Basic Research v. Admiral Insurance Co. (D.C. Utah, November 30, 2009)
Policyholders, manufacturers and marketers of the weight loss pill Akavar 20/50, filed a suit in federal court seeking coverage for defense costs from their insurers for underlying cases accusing the policyholders of false advertising.
Some of the policyholders were first sued in November 2007 in a putative nationwide class action in Utah alleging that the ads regarding weight loss were misleading. In December 2007, the policyholders were hit with a similar class action in California which was consolidated with the Utah action. In May, a third class action was filed, also in California.
The insurers have refused to pay for the policyholders defense costs in the consolidated Utah action but have paid for the defense costs in the California case, it has indicated that it intends to withdraw from that defense.
The policyholders allege that the claims fall within coverage because their policy protects them against personal and advertising injury from the use of another’s advertising idea. The policyholders allege that the advertisements in the underlying claim are not their idea but are trademarks of another company.
A copy of the complaint is attached here
Sarah Fang and Joseph Oliva