apply since the class action complaint failed to allege any of the offenses enumerated in the policy’s
`definition of “personal and advertising injury.” Similarly, Ohio Casualty concluded that no defense or
`indemnification was owed under the commercial umbrella policy it issued to Forbidden Fruit.
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 3
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 4 of 30
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`damages for consuming DL-Malic Acid. But even if he did, courts in Oregon and around the
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`country have held that mere unwanted physical contact, without adverse physical effects, is
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`insufficient to trigger liability coverage for “bodily injury” defined as “physical injury,
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`sickness or disease.” And under binding Oregon case law, the mere fact that a complaint
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`against an insured introduces the list of damages using the nonexclusive “includes” does not
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`expand the insurer’s duty to defend beyond the complaint’s factual allegations.
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`Any Coverage A coverage under the CGL policy is also foreclosed for the separate
`
`reason that the injuries alleged were not “caused by an ‘occurrence,’” defined as an “accident
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`. . . .” Although the determination of whether an event qualifies as an “accident” is subjective
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`under Oregon law, Oregon courts infer a subjective intent to cause harm when that is the only
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`reasonable inference that may be drawn from the allegations. The fact that the claimant could,
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`in the abstract, prove a similar claim without evidence of a harmful purpose is irrelevant when
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`the complaint alleges only intentionally caused harm. The class action complaint here
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`consistently alleges that Forbidden Fruit deliberately misrepresented its product for the
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`purpose of deceiving consumers. These allegations, if true, permit only the conclusion that
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`Forbidden Fruit intended to cause harm. As such, even if the class action complaint did allege
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`bodily injury, there would still be no coverage available since such harm was not caused by an
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`“occurrence.”
`
`Finally, Coverage B of the CGL policy is plainly inapplicable, as is any coverage under
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`the commercial umbrella policy issued by Ohio Casualty. Coverage B clearly limits the scope
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`of such coverage to seven discrete categories of predicate offenses specified in the definition
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`of “personal and advertising injury,” none of which are alleged in the class action complaint.
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 4
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 5 of 30
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`And Coverages A and B of the CGL coverage part of the commercial package policy issued
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`by Ohio Security contain the same contours as paragraphs B.1 and B.2 of the commercial
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`umbrella policy issued by Ohio Casualty. Accordingly, because the allegations within the four
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`corners of the underlying complaint demonstrate that there is no coverage under the relevant
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`coverages of either the Ohio Security or Ohio Casualty Policies, Ohio properly declined to
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`defend Forbidden Fruit in the underlying action, and the Complaint for Declaratory Relief and
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`Breach of Contract (Dkt. 1) should be dismissed with prejudice.
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`A.
`
`The Underlying Complaint
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`III. FACTS
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`Forbidden Fruit operates a craft cider brewery based in Corvallis, Oregon that
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`manufactures and distributes hard cider products under the name “2 Towns Cider.” (Dkt. 1-1,
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`¶¶ 5, 7). On March 12, 2020, one Richard Winters initiated a class action against Forbidden
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`Fruit in the United States District Court for the Southern District of California (the “Underlying
`
`Action”) claiming it violated the California False Advertising Law, Cal. Business &
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`Professions Code §§ 17500, et seq., and the California Unfair Business Practices Law, Cal.
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`Business & Professions Code §§ 17200, et seq. (Dkt. 1, ¶ 5; Dkt. 1-1). The class action
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`complaint alleges Forbidden Fruit advertises its cider drinks as containing “no artificial
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`flavors” when they in fact contain DL-Malic Acid. (Dkt. 1-1, ¶ 55).
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`According to the class action complaint, the packaging on Forbidden Fruit’s products
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`emphasizes that they consist of “whole ingredients,” “locally crafted in Oregon,” and contain
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`“no artificial flavors.” (Dkt. 1-1, ¶ 44). Specifically, such packaging allegedly states:
`
`
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 5
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 6 of 30
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`WHOLE INGREDIENTS
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`Made from 100% fresh-pressed Northwest apples, sourced exclusively from
`local Oregon & Washington farms, as well as other whole, locally harvested
`agricultural ingredients.
