Curtis-Universal, Inc. v. Sheboygan Emergency Medical Services, Inc.

• Decision Date: 12 January 1995
• Docket Number: INCORPORATE,P,CURTIS-UNIVERSA,No. 94-1858,94-1858
• Citation: 43 F.3d 1119
• Parties: , 1995-1 Trade Cases P 70,861 laintiff, v. SHEBOYGAN EMERGENCY MEDICAL SERVICES, INCORPORATED, doing business as Orange Cross; et al., Defendants. FIRST NATIONAL INSURANCE COMPANY OF AMERICA, Intervening Plaintiff-Appellee, v. SHEBOYGAN EMERGENCY MEDICAL SERVICES, INCORPORATED, doing business as Orange Cross, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1119

43 F.3d 1119

63 USLW 2416, 1995-1 Trade Cases P 70,861

CURTIS-UNIVERSAL, INCORPORATED, Plaintiff, v. SHEBOYGAN EMERGENCY MEDICAL SERVICES, INCORPORATED, doing

business as Orange Cross; et al., Defendants.

FIRST NATIONAL INSURANCE COMPANY OF AMERICA, Intervening Plaintiff-Appellee, v. SHEBOYGAN EMERGENCY MEDICAL SERVICES, INCORPORATED, doing

business as Orange Cross, Defendant-Appellant.

No. 94-1858.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 3, 1994.

Decided Dec. 14, 1994.

Rehearing and Suggestion for

Rehearing En Banc Denied

Jan. 12, 1995.

K. Scott Wagner, Hale & Lein, Milwaukee, WI, for Curtis-Universal, Inc.

Craig W. Nelson (argued), Nelson, Dries & Zimmerman, Brookfield, WI, for First Nat. Ins. Co. of America.

Michael Fischer, James T. McKeown (argued), Foley & Lardner, Milwaukee, WI, for Sheboygan Emergency Medical Services, Inc.

Before POSNER, Chief Judge, and CUMMINGS and ENGEL, ^* Circuit Judges.

POSNER, Chief Judge.

We are asked to decide whether an insurance company (First National Insurance Company of America) that has promised to indemnify its insured for liability resulting from the infliction of "advertising injury" has a duty under the law of Wisconsin to defend the insured against a wide-ranging antitrust and tort suit. The district judge held that there was no duty and granted a declaratory judgment to that effect to the insurance company, which had intervened in the suit. 844 F.Supp. 492 (E.D.Wis.1994). The insured--an ambulance service in Sheboygan, Wisconsin that does business under the name "Orange Cross"--has appealed. The appeal is proper because, although litigation remains pending in the district court, the judge's order completely disposes of one party (First National) and the judge entered the order as a final judgment under Fed.R.Civ.P. 54(b).

Together with the two hospitals that own it, Orange Cross has been sued in an 86-paragraph complaint by a competing ambulance service, Curtis-Universal. The complaint charges the defendants with conspiring to exclude Curtis from the Sheboygan market in ambulance service, in violation of federal antitrust law and state tort law. The City of Sheboygan had decided to privatize its emergency ambulance service ("911 service"). To this end it invited bids for the provision of the service on a contract basis. Curtis won the bidding contest, beating Orange Cross, the 911 provider in the surrounding county. Determined to reverse the outcome of the contest, Orange Cross and its parent hospitals organized a boycott of Curtis's ambulance service. Patients brought to either hospital in a Curtis ambulance were told, even if they requested that Curtis be used to take them home or to some other destination when their hospital stay was over, that it was the hospital's policy to use only Orange Cross's ambulance service for the transportation of patients. The hospitals refused to stock Curtis's ambulances with medication, equipment, and supplies, threatened to discontinue referrals to nursing homes that used Curtis's service, and sold their services below cost--all in an effort to run Curtis out of the market. The defendants' scheme was successful; Orange Cross obtained a monopoly of ambulance services in Sheboygan. That is the antitrust claim; among the other claims in Curtis's complaint is a claim for tortious interference with contract in which Orange Cross and the other defendants are accused of "disseminating false information about Curtis" and "campaigning to get the public to call 911 and ask for Orange Cross."

Needless to say, in reciting the allegations of the complaint we do not vouch for their truth. But it is conceded (and is obvious from the insurance policy itself, as we are about to see) that the insurance company's duty to defend depends on what is alleged in the suit against its insured rather than on the insured's actual conduct. City of Edgerton v. General Casualty Co., 184 Wis.2d 750, 517 N.W.2d 463, 470 (1994).

The insurance policy that First National had issued to Orange Cross is entitled "Broad Form Comprehensive General Liability Endorsement" and promises to indemnify the insured for "all sums which the insured shall become legally obligated to pay as damages because of personal injury or advertising injury," and "to defend any suit against the insured seeking damages on account of such injury, even if any of the allegations of the suit are groundless, false or fraudulent." The policy defines "advertising injury" as "injury arising out of an offense committed during the policy period occurring in the course of the named insured's advertising activities, if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition, or infringement of copyright, title or slogan." There are various exclusions, which we shall take up later.

