Vitamin Energy LLC v. Evanston Insurance Co ( 2022 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 20-3461
_____________
VITAMIN ENERGY, LLC,
Appellant
v.
EVANSTON INSURANCE COMPANY
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-19-cv-03672)
District Judge: Honorable Joel H. Slomsky
_______________
Argued
September 21, 2021
Before: JORDAN, PORTER, and RENDELL, Circuit
Judges
(Filed: January 5, 2022)
_______________
Patrick K. Gibson
Ippoliti Law Group
1225 N. King Street – Suite 900
Wilmington, DE 19801
George Schooff [ARGUED]
18530 Mack Avenue – Suite 481
Grosse Point Farms, MI 48236
Counsel for Appellant
Michael E. DiFebbo, Jr. [ARGUED]
Gavin Fung
Kennedys CMK
1600 Market Street – Suite 1410
Philadelphia, PA 19103
Counsel for Appellee
______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
Pennsylvania law imposes on insurers a broad duty to
defend lawsuits brought against those they insure. Vitamin
Energy, LLC, obtained a policy from Evanston Insurance
Company and was subsequently sued by a competitor, the
owners of the 5-hour Energy brand, for publishing certain
comparative claims and infringing the 5-hour Energy mark in
advertising and packaging. The District Court decided
Evanston had no duty to defend. We think otherwise. An
insured’s burden to establish its insurer’s duty to defend is
light, and Vitamin Energy has carried it. Read liberally in
2
favor of coverage, as is required, the 5-hour Energy complaint
and the insurance policy impose on Evanston a duty to defend
Vitamin Energy in the underlying suit, at least until there is no
possibility that 5-hour Energy could prevail against Vitamin
Energy on a claim covered by the policy. Likewise, the
coverage exclusions raised by Evanston are construed in favor
of coverage, and we cannot say, at this point, that they
eliminate the duty to defend. Accordingly, we will vacate and
remand.
I. BACKGROUND
A. The Underlying 5-hour Energy Lawsuit
Against Vitamin Energy
This case stems from a separate lawsuit in which
Vitamin Energy, the plaintiff-appellant here, is the defendant.
In June 2019, Vitamin Energy was sued in the United States
District Court for the Eastern District of Michigan by
International IP Holdings, LLC, and Innovation Ventures,
LLC, the owners of trademarks for 5-hour Energy liquid
energy shots.1 In that lawsuit, 5-hour Energy asserts claims
against Vitamin Energy under the Lanham Act for trademark
infringement, false designation of origin, false advertising, and
trademark dilution. It also makes claims under Michigan law
for trademark infringement, indirect trademark infringement,
and unfair competition.
1
We refer herein to International IP Holdings, LLC, and
Innovation Ventures, LLC, collectively and in the singular as
“5-hour Energy.”
3
Among the wrongs Vitamin Energy has allegedly
committed is “false and misleading comparative advertising”
about the benefits of Vitamin Energy’s products relative to
competing products, including 5-hour Energy’s, as shown in
the following chart from paragraph 40 of 5-hour Energy’s
complaint:
4
(J.A. at 280-81 ¶ 40.)2 According to paragraph 46 of the 5-
hour Energy complaint, the comparative advertisement is
“literally false and/or misleading [and] has a tendency to
deceive a substantial portion of consumers” in “represent[ing]
that [Vitamin Energy’s] products contain 1000 MG of Vitamin
C and 100% Daily Value of Vitamin B[.]” (J.A. at 283 ¶ 46.)3
And beyond that, the complaint alleges in paragraph 48 that the
comparative advertisement “is intended to leave, and does
leave, the false and/or misleading impression that, among other
2
In addition to reproducing the chart, paragraph 40
includes other graphics and the following introductory
language:
[Vitamin Energy] also advertises its products
with a series of misleading and false statements
in commerce, including false and misleading
comparative advertising and claims that
[Vitamin Energy’s] Products provide steroid-
like athletic performance enhancement.
Examples are shown below[.]
(J.A. at 280-81 ¶ 40.)
3
Paragraph 46 reads in full:
[Vitamin Energy’s] representation that its
products contain 1000 MG of Vitamin C and
100% Daily Value of Vitamin B is literally false
and/or misleading, has a tendency to deceive a
substantial portion of consumers, the intended
audience, and actual audience, and has deceived
a substantial portion of consumers, the intended
audience, and the actual audience.
(J.A. at 283 ¶ 46.)
