Luxottica of Am., Inc. v. Allianz Global Risks US Ins. Co.

• Decision Date: 28 July 2021
• Docket Number: Case No. 1:20-cv-698
• Citation: 551 F.Supp.3d 799
• Parties: LUXOTTICA OF AMERICA, INC., Plaintiff, v. ALLIANZ GLOBAL RISKS US INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Ohio

551 F.Supp.3d 799

LUXOTTICA OF AMERICA, INC., Plaintiff,

v.ALLIANZ GLOBAL RISKS US INSURANCE COMPANY, Defendant.

Case No. 1:20-cv-698

United States District Court, S.D. Ohio, Western Division.

Signed July 28, 2021

Elizabeth P. Kessler, Elizabeth Benshoff, Jones Day, Columbus, OH, Brian D. McDonald, Pro Hac Vice, Richard J. DeNatale, Pro Hac Vice, San Francisco, CA, for Plaintiff.

Aaren R. Host, Calfee, Halter & Griswold, LLP, Clifford C. Masch, Reminger & Reminger, Cleveland, OH, Adair Martin Smith, Cincinnati, OH, Eva K. Schueller, Pro Hac Vice, DLA Piper LLP, San Francisco, CA, Robert M. Hoffman, Pro Hac Vice, Dallas, TX, Stephen W. Schwab, Pro Hac Vice, Chicago, IL, for Defendant.

ORDER RESOLVING THE PARTIES’ CROSS-MOTIONS FOR SUMMARY JUDGMENT

Timothy S. Black, United States District Judge

This civil action is before the Court on the parties’ cross-motions for summary judgment (Docs. 47, 50) and the parties’ responsive memoranda (Docs. 51, 52, 53, 54).¹

I. BACKGROUND²

The dispute presented in these cross-motions for summary judgment is narrow:

whether Defendant Allianz Global Risks US Insurance Company ("Allianz"), under an insurance policy purchased by Plaintiff Luxottica of America, Inc. ("Luxottica"), owes a duty to defend Luxottica in a class action lawsuit (the "Underlying Lawsuit").

A. The Parties

Luxottica operates retail locations and is more commonly known to the public as "LensCrafters." (Doc. 54-2 at ¶ 1). At LensCrafters’ locations, Luxottica provides consumers with optical services including eyewear fittings, filling prescriptions, and selling ophthalmic lenses. (Id. at ¶ 2).³ Allianz is the insurance company from which Luxottica purchased general commercial liability insurance. (Id. at ¶ 4).

B. The Insurance Policies

The parties agree that there are four Commercial General Liability Policies (the "Policy") relevant to this action, providing coverage for years 2013 through 2017. (Id. ; see Doc. 50-6, Exs. 1–4). The parties agree that the terms contained in each of the Policies are substantially the same and/or the same for the purposes of this dispute. (Doc. 50-3 at ¶ 1).⁴

The Policy first outlines general commercial liability coverage in a section titled "Commercial General Liability Coverage Form." (Doc. 1-1 at PageID 40–55). This section describes coverage for "bodily injury," "personal and advertising injury," and "medical payments." (Id. ) Luxottica does not argue that this section provides coverage for purposes of the current dispute.

In the Policy, added onto the "Commercial General Liability Coverage Form," are various exclusions and endorsements. (See, e.g. Doc. 1-1 at PageID 30, "Forms and Endorsement List"). The exclusions and endorsements discuss coverage and non-coverage for specific topics not discussed or in greater detail than the general policy. (Id. ) For example, there are forms and endorsements titled: "Exclusion – Asbestos Liability," "Fungi or Bacteria Exclusion," and "Named Insured Endorsement." (Id. at PageID 30–31). At issue in the current dispute is the Optical Professional Liability Endorsement (the "OPL Endorsement"), which provides:

We will pay those sums that the insured legally obligated to pay as damages because of any error or omission in providing professional services in the practices of optometry or optical services by your or on your behalf. Such services can be provided by any optician, optometrist or anyone with whom you have a contract, agreement, or relationship including independent contractors and volunteers. Such services include but are not limited to examinations, referrals, prescribing, fitting filing, selling, demonstration and distributing ophthalmic lenses and similar products, but do not include surgery.... We will have the right and duty to defend the insured against any "suit" seeking damages to which this insurance applies. However, we will have no duty to defend the insured against any "suit" seeking damages to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claims or "suit" that may result.

(Doc. 54-2 at ¶ 5–6; Doc. 1-1 at PageID 92).

The parties also have contracted for Umbrella Policies. (Doc. 52-2 at ¶ 7). Each of the Umbrella Policies provides a coverage limit of $27,000,000 per occurrence. (Doc. 52-2 at ¶ 8). The Umbrella Policies further provide:

This insurance does not apply to "bodily injury", "property damage", "personal injury" or "advertising injury" arising out of the rendering or failure to render any professional services and any act, error, omission, malpractice or mistake of a professional nature committed by the "insured" or any person for whom the "insured" is legally responsible. However, if insurance for such "bodily injury", "property damage", "personal injury" or "advertising injury" is provided by a policy listed in the Schedule of Underlying Insurance: 1. This exclusion shall not apply; and 2. The insurance provided by this policy will not be broader than the insurance coverage provided by the policy listed in the Schedule of Underlying Insurance.