`
`NO SHORTCUTS
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`Our cider is always slow fermented at cold temperatures. This time intensive
`process retains the natural character and delicate aromatics of the apples,
`eliminating the need for additives, which plainly fall short.
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`NOTHING ARTIFICIAL
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`NO concentrates or refined sugars.
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`NO essences or artificial flavors.
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`NO velcorin or sorbate.
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`(Dkt. 1-1, ¶ 44). According to the class action complaint, Forbidden Fruit also advertises on
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`its website that its cider products “do not contain Artificial apple and other flavorings, sugar
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`and Carmel color added.” (Dkt. 1-1, ¶ 55).
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`
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`The class action complaint alleges that, contrary to these advertisements, Forbidden
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`Fruit’s cider products do in fact contain DL-Malic Acid, an artificial flavor. (Dkt. 1-1, ¶ 8-9).
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`The sweetness and tartness of flavors like apple, a dominant flavor in Forbidden Fruit’s drinks,
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`allegedly depends upon the ratio of sugar to malic acid. (Dkt. 1-1, ¶¶ 22-23, 35). Malic Acid
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`has two “isomers,” L-Malic Acid, and D-Malic Acid. (Dkt. 1-1, ¶ 19). While L-Malic Acid
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`occurs naturally in fruit, “D-Malic Acid does not occur naturally” and “is most commonly
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`found in a Recemic Mixture, DL-Malic Acid, which is commercially made from petroleum
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`products.” (Dkt. 1-1, ¶ 19). Thus, the class action complaint alleges, adding DL-Malic Acid
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`to a fruit juice solution containing L-Malic Acid artificially changes the ratio of malic acid to
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`sugar, thereby artificially changing the flavor. (Dkt. 1-1, ¶¶ 24). Forbidden Fruit allegedly
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 6
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 7 of 30
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`“includes DL-Malic Acid” in “all of [its] Products” to “help make its products taste more like
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`apple.” (Dkt. 1-1, ¶¶ 11, 27).
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`
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`The class action complaint alleges that Forbidden Fruit knew its products contained
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`this artificial flavor but “intentionally” labeled them otherwise “to capitalize on consumers[’]
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`growing interest in high quality products.” (Dkt. 1-1, ¶ 55). It further alleges that Forbidden
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`Fruit “employs professional chemists or brewers to create the chemical flavor formulas of [its]
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`products.” (Dkt. 1-1, ¶ 54). Due to the expertise of its employees, Forbidden Fruit allegedly
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`“knew or should have known that DL-Malic Acid is not naturally occurring, and that by adding
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`DL-Malic Acid to its products[,] the natural flavoring, if any was ever actually added to the
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`products, would be fundamentally changed.” (Dkt. 1-1, ¶ 54). The class action complaint
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`further alleges that Forbidden Fruit “had the option to add naturally extracted L-Malic Acid to
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`its products … but it instead intentionally used artificial DL-Malic acid … because it was
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`cheaper … and because it did not believe its customers were well educated enough to know
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`the difference.” (Dkt. 1-1, ¶¶ 28, 56). Thus, even though it “knew that the[] representations”
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`on its packaging were “untrue and misleading,” Forbidden Fruit “deliberately made [them] in
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`order to deceive reasonable consumers like [Winters] and other Class Members” into
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`purchasing its products. (Dkt. 1-1, ¶ 77).
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`
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`As a result of Forbidden Fruit’s allegedly “intentional, deceitful practice of falsely
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`labeling its products as containing no artificial flavors,” the class action complaint alleges,
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`Winters and the class members “were deceived into paying money for products they did not
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`want.” (Dkt. 1-1, ¶¶ 12, 48, 50). (Dkt. 1-1, passim). Winters himself allegedly purchased
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`Forbidden Fruit’s products precisely “because [the] packaging claims that their products do
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 7
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 8 of 30
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`not contain artificial flavors.” (Dkt. 1-1, ¶ 46). Notably, notwithstanding its allegations that
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`Forbidden Fruit’s misrepresentations deprived the class of a “protected interest to choose the
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`foods and ingredients they ingest,” the class action complaint nowhere alleges that Winters
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`himself ever actually consumed Forbidden Fruit’s products. (Dkt. 1-1, passim). Instead, it
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`alleges that Forbidden Fruit’s conduct resulted in “lost money,” an impaired ability to “choose
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`the type and quality of products he chose to buy” and that he was “misled into purchasing
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`products he would not have otherwise purchased.” (Dkt. 1-1, ¶¶ 13-14, 50-51 (emphasis
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`added)). The class action complaint describes his alleged injuries as follows:
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`As a result of [the] acts and omissions outlined above, [Winters] has suffered
`concrete and particularized injuries and harm, which include, but are not limited
`to, the following:
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`a. Lost Money;
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`b. Wasting [Winters’] time; and
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`c. Stress, aggravation, frustration, loss of serenity, and loss of confidence in
`product labeling.
