United States District Court, N.D. Illinois, Eastern Division
Hartford Fire Insurance Company, Plaintiff, Counter
Defendant: Michael John Duffy, LEAD ATTORNEY, Ashley L.
Conaghan, Tressler LLP, Chicago, IL.
Thermos, LLC, Defendant, Counter Claimant, ThirdParty
Plaintiff: Seth David Lamden, LEAD ATTORNEY, Neal Gerber &
Eisenberg LLP, Chicago, IL; Eric Y. Choi, Neal, Gerber &
Eisenberg, Chicago, IL.
Travelers Indemnity Company of America, Third Party
Defendant: Jamie Lynn Hull, Jean Mary Golden, Margaret Ann
Shipitalo, Cassiday Schade LLP, Chicago, IL.
National Fire Insurance Company of Hartford, Third Party
Defendant: Katherine Streicher Arnold, LEAD ATTORNEY, Colliau
Carluccio Keener Morrow Peterson & Parsons, Chicago, IL;
Theodore Joseph May, Colliau Carluccio Keener Morrow &
Parsons, Chicago, IL.
ELLIS, United States District Judge.
coverage action, Thermos L.L.C. (" Thermos" ) seeks
to recover defense and indemnity costs from three of its
insurers--Hartford Fire Insurance Company ("
Hartford" ), the Travelers Indemnity Company of America
(" Travelers" ), and National Fire Insurance
Company of Hartford (" National Fire" )
(collectively, the " insurers" )--arising from a
putative consumer class action lawsuit-- Milman v.
Thermos LLC, No. 13 C 7750 (N.D. Ill.) (the "
Milman lawsuit" )--brought against Thermos in
this district. The parties have filed cross-motions
for judgment on the pleadings or summary judgment [61, 64,
66, 69, 71, 73] regarding the duty to defend, Thermos'
claim that the insurers are estopped from denying coverage
for the Milman settlement, and Thermos' request
for section 155 damages. The Court finds that the
Milman complaint alleged claims that were
potentially covered by the insurers' policies but, based
on the insurers' representations that additional defenses
must be considered, defers final decision as to whether the
insurers had a duty to defend and whether the duty to defend
was breached by each insurer. Similarly, the Court defers
consideration of Thermos' estoppel argument until the
duty to defend issue is resolved. But because the Court's
present analysis of the duty to defend issue already
demonstrates a bona fide coverage dispute and Thermos makes
no argument to the contrary, the Court grants judgment to the
insurers on Thermos' request for section 155 damages.
The Milman Lawsuit
August 16, 2013, Milman filed suit against Thermos in the
United States District Court for the District of New Jersey.
That case was voluntarily dismissed without prejudice on
September 26, 2013. On October 29, 2013, the Milman
lawsuit was filed in this court as a putative class action.
The allegations in the Milman complaint are almost
identical to those in the dismissed New Jersey action.
plaintiffs in the Milman lawsuit alleged that
Thermos manufactured two types of allegedly "
leak-proof" bottles intended for use by young children.
Doc. 12-1 ¶ 1. Although Thermos advertised the bottles
as " leak-proof," inducing the plaintiffs and
putative class members to buy the bottles, the bottles had a
" tendency to leak" and thus Thermos' "
development, marketing and sale of the Bottles violate[d]
consumer protection laws, breache[d] [Thermos'] express
warranties to Plaintiffs and the Class, and constitute[d]
unjust enrichment." Id. The plaintiffs claimed
that Thermos' bottles " leak from both the straw and
the gap between the lid and the straw" and "
because the 'push button lid' is easily triggered,
the Bottles often pop open, exposing the leaking straw and
straw area." Id. ¶ 6. They further alleged
that the leaks were " inherent in the design of the
Bottles." Id. Because Thermos advertised its
bottles as leak-proof, the plaintiffs contended that Thermos
was able to price the bottles at a premium over other similar
non-leak-proof children's bottles. But instead of being
leak-proof, the plaintiffs allegedly found that " when
the Bottles are inverted or shaken, liquid escapes from both:
(i) the straw, and (ii) the gap between the straw and part of
the lid surrounding the straw." Id. ¶ 35.
The pushbutton lid also allegedly came open while in a diaper
bag, for example, exposing the straw and leaking liquid.
Reviews reproduced from Amazon.com reported " sticky
juice everywhere," immediate leaks, and " puddles
of milk." Id. ¶ 38. Milman specifically
alleged noticing that, when placed in a diaper bag, the
bottle " soak[ed] the other items in the diaper bag with
liquid." Id. ¶ 45. Both Milman and Thomas
alleged that if the bottles had not been advertised as
leak-proof, they would not have purchased the bottles or at
least would not have paid as much for them.