5
things, all of [Vitamin Energy’s] Products have 1000 MG of
Vitamin C and more Vitamin B Vitamins than [5-hour
Energy’s] Products and that [Vitamin Energy’s] Products are
superior to other products in the market, including [5-hour
Energy’s] Products.” (J.A. at 283 ¶ 48.)4
5-hour Energy also complains of another Vitamin
Energy advertisement, one that promises steroid-like
performance without the accompanying risks, with this text:
Many factors influence performance.
VitaminEnergy® contains performance-
enhancing supplements like Vitamin B12 that
help in the production of red blood cells, caffeine
to provide energy and CBD as an anti-
inflammatory. The synergy provided by these
nutrients allow VitaminEnergy® to deliver
improved performance without the use of
harmful steroids or steroid-like compounds.
4
Paragraph 48 reads in full:
[Vitamin Energy’s] representation that its
products contain 1000 MG of Vitamin C and
100% Daily Value of Vitamin B is intended to
leave, and does leave, the false and/or misleading
impression that, among other things, all of
[Vitamin Energy’s] Products have 1000 MG of
Vitamin C and more Vitamin B Vitamins than
[5-hour Energy’s] Products and that [Vitamin
Energy’s] Products are superior to other products
in the market, including [5-hour Energy’s]
Products.
(J.A. at 283 ¶ 48.)
6
(J.A. at 281 ¶ 40.) Like the complained-of comparative
advertisement, those claims of “steroid-like” performance are,
according to 5-hour Energy, false and misleading, and they
deceive consumers.
Finally, 5-hour Energy alleges that Vitamin Energy uses
a statement promoting the ability of its products to provide “up
to 7 HOURS of Energy” and does so in language and stylized
script that is confusingly similar to, and hence infringes on, 5-
hour Energy’s registered trademarks. (J.A. at 275-80.) 5-hour
Energy offers a comparison of several of its products to the “7
HOURS of Energy” statement to make its point:
7
(J.A. at 275 ¶ 22, 276-77 ¶ 29.)5
B. Vitamin Energy’s Lawsuit Against Evanston
Vitamin Energy believes that the 5-hour Energy lawsuit
is covered by its insurance policy with Evanston (“the Policy”).
As detailed below, the Policy generally imposes on Evanston a
duty to defend claims for an “Advertising Injury[,]” subject to
certain coverage exclusions. (J.A. at 184-85.) A few days after
5-hour Energy filed its lawsuit, Vitamin Energy’s insurance
agent notified Evanston of the suit and requested coverage
under the Policy. Evanston disclaimed coverage. It said that
the 5-hour Energy complaint does not allege an Advertising
Injury or any other injury covered by the Policy, and that, even
if it did, certain coverage exclusions apply that excuse
coverage.
After some further fruitless efforts to get Evanston to
acknowledge coverage, Vitamin Energy took its insurer to
court. Filing in the Pennsylvania Court of Common Pleas, it
sought a declaratory judgment that the 5-hour Energy
complaint alleges an Advertising Injury as defined by the
Policy and that no coverage exclusions apply. It also asserted
5
In addition to reproducing the images of 5-hour
Energy’s products, paragraph 22 includes the following
introductory language: “Examples of [5-hour Energy’s]
Products are shown below[.]” (J.A. at 275 ¶ 22.) In addition
to reproducing the image of Vitamin Energy’s products and
slogan, paragraph 29 includes other versions of the same
statement and the following introductory language: “Examples
of [Vitamin Energy’s] infringing, misleading, and confusingly
similar marks are shown below[.]” (J.A. at 276-77 ¶ 29.)
8
a breach-of-contract claim and a claim of bad-faith denial of
coverage under 42 Pa. Cons. Stat. § 8371. Evanston removed
the case to the District Court, and Vitamin Energy then filed
two amended complaints, which Evanston answered. After the
parties cross-moved for judgment on the pleadings, the District
Court granted Evanston’s motion, holding that 5-hour
Energy’s complaint does not allege an Advertising Injury
within the meaning of that term in the Policy.
Vitamin Energy has timely appealed.
9
II. DISCUSSION6
A. Advertising Injury
Under Pennsylvania law,7 “[a]n insurer’s duty to defend
is broader than its duty to indemnify[.]” Erie Ins. Exch. v.
Moore, 228 A.3d 258, 265 (Pa. 2020); see also Am. & Foreign
Ins. Co. v. Jerry’s Sport Ctr., Inc., 2 A.3d 526, 541 (Pa. 2010)
(observing that the duty to defend extends not only to
“meritorious actions” but also to “groundless, false, or
6
The District Court had jurisdiction under 28 U.S.C.