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`(Dkt. 1-1, ¶ 57). The class action complaint does not allege that DL-Malic Acid is hazardous
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`to health or that Winters or any other class member ever suffered any adverse health effects by
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`consuming Forbidden Fruit’s cider. (Dkt. 1-1, passim).
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`
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`The class action complaint contains two causes of action: violation of the False
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`Advertising Law and violation of the Unfair Business Practices Law. It alleges Forbidden
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`Fruit violated these Acts “by making misrepresentations and untrue statements … fully
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`knowing the Products contained D-Malic Acid.” (Dkt. 1-1, ¶ 75). It further alleges that “these
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`false and misleading written representations” form part of “a scheme with the intent not to sell
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`that personal property or those services … as so advertised.” (Dkt. 1-1, ¶ 79). It seeks
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 8
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 9 of 30
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`certification of a class consisting of all purchasers of the products within the United States,
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`injunctive relief, restitution, and punitive damages. (Dkt. 1-1, ¶¶ 58-59, 104).
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`B.
`
`The Policies
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`Ohio Security and Ohio Casualty issued the following insurance policies to Forbidden
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`Fruit.
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`1.
`
`The Ohio Security Policy
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`Ohio Security issued Commercial Package Policy no. BKS(20)55239179, with a policy
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`period of September 24, 2019 to September 24, 2020 (the “Ohio Security Policy”). (Chong
`
`Decl., Ex. “A”) (“OSIC Policy”). The CGL coverage part of the Ohio Security Policy contains
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`two relevant sections: Coverage A, Bodily Injury and Property Damage Liability Coverage;
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`and Coverage B, Personal and Advertising Injury Liability Coverage. (OSIC Policy, Form
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`CG00010413 at 1, 6).
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`As relevant here, the insuring agreement of Coverage A limits coverage to the insured’s
`
`liability for “bodily injury” caused by an “occurrence”:
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`COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE LIABILITY
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`1. Insuring Agreement
`
`a. We will pay those sums that the insured becomes legally obligated to pay
`as damages because of "bodily injury" or "property damage" to which this
`insurance applies. We will have the right and duty to defend the insured
`against any "suit" seeking those damages. However, we will have no duty
`to defend the insured against any "suit" seeking damages for "bodily injury"
`or "property damage" to which this insurance does not apply.
`
`b. This insurance applies to "bodily injury" and "property damage" only if:
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`(1) The "bodily injury" or "property damage" is caused by an "occurrence"
`that takes place in the "coverage territory" .…
`
`(OSIC Policy, Form CG00010413 at 1. The Ohio Security Policy defines “bodily injury” as
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 9
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 10 of 30
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`follows:
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`3. "Bodily Injury" means physical injury, sickness or disease sustained by a
`person. This includes mental anguish, mental injury, shock, fright or death that
`results from such physical injury, sickness or disease.
`
`
`(OSIC Policy, Form CG00010413 at 14, Form CG88100413 at 7). It defines “occurrence” to
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`mean, in relevant part, an “accident”:
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`13. "Occurrence" means an accident, including continuous or repeated exposure
`to substantially the same general harmful conditions.
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`(OSIC Policy, Form CG00010413 at 16).
