## Facts

- Riso, Inc., a distributor of digital duplicating machines and related parts and supplies, was insured under Great American-issued primary and umbrella commercial general liability policies from 1991–2000.
- California school districts sued Riso in federal court alleging antitrust violations, claiming Riso used tactics to force machine owners to buy only Riso supplies and use Riso service providers.
- The antitrust complaint alleged, among other conduct, that Riso disparaged competing supplies as “supply pirates” and warned their products could cause serious machine damage not covered by Riso’s warranty.
- Riso tendered the defense to the insurers, asserting the complaint triggered “personal injury” coverage for “oral or written publication of material” that “slanders or libels” or “disparages a person’s or organization’s goods, products or services.”
- The insurers refused to defend; the antitrust case later settled.
- The insurers filed a Massachusetts federal diversity declaratory action seeking a ruling of no duty to defend or indemnify; the district court granted summary judgment to the insurers, and Riso appealed.

## Issues

1. Whether, under Massachusetts law, the antitrust complaint alleged a covered “personal injury” offense—disparagement—sufficient to create a duty to defend.
2. Whether any duty to indemnify could exist where no duty to defend was triggered by the complaint.

## Decision

- The First Circuit affirmed summary judgment for the insurers.
- The court held there was no duty to defend because the underlying complaint, read as a whole, did not even potentially assert a covered disparagement offense.
- The court held there was no duty to indemnify because the duty to indemnify is narrower than the duty to defend, and the absence of a duty to defend foreclosed indemnity on the settlement.

## Legal Principles

- Under Massachusetts law, the duty to defend is broader than the duty to indemnify, but it still depends on whether the complaint’s allegations show a possibility of coverage under the policy as written.
- CGL “personal injury” coverage for slander/libel/disparagement is directed at tort-like publication offenses; it is not triggered merely because critical statements appear in a complaint primarily asserting non-covered business torts or statutory claims.
- Disparagement coverage requires allegations that the insured published material disparaging the goods, products, or services of the party claiming injury in the underlying suit; disparagement aimed at third-party competitors does not satisfy that requirement when the underlying plaintiffs are not the disparaged parties.
- When alleged disparaging statements are pleaded only as part of an anticompetitive scheme and the claimed harm is antitrust injury (e.g., lock-in, overcharges), the allegations do not state a covered disparagement injury.

## Conclusion

The court ruled that the insurers owed no defense or indemnity because the underlying antitrust complaint sought redress for anticompetitive conduct and, although it referenced disparaging statements about competitors’ products, it did not allege disparagement of the school-district plaintiffs’ goods or services within the meaning of the policies’ “personal injury” coverage.


Great Am. Ins. Co. v. Riso, Inc., 479 F.3d 158 (1st Cir. 2007)