(Doc. 54-2 at ¶ 9).

C. The Underlying Lawsuit

The Underlying Lawsuit is a consolidated class action: Yesinia Ariza, et al., v. Luxottica Retail North America, an Ohio Corporation d/b/a LensCrafters , No. 1:17-cv-05216-PKC-RLM (E.D.N.Y.). (Doc. 50-3 at ¶ 3; Doc. 52-2 at ¶ 10–11). The Underlying Lawsuit includes three actions filed against Luxottica: Kathleen Infante, et al. v. Luxottica Retail North America , Case No. 3:17-cv-05145 (N.D. Cal. Sept. 5, 2017); Yesenia Ariza and David Soukup, et al. v. Luxottica Retail North America , Case No. 1:17-cv-05216 (E.D.N.Y. Sept. 5, 2017); and Gracelynn Tenagila, et al. v. Luxottica Retail North America , Case No. 2:17-cv-14311 (S.D. Fla. Sept. 5, 2017). (Id. )

After the actions were consolidated, an amended complaint was filed on January 5, 2018, followed by a second amended complaint ("the Underlying Complaint") on September 21, 2018. (Doc. 52-2 at ¶¶ 13–14). Pursuant to the Policy, Luxottica gave timely notice of the Underlying Lawsuit to Allianz. (Doc. 52-2 at ¶ 18).⁵

The Underlying Complaint contains allegations against Luxottica's AccuFit System. (See generally , Underlying Complaint). Luxottica introduced its AccuFit system in or around 2009. (Id. at ¶ 28). AccuFit was used by Luxottica to measure a customer's pupillary distance before manufacturing prescription eyeglasses. (Id. at ¶¶ 2, 29–31). AccuFit was allegedly used as a selling point for Luxottica, claiming that the system provided pupillary distance measurements "five times more accurate" than traditional measurements; thus, making better and more accurate prescription eyeglasses. (Id. at ¶¶ 3, 32). However, according to the Underlying Complaint, AccuFit could not provide more accurate prescription eyeglasses. (Id. at ¶ 41).

AccuFit was a failed system because, even with more accurate measurements, Luxottica's "decades-old" manufacturing equipment was incapable of producing eyeglasses with pupillary distance measurements that were "five times" more accurate than traditional methods. (Id. at ¶¶ 3–4, 42–44). The Underlying Complaint contains various allegations that Luxottica knew it was incapable of manufacturing eyeglasses with the level of precision that the AccuFit system measured, yet nevertheless pushed the AccuFit glasses to consumers. (Id. at ¶¶ 44–50).

The Underlying Complaint is composed of the California Class, the Florida Class, and the New York Class. (Id. at ¶ 76). Each class consists of residents of each state that purchased prescription eyeglasses from Luxottica from September 5, 2011 to the present. (Id. ) As alleged, the questions of law and fact common to all the classes include:

a. Whether [Luxottica] misrepresented material facts about its manufacturing process, including the fact that AccuFit measurements could not be converted into the manufactured lenses;

b. Whether [Luxottica] omitted material facts about its manufacturing process, including the fact that AccuFit measurements could not be converted into the manufactured lenses;

c. Whether [Luxottica] engaged in deceptive acts or practices, including misrepresenting and/or omitting the fact that AccuFit measurements could not be converted into the manufactured lenses; and

d. Whether [Luxottica] falsely advertised its manufacturing process at the time of sale, including the fact that AccuFit measurements could not be converted into the manufactured lenses.

(Id. at ¶ 81).

The claims made against Luxottica in the Underlying Lawsuit include:

1. Violation of the California Business and Professions Code § 17200, et seq. , for unlawful, unfair, and/or fraudulent business practices, (id. at ¶¶ 87–96);

2. Violation of the California Business and Professions Code § 17500, et seq. , the "False Advertising Law," (id. at ¶¶ 97–102);

3. Violation of the California Consumer Legal Remedies Act, Civil Code §§ 1761(a), 1770, for misrepresenting the certification, characteristics, and quality of goods to consumers, (id. at ¶¶ 103–111);

4. Violation of the Florida Deceptive and Unfair Trade Practices Act § 501.201, et seq. , (id. at ¶¶ 112–119);

5. Violation of the New York General Business Law § 349, et seq. , which prohibits "deceptive acts or practices in the conduct of any business, trade or commerce in the furnishing of any service in" New York, (id. at ¶¶ 120–129);

6. Violation of the New York General Business Law § 350, et seq. , the state's false advertising law, (id. at ¶¶ 130–137);

7. Quasi-contract and/or unjust enrichment, (id. at ¶¶ 138–142);

8. Fraudulent misrepresentation, (id. at ¶¶143–146); and

9. Fraudulent omission, (id. at ¶¶ 147–150).

The Underlying Plaintiffs in the Underlying Lawsuit seek various damages related to their purchase of prescription eyeglass from Luxottica, including "[r]estitution of all charges paid by Plaintiffs and the Class," "[d]isgorgement to Plaintiffs and the Class of all monies wrongfully obtained and retained by Defendant;" "statutory...