`
`
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`The insuring agreement of Coverage B, in turn, limits coverage to the insured’s liability
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`for damages because of “personal and advertising injury”:
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`COVERAGE B - PERSONAL AND ADVERTISING INJURY LIABILITY
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`1. Insuring Agreement
`
`a. We will pay those sums that the insured becomes legally obligated to pay
`as damages because of "personal and advertising injury" to which this
`insurance applies.…
`
`(OSIC Policy, Form CG00010413 at 6). The Ohio Security Policy defines “personal and
`
`advertising injury” as follows:
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`14. "Personal and advertising injury" means injury, including consequential "bodily
`injury", arising out of one or more of the following offenses:
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`a. False arrest, detention or imprisonment;
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`b. Malicious prosecution;
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`c. The wrongful eviction from, wrongful entry into, or invasion of the right of
`private occupancy of a room, dwelling or premises that a person occupies,
`committed by or on behalf of its owner, landlord or lessor;
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`d. Oral or written publication, in any manner, of material that slanders or libels
`a person or organization or disparages a person’s or organization’s goods,
`products or services;
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`e. Oral or written publication, in any manner, of material that violates a person’s
`right of privacy;
`
`Bullivant|Houser|Bailey PC
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`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
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`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 10
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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 11 of 30
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`f. The use of another’s advertising idea in your "advertisement"; or
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`g. Infringing upon another’s copyright, trade dress or slogan in your
`"advertisement".
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`(OSIC Policy, Form CG00010413 at 16).
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`2.
`
`The Ohio Casualty Policy
`
`
`
`Ohio Casualty issued Commercial Umbrella Policy no. USO(20)55239179 for the same
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`policy period (the “Ohio Casualty Policy”). (Chong Decl., Ex. B) (“OCIC Policy”). As
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`relevant here, the Ohio Casualty Policy contains a single insuring agreement with two
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`paragraphs, B.1 and B.2, which are analogous to Coverages A and B of the Ohio Security
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`Policy. The Ohio Casualty Policy provides:
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`I. COVERAGE
`
`A. We will pay on behalf of the "Insured" those sums in excess of the
`"Retained Limit" that the "Insured" becomes legally obligated to pay by
`reason of liability imposed by law or assumed by the "Insured" under an
`"insured contract" because of "bodily injury", "property damage" or
`"personal and advertising injury" to which this insurance applies.…
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`B. This insurance applies to:
`
`1. "Bodily injury" or "property damage" only if …[:]
`
`b. The "bodily injury" or "property damage" is caused by an
`"occurrence" ….
`
`2. "Personal and advertising injury" caused by an "offense" arising out of
`your business ….
`
`(OCIC Policy, Form CU88300714 at 1). The Ohio Casualty Policy similarly defines “bodily
`
`injury” as follows:
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`C. "Bodily injury" means physical injury, sickness, or disease, including death of
`a person. "Bodily injury" also means mental injury, mental anguish, humiliation,
`or shock if directly resulting from physical injury, sickness, or disease to that
`person.
`
`"Bodily injury" does not include "bodily injury" arising out of "personal and
`advertising injury".
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 11
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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 12 of 30
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`(OCIC Policy, Form CU60020697 at 6; CU88300714 at 4). The Ohio Casualty policy contains
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`substantively identical definitions of “occurrence” and “personal and advertising injury” to
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`those contained in the Ohio Security Policy.
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`C.
`
`The Request for Insurance Coverage
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`On March 27, 2020 Forbidden Fruit tendered the class action complaint to Ohio
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`Security, which promptly acknowledged receipt and undertook an investigation. (Chong
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`Decl., ¶¶ 5-6, Ex. C). Ohio’s investigation ultimately revealed that neither the Ohio Security
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`Policy nor the Ohio Casualty Policy (together, the “Policies”) afforded any coverage for the
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`claim set forth in the class action complaint. Chong, Decl., Ex. “D”).
