Rose Acre Farms, Inc. v. COLUMBIA CASUALTY CO. and NATIONAL FIRE INSURANCE CO. OF HARTFORD

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-1599
ROSE ACRE FARMS, INC.,
Plaintiff-Appellant,
v.
COLUMBIA CASUALTY CO. and
NATIONAL FIRE INSURANCE
CO. OF HARTFORD,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Indiana, New Albany Division.
No. 4:09-cv-00135-SEB-WGH—Sarah Evans Barker, Judge.
ARGUED SEPTEMBER 26, 2011—DECIDED NOVEMBER 1, 2011
Before CUDAHY, POSNER, and WOOD, Circuit Judges.
POSNER, Circuit Judge. The plaintiff, Rose Acre, the
nation’s second-largest producer of eggs, has along with
other egg producers been charged in a number of class
action suits with conspiring to fix the price of eggs, in
violation of section 1 of the Sherman Act. (It has been
embroiled in antitrust litigation before, perhaps because it

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2 No. 11-1599
has been so successful. See A.A. Poultry Farms, Inc. v.
Rose Acre Farms, Inc., 881 F.2d 1396 (7th Cir. 1989).)
Other violations are charged as well in some of the
class action suits, but they are similar to the Sherman
Act violations and need not be discussed separately.
The class actions were consolidated and transferred
for pretrial proceedings to the Eastern District of Pennsyl-
vania, where they are pending. Rose Acre asked its
liability insurers to defend it in the class action suits,
arguing that the complaints sought damages for what
Rose Acre’s policies call “personal and advertising in-
jury.” As the policies are identical, differing only in the
coverage period, to simplify this opinion we’ll pretend
there’s only one insurer, one insurance policy, and,
because the antitrust complaints do not differ from each
other in any respect relevant to the appeal, one antitrust
complaint.
The insurer (for remember we’re pretending there’s just
one) refused to defend Rose Acre, on the ground that
the antitrust complaint alleged nothing that could be
regarded as “personal and advertising injury.” This suit,
a diversity suit governed by Indiana law, followed. The
district court granted summary judgment in favor of the
insurer.
The insurance policy defines “personal and advertising
injury” as “injury . . . arising out of one or more of the
following offenses,” and a list of torts follows that
includes “the use of another’s advertising idea in your
‘advertisement.’ ” We’ll call this coverage “advertising
injury.”

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No. 11-1599 3
“Answers to 11 Frequently Asked Questions about Chickens,” å
www.roseacre.com/eggfaq.html (visited Sept. 26, 2011): “11.
Which came first, the chicken or the egg? Answer: According
to the Bible, the chicken came first. ‘And the evening and the
morning were the fourth day. And God said, “Let the waters
bring forth abundantly the moving creature that hath life,
and fowl that may fly above the earth in the open firmament
of heaven.” ’ Genesis 1:19-20.”
Rose Acre tries to connect its advertising to the
antitrust suit in the following convoluted manner. The
company belongs to United Egg Producers, Inc., the
trade association of egg producers. The association pub-
lishes animal husbandry guidelines, see United Egg
Producers, Animal Husbandry Guidelines for U.S. Egg Laying
Flocks (2010 ed.), www.uepcertified.com/media/pdf/UEP-
Animal-Welfare-Guidelines.pdf (visited Oct. 5, 2011), and
permits producers who comply with its guidelines to
market their eggs as “United Egg Producers Certified.”
Rose Acre does that, and it also advertises its compliance
with the guidelines on its website, www.roseacre.com/
(visited Sept. 26, 2011), where it points out that it sells not
only eggs produced by caged chickens, but also eggs
produced by “free-roaming” chickens—chickens that
are not caged (they have nests in their hen houses but
are free to run around) and subsist on a vegetarian diet.
(See the excerpt from the website at the end of this opin-
ion.)
The website states (along with much else—including
an answer to the question which came first, the chicken
or the egg ) that “eggs from the ‘Free-Roaming’ farmså
cost much more than regular eggs because the eggs must

