National Casualty Co. v. Launch Media, Inc.

220 F. App'x 527

Opinions

MEMORANDUM

*

Launch Media, Inc. and Yahoo! Inc., (collectively Launch Media) appeal the district court’s summary judgment in favor of National Casualty Company. The district court granted National declaratory relief, holding that the underlying copyright infringement suit, Arista Records v. Launch Media, constituted one loss; therefore, National had met its duty to defend by tendering defense under policy LS 012344, which covered the period from July 28, 1999 to July 28, 2000, and it had no duty to defend under policy LS 012344A, which covered the period from July 28, 2000 to July 28, 2001. We affirm.

Although the duty to defend in California is broad, Montrose Chem. Corp. v. Superior Court, 6 Cal.4th 287, 299, 24 Cal.Rptr.2d 467, 861 P.2d 1153 (1993), we agree with the district court that there is no possibility of coverage under National’s second policy. The underlying lawsuit tendered for coverage is the Arista Records action, which alleges the unlawful systematic transmission of copyrighted songs. Launch Media’s argument hinges on the transmittal of songs for the first time during the LS 0121344A policy period, but this is not a new loss because the alleged copyright infringement involves the same subject matter (webcasting without a license) and the same class of persons (those complaining in Arista Records')1 that triggered coverage and that National defended under the LS 012344 policy until those policy limits were exhausted.

This interpretation does not render coverage under LS 012344A illusory, as Launch Media maintains, because infringement claims not stemming from the Arista Records action, as well other forms of media liability such as claims arising out of libel, slander, and defamation, remain potentially covered by the policy. Nor is it inconsistent with the reasonable expectations of the insured, for otherwise Launch Media would have had to pay hundreds or thousands of SIRs in order to trigger coverage. Cf. EOTT Energy Corp. v. Storebrand Int’l Ins. Co., 45 Cal.App.4th 565, 575-78, 52 Cal.Rptr.2d 894 (1996) (holding that the insured would expect 653 separate thefts to be considered one loss, where they were related to the same cause and a $100,000 deductible applied to each “occurrence”). Launch Media’s argument that the number of SIRs should be limited to eleven — based on the number of record labels whose copyrights were infringed — is unavailing. It does not comport with the actual policy language and it does not represent Launch Media’s objectively reasonable expectations as evidenced by its initial payment of one SIR for coverage under the LS 012344 policy.

AFFIRMED.

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R. 36-3.

1

. J Records, which is not a party to any suit, was acquired by BMG, who was a party to the Arista Records action.