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`Ohio promptly informed Forbidden Fruit of this determination in a letter dated May 11,
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`2020. (Chong, Decl., Ex. “D”). Ohio explained that the allegations in the class action
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`complaint did not trigger the insuring agreement of Coverage A since the class action
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`complaint did not allege that anyone suffered any physical injury, sickness or disease. (Chong
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`Decl., Ex. “D” at 16). What injuries it did allege, moreover, arose out of allegedly intentional
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`conduct designed to deceive consumers into purchasing Forbidden Fruit’s products. (Chong
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`Decl., Ex. “D” at 16). The injuries resulting from such conduct, Ohio explained, would not
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`satisfy the Policies’ definition of “occurrence.” (Chong Decl., Ex. “D” at 16). Ohio also
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`explained that CGL coverage part Coverage B did not apply since the class action complaint
`
`did not allege any of the “offenses” contained in the definition of “personal and advertising
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`injury.” (Chong Decl., Ex. “D” at 17). For similar reasons, Ohio informed Forbidden Fruit
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`that insuring agreement paragraphs B.1 and B.2 of the Ohio Security Policy did not afford
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`coverage for the class action complaint. Ohio advised that it was respectfully declining
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 12
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`

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`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 13 of 30
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`Forbidden Fruit’s tender and thus denying coverage. (Chong Decl., Ex. “D”).
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`During the pendency of this litigation, Forbidden Fruit and Winters reached an
`
`agreement to settle the class action. (Chong Decl., Ex. “E”). On September 22, 2020, the
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`Southern District of California entered an Order Preliminarily Approving the settlement.
`
`(Chong Decl., Ex. “E”). According to that Order, the settlement occurred after certain
`
`“informal discovery,” consisting of an exchange of documents and data regarding Forbidden
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`Fruit’s products. (Chong Decl., Ex. “E”). The Order does not indicate that Winters or any
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`class member was deposed or provided any written discovery. (Chong Decl., Ex. “E”). The
`
`Order sets forth no additional factual basis for settlement other than the allegations in the class
`
`action complaint. (Chong Decl., Ex. “E”).
`
`IV. SUMMARY JUDGMENT STANDARD
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`Summary judgment is appropriate when “there is no genuine dispute as to any material
`
`fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
`
`V. ARGUMENT
`
`A.
`
`Ohio Had No Duty to Defend Forbidden Fruit in the Underlying Action Since the
`Allegations Do Not Fall Within the Policies’ Insuring Agreements
`
`The undisputed facts show that Ohio had no duty to defend Forbidden Fruit in the class
`
`action. In Oregon, an insurer’s duty to defend depends upon a consideration of two documents:
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`“the insurance policy and the complaint in the action against the insured.” Bresee Homes, Inc.
`
`v. Farmers Ins. Exch., 353 Or. 112, 116, 293 P.3d 1036 (2012). By limiting the analysis to
`
`these two documents, the so-called “four corners” rule “generally prevents consideration of
`
`extrinsic evidence.” West Hills Dev. Co. v. Chartis Claims, Inc., 360 Or. 650, 653, 385 P.3d
`
`1053 (2016). A duty to defend arises only if the complaint “could, without amendment, impose
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 13
`
`

`

`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 14 of 30
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`liability for conduct covered by the policy.” West Hills, 360 Or. at 663. An insurer has no
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`duty to defend where the complaint “allege[s] only conduct that clearly falls outside the
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`coverage of the policy.” Id. at 663; Ledford v. Gutoski, 319 Or. 397, 402, 877 P.2d 80 (1994).
`
`1.
`
`Ohio Had No Duty to Defend Under Coverage A of the Ohio Security Policy
`or Insuring Agreement Paragraph B.1 of the Ohio Casualty Policy since the
`Class Action Complaint Does Not Allege “Bodily Injury” Caused by an
`“Occurrence”
`
`The complaint in the underlying action contains no allegations covered by Coverage A
`
`in the CGL coverage part of the Ohio Security Policy or paragraph B.1 of the Ohio Casualty
`
`Policy. As noted above, these analogous coverages apply only to certain damages because of
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`“bodily injury” caused by an “occurrence.” Ohio’s duty to defend is triggered only by a “‘suit’
`
`seeking those damages.” Accordingly, the issue is whether the alleged injury for which the
`
`class action complaint seeks damages satisfies the Policies’ definition of “bodily injury” and,
`
`separately, whether the cause of that injury satisfies the Policies’ definition of “occurrence.”
`
`The requirements are conjunctive and the absence of either precludes coverage. Because the
`
`allegations of the class action complaint satisfy neither requirement, Ohio is entitled to
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`judgment as a matter of law.