January 3, 2014, Thermos moved to dismiss the complaint. On
April 23, 2014, the court dismissed the plaintiffs' claim
for injunctive relief but otherwise let the complaint
proceed. The parties then participated in a successful
settlement conference on August 14, 2014, with the plaintiffs
filing for preliminary approval of the class action
settlement on December 17, 2014. The court granted
preliminary approval on December 23, 2014, with final
approval following on May 27, 2015. For settlement purposes,
the court certified the following class:
All persons who purchased a Foogo® stainless steel
vacuum-insulated straw bottle or a Foogo® plastic straw
bottle in the United States at any time between January 1,
2007 and December 23, 2014 excluding (a) any such person who
purchased for resale and not for personal or household use,
(b) any officers, directors or employees, or immediate family
members of the officers, directors or employees, of Thermos,
and (c) the presiding judges and their immediate families.
Doc. 70-5 at 3. Class members received either monetary
compensation or replacement Thermos products.
The Insurance Policies
had commercial general liability coverage with three
different insurers, Hartford, Travelers, and National Fire,
over the relevant time period. Hartford issued liability
policies to Thermos for the policy periods August 31, 2006 to
August 31, 2007 and August 31, 2007 to August 31, 2008 (the
" Hartford Policies" ). See Doc. 68-11;
Doc. 68-12. Travelers issued Thermos four commercial general
liability policies between August 31, 2008 and August 31,
2012 (the " Travelers Policies" ). See
Doc. 18-4; Doc. 18-5; Doc. 18-6; Doc. 18-7. Finally, National
Fire issued a commercial general liability policy to Thermos
for the period covering August 31, 2012 to August 31, 2013
(the " National Fire Policy" ). See Doc.
18-8. The relevant language of the insurance policies is the
same, and so the Court will combine its recitation of these
pertinent policy provisions here while providing appropriate
citations to each policy.
insurance policies provide that the insurers " 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." Doc. 68-11 at 69; Doc. 68-12 at 62; Doc. 18-4
at 19; Doc. 18-5 at 17; Doc. 18-6 at 15; Doc. 18-7 at 15;
Doc. 18-8 at 8. The policies also provide that the insurers
are required to defend Thermos in suits seeking such damages.
Doc. 68-11 at 69; Doc. 68-12 at 62; Doc. 18-4 at 19; Doc.
18-5 at 17; Doc. 18-6 at 15; Doc. 18-7 at 15; Doc. 18-8 at 8.
" Property damage" is defined as:
a. Physical injury to tangible property, including all
resulting loss of use of that property. All such loss of use
shall be deemed to occur at the time of the physical injury
that caused it; or
b. Loss of use of tangible property that is not physically
injured. All such loss of use shall be deemed to occur at the
time of the " occurrence" that caused it.
Doc. 68-11 at 86; Doc. 68-12 at 79; Doc. 18-4 at 51; Doc.
18-5 at 51; Doc. 18-6 at 50; Doc. 18-7 at 56; Doc. 18-8 at
20. But the insurance only applies if the "
'property damage' is caused by an
'occurrence.'" Doc. 68-11 at 69; Doc. 68-12 at
62; Doc. 18-4 at 19; Doc. 18-5 at 17; Doc. 18-6 at 15; Doc.
18-7 at 15; Doc. 18-8 at 8. An " occurrence" is
" an accident, including continuous or repeated exposure
to substantially the same general harmful conditions."
Doc. 68-11 at 85; Doc. 68-12 at 78; Doc. 18-4 at 32; Doc.
18-5 at 30; Doc. 18-6 at 28; Doc. 18-7 at 28; Doc. 18-8 at
insurance policies contain several exclusions to which the
insurance does not apply, including:
a. Expected Or. Intended Injury
" Bodily injury" or " property damage"
expected or intended from the standpoint of the insured. This
exclusion does not apply to " bodily injury" or
" property damage" resulting from the use of
reasonable force to protect persons or property.
. . . .
j. Damage to Property
" Property damage" to: . . .
(6) That particular part of any property that must be
restored, repaired or replaced because " your work"
was incorrectly performed on it. . . .
Paragraph[ ] (6) of this exclusion do[es] not apply to
liability assumed under a sidetrack agreement.
Paragraph (6) of this exclusion does not apply to "
property damage" included in the "
products-completed operations hazard" .
k. Damage To Your Product
" Property damage" to " your product"
arising out of it or any part of it.