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4 No. 11-1599
be gathered by hand from the individual hen’s nest.
All of our chickens are kept in a humane and friendly
environment. Plenty of fresh water, fresh air, and fresh
feed are available to each chicken at all times, with plenty
of space for each chicken to move about and socialize
with the other chickens.” www.roseacre.com/eggfaq.html
(visited Oct. 27, 2011). This statement could be thought
intended to throw consumers suspicious of the high price
of eggs laid by free-roaming chickens off the scent, and
make them think the high price the result not of a conspir-
acy among egg producers but instead of the chickens’
healthful and humane living conditions; those conditions
increase labor costs (the eggs must be gathered by
hand) and probably other costs as well, since the
chickens have more space.
But that interpretation is not alleged in any of the 353
paragraphs of the antitrust complaint. The complaint
doesn’t mention Rose Acre’s website, or any other ad-
vertising on defendants’ websites; it doesn’t quote
the passage we quoted from the website about eggs from
“free-roaming” chickens being more costly. It says that
“Rose Acre has participated in and profited from UEP’s
and its [presumably the “its” is “Rose Acre’s”] efforts to
reduce supply and fix prices,” that “Rose Acre has
agreed to the conspiracy by selling UEP certified eggs,”
that “UEP Certified companies [such as Rose Acre] are
permitted to display the UEP Certified logo on their
packaging and to market their eggs as ‘United Egg Pro-
ducers Certified,’ ” and finally that “all UEP Certified
eggs must also be marketed with the phrase ‘Produced
in Compliance with the United Egg Producers’ Animal

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No. 11-1599 5
Husbandry Guidelines.’ ” But the antitrust complaint
complains only about conspiring to fix the price of eggs
from caged chickens, and nowhere does Rose Acre’s
website state that the cost of those eggs is increased by
the measures taken to make the chickens that lay
them healthy and happy—though remember that it does
say that all its chickens have a healthy and friendly envi-
ronment, so perhaps there’s a faint implication that
all Rose Acre’s eggs are more expensive than they
would be if the company did not give more weight to
its chickens’ mobility and social opportunities than to
the cost of their eggs.
But this suit would fail even if one could tease out of
the antitrust complaint a charge that Rose Acre’s ad-
vertising was in furtherance of the alleged antitrust
conspiracy. Coverage of liability for an “offense” defined
as “the use of another’s advertising idea” in one’s own
advertising cannot extend to using another’s advertising
idea with that other’s consent. Suppose Rose Acre pub-
lished on its website the following ad, written by its
director of marketing: “We are socialists, we abhor
profits, and we sell all our eggs at cost.” Although the
ad might be thought in furtherance of the antitrust con-
spiracy, any antitrust liability that it created would not
be “advertising injury” because the company’s marketing
director is not “another.” What difference could it
make if instead the ad had been written by Rose Acre’s
advertising agency?
Antitrust liability, moreover, is a major business risk,
especially for one of the largest companies in a major

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6 No. 11-1599
market. It is hardly likely that parties to an insurance
contract would seek to cover such a serious risk indirectly
through an “advertising injury” provision aimed at
misappropriation and other intellectual-property torts.
It is a standard provision, as so many provisions in
insurance policies are; it was drafted by ISO (Insurance
Services Office, Inc.), a coalition of insurance companies
that among other things drafts standardized insurance
policies for its members and other insurance companies,
see “Company Background,” www.iso.com/About-ISO/
ISO-Services-for-Property-Casualty-Insurance/Company-
Background.html (visited Oct. 27, 2011), including liability
insurance policies. See Hartford Fire Ins. Co. v. California,
509 U.S. 764, 772 (1993). The provision, which has been
approved by Indiana’s insurance commissioner, replaces
an earlier provision that defined advertising injury
as “misappropriation of advertising ideas or style of
doing business.” 4 David A. Gauntlett, New Appleman
on Insurance Law §§ 30.01(4)(a)(ii)(B)(3)-(C) (2011); State
Farm Fire & Casualty Co. v. Steinberg, 393 F.3d 1226, 1231
n. 2 (11th Cir. 2004). Rose Acre points out that “use”
does not carry the pejorative connotation of “misappro-
priation.” True; but the reason for the change of wording
had nothing to do with Rose Acre’s argument. The
reason was that a conflict had developed in the courts
over whether “misappropriation” was used in the policy
in its common law sense, which does not include trade-
mark infringement, or should be read in a broader,
layperson’s sense. Compare State Auto Property & Casualty
Ins. Co. v. Travelers Indemnity Co., 343 F.3d 249, 255-57
(4th Cir. 2003) (North Carolina law), with Advance Watch