`
`(a)
`
`The Class Action Complaint Does Not Allege “Bodily Injury” Defined
`As “Physical Injury, Sickness or Disease”
`
`First, Coverage A does not apply since the class action complaint does not seek to
`
`recover for “bodily injury” as that term is defined in the Policies. “If an insurance policy
`
`explicitly defines the phrase in question,” Oregon courts simply “apply that definition.”
`
`Holloway v. Republic Indem. Co. of Am., 341 Or. 642, 650, 147 P.3d 329 (2006). Here, the
`
`Policies contain functionally identical definitions of “bodily injury” as “physical injury,
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 14
`
`

`

`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 15 of 30
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`sickness or disease sustained by a person.” As this Court held in its Order granting Ohio’s
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`Motion for Protective Order and denying Forbidden Fruit’s Motion to Compel, this language
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`is not ambiguous and clearly “requires some type of physical impact” in order to trigger
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`coverage. (Dkt. 33 at 6-7). Because the class action complaint does not seek to recover for
`
`any physical impact with Forbidden Fruit or its products, the Policies do not afford coverage
`
`under Coverage A.
`
`The economic damages and deprivation of consumer rights alleged do not involve any
`
`such “physical impact.” The class action complaint alleges that Forbidden Fruit’s
`
`advertisements deceived Winters and the class members into “paying money for products they
`
`did not want” and that this deception allegedly deprived them of a “protected interest” in
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`selecting “the type and quality of products [t]he[y] chose to buy.” The loss of money or an
`
`interest in freedom of choice plainly does not involve physical injury to a person. See, e.g.,
`
`Martin v. State Farm Fire & Cas. Co., 146 Or.App. 270, 280, 932 P.2d 1207 (1997) (holding
`
`that policy did not afford coverage because “the only causal connection is with damage to
`
`plaintiff’s economic interests, which the policies do not cover.”).
`
`Most importantly, the class action complaint does not allege that the class members
`
`sustained any injury from the actual physical ingestion of Forbidden Fruit’s products. Despite
`
`its extended discussion of the nature of DL-Malic Acid, that complaint nowhere alleges that
`
`DL-Malic Acid is any way harmful to consumers. Nor does it even allege that Winters, or any
`
`class member for that matter, ever ingested Forbidden Fruit’s products. To the limited extent
`
`it does address consumption of a product, moreover, it does so in terms of the deprivation of
`
`the class members’ alleged “interest” in “choos[ing] the foods and ingredients they ingest” and
`
`Bullivant|Houser|Bailey PC
`
`925 Fourth Avenue, Suite 3800
`Seattle, Washington 98104
`Telephone: 206.292.8930
`
`
`
`MOTION FOR SUMMARY JUDGMENT
`CIVIL NO. 3:20-CV-00844-AC
`Page 15
`
`

`

`Case 3:20-cv-00844-AC Document 41 Filed 01/05/21 Page 16 of 30
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`not in a way that alleges physical harm from the consumption of the product itself. The class
`
`action complaint is thus not seeking damages for any bodily injury from the ingestion of DL-
`
`Malic Acid, but rather for deprivation of a separate interest in freedom of choice. Deprivation
`
`of that interest, no matter how broadly construed, cannot constitute “physical, injury sickness
`
`or disease.” See Medmarc Cas. Ins. Co. v. Avent Am., Inc., 612 F.3d 607 (7th Cir. 2010)
`
`(holding that complaint alleging that substance in insured’s product “can cause physical harm”
`
`did not trigger coverage “because [it] lack[ed] the essential element of actual physical harm to
`
`the plaintiffs.”). Thus, the class action complaint does not seek recovery for damages because
`
`of “bodily injury” as required by the Policies.
`
`For these reasons, the class action complaint’s reference to “[s]tress, aggravation,
`
`frustration, loss of serenity, and loss of confidence in product labeling” also does not trigger
`
`coverage. Both Policies make clear that “mental anguish” or “mental injury” must “result[]
`
`from … physical injury, sickness or disease” to qualify as “bodily injury.” (OSIC Policy, Form
`
`CG88100413 at 7; OCIC Policy, Form CU60020697 at 6). As this Court has already held, this
`
`language unambiguously requires physical injury as a “precondition” to coverage for any type
`
`of emotional harm. (Dkt. 33 at 6).