Monday, November 28, 2016

Massachusetts Appeals Court holds that coverage for trade disparagement includes disparagement of a person's ownership of a product

My last post was about  Rass v. The Travelers Cos. Inc., __ N.E.3d __, 2016 WL 6636281 (Mass. App. Ct.), in which the Massachusetts Appeals Court held that an insurer is not liable for pre-notice defense costs.
The underlying case concerned the sale of Indian sauce to Trader Joe’s.  Paul Jaggi had originally created the sauce.  Neera Tulshian worked with him to give the sauce a stable shelf life so it could be sold in jars without refrigeration.  Tulshian’s company, IAM, manufactured the sauces, and Jaggi’s companies, including Rass, distributed them to Trader Joe’s.
Jaggi decided to work with a different manufacturer.  He sent an email to Trader Joe's stating that they may be contacted by Tulshian directly for sale of the sauces.  Jaggi wrote that such a move would be illegal. 
Tulshian learned of that communication.  She sued for misappropriation of trade secrets, tortious interference with present and prospective economic advantage, and trade libel. 

One of the coverage issue before the Massachusetts Appeals Court was whether the trade disparagement claim was covered under the policy issued by Travelers to Rass.  The policy provided coverage for statements that "disparage a person's or organization's goods, products or services." 

Travelers argued that the email did not disparage any goods, products or services, but rather disparaged Tulshian herself, or her ownership of the sauces.  The court disagreed, holding that an objective and reasonable policyholder would expect the disparagement claim to be covered under the facts alleged. 

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