§§ 1332(a) and 1441. We have appellate jurisdiction pursuant
to 28 U.S.C. § 1291. “A motion for judgment on the pleadings
under Rule 12(c) is analyzed under the same standards that
apply to a Rule 12(b)(6) motion.” Wolfington v.
Reconstructive Orthopaedic Assocs. II PC, 935 F.3d 187, 195
(3d Cir. 2019) (internal quotation marks and citation omitted).
District courts “must view the facts presented in the pleadings
and the inferences to be drawn therefrom in the light most
favorable to the nonmoving party, and may not grant the
motion unless the movant clearly establishes that no material
issue of fact remains to be resolved and that [it] is entitled to
judgment as a matter of law.” Id. (internal quotation marks and
citation omitted). We review that determination de novo. Mid-
Am. Salt, LLC v. Morris Cty. Coop. Pricing Council, 964 F.3d
218, 226 (3d Cir. 2020). “[I]nterpretation of [an insurance
policy] is a question of law over which we exercise plenary
review.” Ramara, Inc. v. Westfield Ins. Co., 814 F.3d 660, 674
(3d Cir. 2016).
7
The parties do not dispute that Pennsylvania law
applies to a determination of the scope of the Policy.
10
fraudulent” ones). The duty to defend exists “if the factual
allegations of the [underlying] complaint on its face encompass
an injury that is actually or potentially within the scope of the
policy.” Babcock & Wilcox Co. v. Am. Nuclear Insurers, 131
A.3d 445, 456 (Pa. 2015) (citation omitted). “Whether a claim
is potentially covered is answered by comparing the four
corners of the insurance contract to the four corners of the
[underlying] complaint.” Moore, 228 A.3d at 265 (internal
quotation marks and citation omitted). We must read the
policy “as a whole” and construe terms according to their
“plain meaning[.]” Ramara, Inc. v. Westfield Ins. Co., 814
F.3d 660, 676 (3d Cir. 2016) (internal quotation marks and
citation omitted). Although the insured bears the burden of
establishing coverage, Nationwide Mut. Ins. Co. v. Cosenza,
258 F.3d 197, 206 (3d Cir. 2001) (applying Pennsylvania law),
the underlying complaint’s allegations are assumed to be true
and are liberally construed in favor of coverage. Ramara, 814
F.3d at 673-74; Moore, 228 A.3d at 265.
Starting with “the four corners of the insurance
contract[,]” Moore, 228 A.3d at 265 (citation omitted), the
Policy here provides that Evanston “shall have the right and
duty to defend and investigate any Claim to which coverage
under this policy applies.” (J.A. at 192.) One such covered
claim is an “Advertising Injury[.]”8 (J.A. at 184-85.) The
Policy defines Advertising Injury as an injury “arising out of
oral or written publication of material that libels or slanders …
8
The Policy requires Evanston to pay “all sums in
excess of the Deductible … which the Insured shall become
legally obligated to pay as Damages as a result of Claims first
made against the Insured … for … Advertising Injury[.]” (J.A.
at 184.)
11
a person’s or organization’s products, goods or operations or
other defamatory or disparaging material, occurring in the
course of the Named Insured’s Advertisement.” (J.A. at 185.)
The parties here agree that the term “disparaging material,” as
used in the Policy, includes, at a minimum, an injurious false
statement about another’s goods. See Pro Golf Mfg., Inc. v.
Trib. Rev. Newspaper Co., 809 A.2d 243, 246 (Pa. 2002)
(observing that “the publication of a disparaging statement
concerning the business of another is actionable where[,]” in
addition to other elements, “the statement is false” and
“pecuniary loss does in fact result”).9
Their disagreement lies in whether 5-hour Energy’s
complaint alleges that Vitamin Energy’s comparative
advertising contains a false or misleading statement about 5-
hour Energy’s products or only a falsehood about Vitamin
Energy’s own products. Vitamin Energy argues that 5-hour
Energy’s complaint includes an allegation that the comparative
advertising asserts a falsehood about 5-hour Energy’s
products. That particular allegation is that Vitamin Energy’s
“representation that its products contain … 100% Daily Value
of Vitamin B is intended to leave, and does leave, the false
and/or misleading impression that, among other things, all of
9
See also Disparagement, Black’s Law Dictionary
(10th ed. 2014) (defined, in torts context, as “false and
injurious statement that discredits or detracts from the
reputation of another’s … product”). Because, as we explain,
the agreed-upon minimum reach of the term “disparaging
material” is sufficient to create a duty to defend Vitamin
Energy in 5-hour Energy’s lawsuit, we need not consider
whether the parties intended to define the term more broadly.