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No. 11-1599 7
Co., Ltd. v. Kemper National Ins. Co., 99 F.3d 795, 802-03 (6th
Cir. 1996) (Michigan law); see also United States Golf Ass’n
v. St. Andrews Systems, Data-Max, Inc., 749 F.2d 1028, 1034-
35 (3d Cir. 1984); 2 J. Thomas McCarthy, McCarthy
on Trademarks & Unfair Competition § 10:72, pp. 10-190 to 10-
193. To resolve the conflict, ISO replaced “misappropria-
tion” with “use” and, for good measure, added explicit
coverage for trademark infringement. Gauntlett, supra,
§ (4)(a)(ii)(C).
This history makes clear that coverage is limited to
liability to the “other” whose advertising idea is used
by the insured without the “other’s” permission. That is
what “misappropriation” is; and the question whether
as used in an insurance policy it might embrace trade-
mark infringement does not alter the understanding
that using someone else’s idea with that someone’s
consent is not misappropriation.
Furthermore, the policy does not apply to advertising
injury that is “caused by or at the direction of the
insured with the knowledge that the act [triggering
liability] would violate the rights of another and would
inflict ‘personal and advertising injury’ ” or that “aris[es]
out of a criminal act committed by or at the direction of
any insured.” Participation in a conspiracy to violate
federal antitrust law is both deliberate and criminal, and
is thus excluded from coverage by both provisions.
See Del Monte Fresh Produce, N.A., Inc. v. Transportation
Ins. Co., 500 F.3d 640, 642-44 (7th Cir. 2007); Curtis-Univer-
sal, Inc. v. Sheboygan Emergency Medical Services, Inc., 43
F.3d 1119, 1123 (7th Cir. 1994); Trailer Marine Transport

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8 No. 11-1599
Corp. v. Chicago Ins. Co., 791 F. Supp. 809, 812 (N.D. Cal.
1992).
It is true as noted in the Curtis-Universal opinion that if
an insured asks its liability insurer to defend a suit
that alleges conduct that is potentially covered by
the policy as well as conduct that is not, the insurer
must defend the entire suit. 43 F.3d at 1122; see
also Transamerica Ins. Services v. Kopko, 570 N.E.2d 1283,
1285 (Ind. 1991); Liberty Mutual Ins. Co. v. OSI Industries,
Inc., 831 N.E.2d 192, 200 (Ind. App. 2005); Aearo Corp. v.
American Int’l Specialty Lines Ins. Co., 676 F. Supp. 2d 738,
745 (S.D. Ind. 2009) (Indiana law). But the antitrust
suit for which Rose Acre wants a defense makes
no claim that the policy could be thought to cover.
We note finally that the Eleventh Circuit, in a case
decided a week before the oral argument in this case,
rejected an identical claim by a firm represented by
Rose Acre’s counsel in this case. Trailer Bridge, Inc. v.
Illinois National Ins. Co., 2011 WL 4346579 (11th Cir. Sept.
19, 2011) (per curiam).
The judgment of the district court is
AFFIRMED.

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No. 11-1599 9
Rose Acre Farms—Cage Free
11-1-11

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