Appeals court agrees insurer need not defend portable charger class action

A First Financial Insurance Co. unit is not obligated to defend an electronics accessory maker against a consumer class action over alleged misrepresentations of the capacity of some of its portable chargers, the 2nd U.S. Circuit Court of Appeals said.

In Wednesday’s ruling in Tzumi Electronics LLC v. The Burlington Insurance Co., a three-judge panel said the underlying class action did not constitute a personal or advertising injury because it does not allege disparagement against any of the company’s competitors.

The appellate panel was not persuaded that the language in the settlement agreement in the underlying case, which included the term “disparagement,” was enough to trigger coverage. The court agreed with U.S. District Judge Katherine Polk Failla of the Southern District of New York that the argument was only Tzumi’s interpretation of the allegations.

New York-based Tzumi purchased a commercial general liability policy from Burlington that was in effect from 2017 to 2018. In May 2020, two consumers filed a class action against Tzumi, saying it misrepresented the capacity of its “Pocket Juice Portable Charger.” The lawsuit settled for a confidential amount in August 2022, court records show.

Tzumi told Burlington in August 2019 that it had received notice of the prospective class action, but the insurer refused to provide a defense, prompting Tzumi to sue for breach of contract. Tzumi also sought a court order regarding Burlington’s duty to pay for defense costs.

The parties each moved for summary judgment. The trial judge agreed with Burlington that it had no defense obligations because the class action did not allege that Tzumi disparaged its competitors when making representations about its portable chargers. Tzumi appealed.

Representatives for the parties did not respond to requests for comment.