12
[Vitamin Energy’s] Products have … more Vitamin B
Vitamins than [5-hour Energy’s] Products[.]” (J.A. at 283
¶ 48.) The focus of that allegation is the comparative chart
referenced above, but it is also consistent with 5-hour Energy’s
other allegations in paragraph 48, as well as those in paragraph
46, of its complaint.10 Evanston argues, however, that the
allegation refers only to Vitamin Energy’s products. Similarly,
Evanston asserts that all other allegations in 5-hour Energy’s
complaint pertain only to Vitamin Energy’s own products,
such as the claim that Vitamin Energy’s “representation that its
products contain 1000 MG of Vitamin C … is literally false
and/or misleading,” because “the majority of [Vitamin
Energy’s] Products do not contain 1000 MG of Vitamin C
and/or any Vitamin C at all.” (J.A. at 283 ¶¶ 46-47.)
Regardless of what ingredients Vitamin Energy’s
products might have, the company itself has the better of this
dispute. When construed liberally in favor of coverage,
Ramara, 814 F.3d at 673, the allegations of the underlying 5-
hour Energy complaint, including paragraphs 40 and 48, as
well as paragraph 46, are best read as saying not only that
Vitamin Energy’s own products contain 100% of the daily
recommended value of vitamin B, but also that 5-hour
Energy’s products do not. That latter representation is clearly
about 5-hour Energy’s products, not Vitamin Energy’s, and 5-
hour Energy asserts that it is false. The underlying complaint
is thus distinguishable from the complaints at issue in cases
relied upon by Evanston. Cf. Frog, Switch & Mfg. Co. v.
Travelers Ins. Co., 193 F.3d 742 (3d Cir. 1999) (concluding
that the alleged advertising injury said nothing disparaging
about the plaintiff’s product, but that defendant merely used
10
See supra notes 3-4.
13
plaintiff’s good reputation to pass off its own goods). Put
simply, the underlying complaints in those cases did not allege
a false statement about a competitor’s product, but 5-hour
Energy’s complaint did.
True, other allegations in 5-hour Energy’s complaint
pertain only to Vitamin Energy’s statements about Vitamin
Energy’s own products. And, as noted above, the allegation
that does pertain to 5-hour Energy’s products also references
the vitamin content of Vitamin Energy’s products. But it goes
further, making an allegedly false representation about the
vitamin content of 5-hour Energy’s products as well.11 We
cannot focus on the former and ignore the latter, for the
underlying complaint need only contain “at least one allegation
that falls within the scope of the policy’s coverage [for] the
duty to defend [to be] triggered[.]” Leithbridge Co. v.
Greenwich Ins. Co., 464 F. Supp. 3d 734, 739 (E.D. Pa. 2020)
11
Of course, had Vitamin Energy cabined its
comparative advertising efforts to simple puffery, claims of
relative superiority over other competitors, or claims about
competitors that its competitors did not allege were false or
misleading, then no duty to defend would arise because it is
well established that such claims are not actionable. See, e.g.,
U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d
914, 922 (3d Cir. 1990) (explaining that “[m]ere puffing … is
not actionable”); see also Restatement (Second) of Torts § 649
(Am. Law Inst. 1977) (providing that “[a] competitor is
conditionally privileged to make an unduly favorable
comparison of the quality of his own … things, with the quality
of … competing … things … if the comparison does not
contain false assertions of specific unfavorable facts”).
14
(citing Gen. Accident Ins. Co. of Am. v. Allen, 692 A.2d 1089,
1095 (Pa. 1997)).
For a similar reason, we reject Evanston’s argument that
coverage should be denied because the “gravamen” of 5-hour
Energy’s complaint is that Vitamin Energy’s slogan promoting
“up to 7 HOURS of Energy” (J.A. at 276-77 ¶ 29) amounts to
trademark infringement. (Answering Br. at 33.) Even
assuming that 5-hour Energy is more concerned with
trademark infringement than its other claims, the question for
us is “whether a claim against an insured is potentially
covered[,]” not whether the most salient claim is potentially
covered. Jerry’s Sport Ctr., 2 A.3d at 541 (emphasis added).
Here, the alleged comparative advertising injury is potentially
covered.
