Hanover's 3rd Circ. Win Exposes Policyholders To Vague Suits


The Third Circuit's recent ruling that Urban Outfitters isn't covered for claims that it violated the Navajo Nation's copyrights because some of the retailer's purported infringement predated its insurance policy period could leave policyholders vulnerable to lawsuits that are unclear as to when wrongful conduct occurred, attorneys say.

Applying the "prior publication" exclusion in Urban Outfitters Inc.'s policy with Hanover Insurance Co., a panel of the appeals court found that a lower court properly nixed coverage for the Navajo Nation's complaint under the policy because the tribe alleged that the retailer engaged in "similar liability-triggering behavior" both before and during Hanover's coverage period. The panel determined that Urban Outfitters' use of the "Navajo" and "Navaho" names in advertisements for its clothing were part of a continuing pattern of infringement, rejecting the notion that each pattern, design and product identified in the tribe's suit amounted to a "fresh wrong" requiring Hanover to share defense duties with another insurer.

According to Robert D. Chesler, a shareholder in Anderson Kill PC's Newark office:

“The Third Circuit's decision will make it tougher for litigants to move for an early resolution on the question of whether a fresh wrong exists. I think whether there is a fresh wrong is a fact-intensive question," Chesler said. "This ruling makes it more difficult for parties to move for summary judgment on the issue — they must first conduct more discovery."

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Insurance Recovery Attorney | Anderson Kill P.C.
Robert D. Chesler

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