In Foster Farms, LLC v. Everest Nat'l Ins. Co., No. 3:21-cv-04356-WHO, 2023 U.S. Dist. LEXIS 71397 (N.D. Cal. Apr. 24, 2023), the court closely examined the meaning of “interrelated wrongful act” in the context of insurance coverage for antitrust litigation. The underlying facts featured several cases accusing Foster Farms of anticompetitive practices in the sale of its poultry products. The court grouped these cases into two categories—one for chicken (the “Chicken Suits”) and one for turkey (the “Turkey Suits”).
The Chicken Suits alleged that executives in the industry would regularly meet at trade association meetings and utilize data benchmarking reports prepared by Agri Stats, an analytics service, “to share confidential and proprietary information to reduce competition, constrain supply, and create pretext for industry-wide production cuts.” Id. at *6. The Turkey Suits’ allegations were similar, asserting that “turkey producers ‘exercise[d] a remarkable level of industry-wide restraint in keeping the growth of turkey supply in check’ and that the defendant-producers ‘acted in a concerted way to decrease turkey supply.’ . . . They also assert that the defendants engaged in coordinated production cuts in 2009, 2013, 2014, and 2015.” Id. at *12.
Antitrust suits may be covered where they allege claims that also support business tort liability, but directors and officers (D&O) policies (the type at issue here) usually contain an exclusion for antitrust claims unless an individual officer or director is named as a defendant. Foster Farms, however, specifically sought a D&O policy that would provide antitrust coverage because of litigation trends in the food industry. Since the Chicken Suits were already pending at the time Foster Farms sought antitrust coverage, the policy included a specific matter exclusion that precluded any potential coverage for the Chicken Suits. The Everest case turned on whether the Turkey Suits, which commenced after the policy inception, “alleg[ed], [were] based upon, ar[ose] out of, or [were] attributable to or in any way related directly or indirectly, in whole or in part, to an ‘Interrelated Wrongful Act.’” The policy defined “interrelated wrongful act” as “(i) any fact, circumstance, act or omission alleged in any ‘Event(s)’ and/or (ii) any ‘Wrongful Act’ which is the same as, is similar or related to, or a repetition of, any ‘Wrongful Act’ alleged in any ‘Event(s).’”