In reaching that conclusion, we note again that the duty
to defend is broader than the duty to indemnify. The duty “is
not limited to meritorious actions; it even extends to actions
that are groundless, false, or fraudulent as long as there exists
the possibility that the allegations implicate coverage.” Id.
(internal quotation marks and citation omitted). The 5-hour
Energy complaint, when read in favor of coverage, raises
allegations that are “potentially within the scope of the policy.”
Moore, 228 A.3d at 265 (emphasis omitted) (internal quotation
marks and citation omitted). The truth of those allegations,
their merits under applicable state and federal law, and
Evanston’s ultimate duty to indemnify are “not at issue when
determining whether there is a duty to defend[.]” Id. We
therefore do not opine on those issues, stopping at the
conclusion that 5-hour Energy’s complaint raises the
possibility of an Advertising Injury as defined in the Policy.
15
B. Coverage Exclusions
Evanston argues that, even if 5-hour Energy’s
complaint alleges an Advertising Injury, certain Policy
exclusions apply and thus bar coverage.12 As the insurer,
Evanston bears the burden of establishing the applicability of
exclusions, and we construe the exclusions in favor of
coverage. Cosenza, 258 F.3d at 206-07. Based on the
presently required reading of 5-hour Energy’s complaint, with
all inferences being in favor of coverage, Evanston has not
carried its burden, at least not insofar as it seeks to avoid the
duty to defend at this stage.
Evanston first points to what it calls the Policy’s
“Intellectual Property” exclusion. (Answering Br. at 36-37.)
That exclusion eliminates coverage for
any Claim based upon or arising out of Personal
Injury or Advertising Injury arising out of piracy,
unfair competition, the infringement of
copyright, title, trade dress, slogan, service mark,
service name or trademark, trade name, patent,
trade secret or other intellectual property right[.]
12
The District Court did not reach Evanston’s exclusion
arguments, which were timely raised below, because it held
that 5-hour Energy’s complaint does not allege an Advertising
Injury. Because “our interpretation of [an insurance policy] is
a question of law over which we exercise plenary review,”
Ramara, 814 F.3d at 674, we may address the applicability of
the exclusions in the first instance. We do so in the interest of
judicial economy.
16
(J.A. at 191.) Although 5-hour Energy’s complaint does allege
trademark infringement, Vitamin Energy does not seek
coverage based on that claim. Rather, the alleged wrong that
Vitamin Energy relies on to invoke the duty to defend is the
comparative advertisement supposedly misrepresenting the
vitamin content of 5-hour Energy’s products, and that
potentially does fall within the scope of an Advertising Injury
as defined in the Policy. An exclusion that may apply to only
some allegations does not excuse Evanston from its obligation
to defend the entire lawsuit, which obligation continues “as
long as at least one claim is potentially covered by the policy.”
Post v. St. Paul Travelers Ins. Co., 691 F.3d 500, 521 (3d Cir.
2012) (citation omitted).
Even so, Evanston argues that the Intellectual Property
exclusion’s “unfair competition” language bars coverage for 5-
hour Energy’s claim for unfair competition under Michigan
law. (J.A. at 191.) Perhaps the claim for disparagement in 5-
hour Energy’s lawsuit might be considered a claim for “unfair
competition” under the Michigan statute, which is cited in the
underlying complaint. Mich. Comp. Laws § 445.903(1)(f);13
Action Auto Glass v. Auto Glass Specialists, 134 F. Supp. 2d
897, 899 (W.D. Mich. 2001). But, as we have observed
elsewhere, the term “unfair competition” does not have a
singular, unambiguous meaning. Granite State Ins. Co. v.
Aamco Transmissions, Inc., 57 F.3d 316, 319 (3d Cir. 1995).
In context, “unfair competition” in the Intellectual Property
13
Although 5-hour Energy’s complaint asserts a cause
of action for “Unfair Competition under MCL § 445.903” (J.A.
at 294), that statute is actually titled “Unfair, unconscionable,
or deceptive methods, acts, or practices; promulgation of
rules[.]” Mich. Comp. Laws § 445.903.
17
exclusion gains meaning from its neighbors – “piracy, … the
infringement of copyright, title, trade dress, slogan, service
mark, service name or trademark, trade name, patent, trade
secret or other intellectual property right[.]” (J.A. at 191.) See
Post, 691 F.3d at 520 (“Words are known by the company they
keep.” (quoting Northway Vill. No. 3, Inc. v. Northway Props.,
Inc., 244 A.2d 47, 50 (Pa. 1968))). As used in the Policy, those
terms refer narrowly and consistently to intellectual property
rights, and so should “unfair competition[.]” Cf. JAR Lab’ys
LLC v. Great Am. E & S Ins. Co., 945 F. Supp. 2d 937, 945-46
(N.D. Ill. 2013) (construing “unfair competition” as “targeting
a narrow subset of intellectual property violations that does not
include [underlying] false advertising and related claims”).
