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Vol. 8 - Issue 10
November 20, 2019


Court Teaches A Coverage Lesson From Porky’s Cabaret’s “Back To School Party”


Ordinarily, as we all know, whether an insurer has a duty to defend is based on a comparison between the policy and, depending on the jurisdiction, complaint or complaint and extrinsic evidence.  In either case, the policy says what it says, the complaint says what it says, and you do the comparison to determine if a defense duty is triggered.  Of course, an analysis of case law, addressing the relevant coverage issue, may be included in the calculus.

But once in a while, answering the duty to defend question requires a further step.  In addition to comparing the complaint (and perhaps extrinsic evidence) with the policy, there can be a requirement to examine substantive issues in the underlying action -- and perhaps undertake legal research.         

This was the duty to defend scenario in AIX Specialty Ins. Co. v. Dginguerian, No. 18-24099 (S.D. Fla. Sept. 20, 2019).  A comparison, between the underlying complaint and the policy, revealed no duty to defend.  But then the court, in the coverage case, started asking questions about the underlying complaint and did some legal research.  When it was finished, the duty to defend had been triggered.

The facts are set out by the court as follows: “Ms. [Sara] Underwood is a model, actress, and television host.  She has modeled for Playboy magazine and appeared in films and several episodes of reality television programs.  Ms. Underwood alleges [Porky’s] Cabaret posted a stolen image of her to its Facebook page on August 26, 2014, to advertise for a ‘back to school party,’ implying Ms. Underwood was a stripper at Cabaret.  She further alleges Xcitement magazine posted an image of her on August 26, 2014 as part of an advertisement for Cabaret, insinuating Ms. Underwood was a stripper for Cabaret. According to Ms. Underwood, Cabaret did not seek permission to use her image, and she was never hired by nor compensated to advertise for Cabaret.”

Ms. Underwood filed suit against Porky’s Cabaret setting forth causes of action for (1) violations of the Lanham Act (False Advertising and False Endorsement; (2) violation of Florida Statutes concerning “Right of Publicity” and “Unauthorized Misappropriation of Name/Likeness;” (3) violation of the “Common Law Right of Publicity” for “Unauthorized Misappropriation of Name and Likeness;” (4) conversion; and (5) unjust enrichment.

At issue in the coverage case was the availability of coverage for Porky’s Cabaret for “personal and advertising injury.”  The insurer argued that it had no duty to defend or indemnify the Cabaret. 

The policy included an Intellectual Property exclusion, which precludes coverage for “personal and advertising injury” arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. 

Reading various policy provisions together, the court explained that coverage for personal and advertising injury “includes damages arising from (1) oral or written publication that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; (2) violations of privacy; (3) use of another’s idea in the insured’s advertisement; and (4) copyright, trade dress or slogan infringement. And read together, coverage for personal advertising injury excludes damages arising from (1) patent, trade mark, and trade secret infringement; and (2) other intellectual property rights.”

Here’s where the duty to defend analysis went beyond simply comparing the insurance policy to the complaint.  Ms. Underwood brought several causes of action, but none of them were for defamation.  However, as Porky’ Cabaret put it, the underlying claims “sound in defamation.”  

The court agreed, describing Ms. Underwood’s allegations as follows: “Ms. Underwood alleges Cabaret published a ‘stolen image of Underwood’ on its Facebook page to advertise for a ‘back to school’ party.  She alleges Cabaret used the picture ‘to intentionally give the impression that Underwood is either a stripper working at the strip club or that she endorses [Cabaret].’  According to Ms. Underwood, this publication ‘impugns [her] character, embarrasses her and suggests — falsely — her support for and participation in the strip tease industry.’  She further alleges Cabaret’s publication ‘has caused irreparable harm to [Ms. Underwood’s] reputation and brand by attributing to [her] the adult entertainment and striptease lifestyle and activities at [Cabaret’s] strip club.’”
In concluding that Ms. Underwood asserted a claim for defamation, despite not including one specifically, the court considered the crux of Ms. Underwood’s allegations, in conjunction with an examination of the elements of defamation under Florida law (and related case law).

The test for the duty to defend, the court observed, can include the “fairly read grounds for liability expressed by allegations of fact in the underlying complaint — not the specific label of the cause of action.”  To carry this out, the court delved into the law at issue in the underlying action. 

Porky’s Cabaret instructs that, in certain cases, determination of the duty to defend can expand from the usual task, of comparing the complaint (and perhaps extrinsic evidence) with the policy, to undertaking an analysis of legal issues and grounds for liability in the underlying action. 


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