The policy does not cover antitrust injury, but the district judge ruled correctly that if any part of the suit would if successful require the insurance company to indemnify the insured for "advertising injury," the insurance company was obligated to defend against the entire suit. School District of Shorewood v. Wausau Ins. Cos., 170 Wis.2d 347, 488 N.W.2d 82, 88 (1992); Tews Funeral Home, Inc. v. Ohio Casualty Ins. Co., 832 F.2d 1037, 1043-44 (7th Cir.1987) (per curiam) (a case similar to ours, but governed by Illinois law); cf. Pipefitters Welfare Educational Fund v. Westchester Fire Ins. Co., 976 F.2d 1037, 1040 (7th Cir.1992). The judge therefore considered whether the count charging tortious interference might come within the scope of the policy. The insurance company conceded that the injury about which Curtis was complaining in that and the other counts had been inflicted in the course of Orange Cross's "advertising activities," but not that the injury had arisen out of any of the listed torts (libel, slander, etc.) that delimit the policy's coverage of advertising injury. The closest tort listed in the policy was unfair competition, but the district judge held that this term should be narrowly limited to acts of or similar to trademark infringement, and he did not think that the complaint charged such acts.

In reaching this conclusion the judge thought it significant that Curtis's complaint did not use the term "unfair competition" and that the complaint as a whole was centered in the antitrust allegations. Neither point is significant. The insurer's obligations are not circumscribed by the plaintiff's choice of legal theories. The plaintiff's complaint, upon which the insurer's duty depends, need not even set forth the plaintiff's legal theories. See, e.g., Fed.R.Civ.P. 8(a); Fed.R.Civ.P. Form 9. What is important is not the legal label that the plaintiff attaches to the defendant's (that is, the insured's) conduct, but whether that conduct as alleged in the complaint is at least arguably within one or more of the categories of wrongdoing that the policy covers. U.S. Fire Ins. Co. v. Good Humor Corp., 173 Wis.2d 804, 496 N.W.2d 730, 734-35 (App.1993); Allison v. Ticor Title Ins. Co., 907 F.2d 645, 649 (7th Cir.1990) (applying Wisconsin law). So, for example, if the complaint alleges facts that if proved would show that the insured had infringed the plaintiff's copyright, the policy kicks in even if the complaint charges the insured only with fraud or intentional infliction of emotional distress. Barber v. Nylund, 158 Wis.2d 192, 461 N.W.2d 809, 811 (App.1990); Berg v. Fall, 138 Wis.2d 115, 405 N.W.2d 701, 704 (App.1987). Nor is the insurer allowed to escape from his duties of defense and indemnification by reference to the core or dominant character of the plaintiff's allegations. That would violate the principle that if any of the conduct alleged in the complaint falls within the scope of the insurance policy, the insurer must defend. If unfair competition within the meaning of the insurance contract is alleged (not necessarily by name), it is irrelevant that it is a subordinate aspect of the plaintiff's case.

So we must decide whether facts alleged in or implied by the claim of tortious interference with the contract between Curtis and the City of Sheboygan constitute "unfair competition" within the meaning of the insurance contract. This may in turn depend on whether the policy should be understood as using "unfair competition" broadly, perhaps in a layman's sense, or whether it must be confined to its core legal meaning. Taken broadly--and even without regard to section 5 of the Federal Trade Commission Act, 15 U.S.C. Sec. 45, which forbids "unfair methods of competition," a term that has been interpreted to encompass everything forbidden by federal antitrust law and then some, FTC v. Brown Shoe Co., 384 U.S. 316, 86 S.Ct. 1501, 16 L.Ed.2d 587 (1966)--"unfair competition" is committed whenever a seller resorts to methods of competition forbidden by law, including antitrust law. Milton Handler, "Unfair Competition," 21 Ia.L.Rev. 175 (1936). The broad interpretation cannot be right for the insurance policy in our case. It would turn insurance against liability for "advertising injury" into insurance against liability for antitrust violations, provided only that the violations arose out of the insured's "advertising activities"--and if one may judge from the insurance company's concession that Orange Cross was engaged in advertising activities, this requirement is easily satisfied, perhaps by any firm that conducts marketing activities of any sort in support of its sales. As far as we have been able to determine, insurance companies will not insure against liability for antitrust violations, a liability based on deliberate rather than inadvertent actions, cf. Harley-Davidson, Inc. v. Minstar, Inc., 41 F.3d 341, 343 (7th Cir.1994), and for this and other reasons impossible to predict by the actuarial methods on which insurance companies base their determination of premiums. Granted, various exclusions in the...