The term thus does not necessarily bar coverage based on
allegations supporting a potential disparagement claim under
Michigan law. Indeed, if the exclusion did bar coverage
because of allegations supporting a potential disparagement
claim, it would arguably render the Policy’s coverage of injury
from “disparaging material” (J.A. at 185) a nullity, which we
doubt the parties intended. In any event, the duty to defend is
not defeated at this juncture by Evanston’s preferred reading of
Michigan law.
Next, Evanston argues that the “Incorrect Description”
and “Failure to Conform” exclusions bar coverage based on
claims against Vitamin Energy for its representations about its
own products’ “steroid-like” performance and vitamin content.
(Answering Br. at 38-39.) The Incorrect Description exclusion
bars coverage for “any Claim based upon or arising out of
Advertising Injury arising out of a mistake in advertised price
or incorrect description of any product, good or operation[.]”
(J.A. at 191.) The Failure to Conform exclusion bars coverage
for “any Claim based upon or arising out of the failure of
18
products, goods or services to conform with any statement of
quality or performance made in the Named Insured’s
Advertisement.” (J.A. at 191.) Relying on other cases
interpreting similar provisions, Evanston asserts that the
exclusions pertain to descriptions of the insured’s own
products. Be that as it may, as discussed above, it is Vitamin
Energy’s alleged misrepresentation of the ingredients in 5-hour
Energy’s products, not Vitamin Energy’s own products, that
creates the possibility of coverage. See supra Section II.A.
Accordingly, the exclusions do not affect Evanston’s duty to
defend the lawsuit. See Post, 691 F.3d at 521 (“This exclusion
would only excuse [the insurer’s] duty to defend [the insured]
if the possibility of [the underlying plaintiff’s] recovery could
be confined solely to [the excluded claim].”). Moreover, as
with the Intellectual Property exclusion, if the Incorrect
Description and Failure to Conform exclusions were read
broadly to encompass allegations supporting a potential
disparagement claim, then the exclusions would render the
Policy’s coverage for injury arising out of “disparaging
material” a nullity, which again we doubt the parties intended.
Finally, Evanston refers to two “Knowing” exclusions,
arguing that they bar coverage for 5-hour Energy’s claims.
(Answering Br. at 39-41.) Those two exclusions bar coverage
for the following:
[A]ny Claim based upon or arising out of
Personal Injury or Advertising Injury caused by
or at the direction of the Insured with the
knowledge that the act would violate the rights
of another and would inflict Personal Injury or
Advertising Injury; [or]
19
[A]ny Claim based upon or arising out of
Personal Injury or Advertising Injury arising out
of the oral or written publication of material, if
done by or at the direction of the Insured with the
knowledge of its falsity[.]
(J.A. at 191.) Evanston cites 5-hour Energy’s allegation that
Vitamin Energy infringed on 5-hour Energy’s trademarks with
actual knowledge that it was doing so. But again, Vitamin
Energy seeks coverage based on a different claim: its allegedly
false or misleading representation about the vitamin content of
5-hour Energy’s products. Vitamin Energy’s alleged
knowledge of trademark infringement does not eliminate
coverage for a disparagement claim, and so does not eliminate
the duty to defend. Post, 691 F.3d at 521.
We do not intend to signal how the coverage dispute
here should ultimately be decided. As already indicated, we
are focused now solely on the duty to defend. In that context,
only the supporting “factual allegations contained in the
[underlying] complaint” are considered. Cf. Mut. Benefit Ins.
Co. v. Haver, 725 A.2d 743, 745-46 (Pa. 1999) (where factual
allegations in complaint made clear that insured had
knowledge of danger, applying “knowing endangerment”
coverage exclusion even though complaint asserted only
negligence claims). Discovery may uncover evidence that
Vitamin Energy published the comparative advertisement with
knowledge of a falsehood or a resulting injury. See Moore, 228
A.3d at 265 (observing that discovery can narrow a case to be
clearly outside of coverage, thus terminating the duty to
defend). For now, however, we cannot say that the duty to
defend is defeated by the Knowing exclusions.
20
III. CONCLUSION
For the foregoing reasons, we will vacate the order of
the District Court and remand for further consideration of the
case consistent with this opinion.
21