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The Cincinnati Insurance Co. v. KT Health Holdings, LLC

United States District Court, D. Massachusetts

March 27, 2017

THE CINCINNATI INSURANCE COMPANY, Plaintiff,
v.
KT HEALTH HOLDINGS, LLC, and KT HEALTH, LLC, Defendants.

          MEMORANDUM AND ORDER ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND MOTIONS TO STRIKE

          F. Dennis Saylor IV United States District Judge

         This is a dispute concerning the scope of an insurance policy. Defendants KT Health Holdings, LLC, and KT Health, LLC, have a general liability insurance policy issued by plaintiff, the Cincinnati Insurance Company. Defendants manufacture and sell an athletic tape called KT Tape that is advertised to relieve pain and prevent injury during exercise. They are now defendants in a class action lawsuit alleging that they made false and misleading statements in advertising concerning the efficacy of KT Tape. That lawsuit also alleges a single count for personal injury arising out of skin irritation caused by KT Tape on behalf of the named plaintiff alone.

         Plaintiff has moved for partial summary judgment seeking a declaratory judgment that the policy does not cover the class claims asserted in the underlying action. Plaintiff has also filed two motions to strike portions of declarations submitted by defendants in opposition to that motion. For the following reasons, plaintiff's motion for partial summary judgment will be granted, and the motions to strike will be denied.

         I. Background

         Unless otherwise noted, the facts set forth below are undisputed.

         Defendants KT Health Holdings, LLC (“KTHH”) and KT Health, LLC (“KTH”) manufacture and sell a colorful elastic tape called KT Tape for use in sports and fitness activities. (Def. SMF Ex. 1, ¶¶ 4-8). Defendants advertise KT Tape as way to prevent injury and alleviate pain during exercise. (Def. SMF ¶¶ 40-43).

         A. The Underlying Action

         On October 30, 2015, Alexander Vuckovic filed a class action lawsuit against KTHH, KTH, and KT Holdings, LLC. (Compl., Vuckovic v. KT Health Holdings, et al., 15-cv-13696-GAO (Oct. 30, 2015)). In January 2016, Vuckovic amended the complaint to eliminate KT Holdings, LLC as a defendant. (First Amended Complaint, Pl. SMF Ex. C). The first amended complaint alleged three counts under state law for unjust enrichment, untrue and misleading advertising in violation of Mass. Gen. Laws ch. 266, § 91, and unfair and deceptive practices in violation of Mass. Gen. Laws ch. 93A, § 2. (Id. ¶¶ 57-74). It proposes to bring claims on behalf of all persons who purchased KT Tape in Massachusetts since the fall of 2011. (Id. ¶ 48). It did not assert any personal injury claims.

         On July 7, 2016, Vuckovic filed a second amended complaint (“SAC”) adding a single claim for personal injury arising out of redness and irritation caused by affixing KT Tape to his skin. (SAC, Pl. SMF Ex. A). That new claim applies to Vuckovic alone, while the original three counts are alleged on behalf of the class. (Id. ¶¶ 61-88).[1]

         In substance, the class claims allege that KT Tape does not work as advertised. The SAC alleges that defendants' statements in advertisements, use of photographs of Olympic athletes wearing KT Tape, and other marketing practices create the impression that KT Tape relieves pain and prevents injury during exercise. (Id. ¶¶ 3-18). It further alleges that those claims are “not supported by scientific evidence, and [are] not accepted by the medical community.” (Id. ¶ 22). It states that defendants' “creative and aggressive marketing efforts are the only reason that [defendants] ha[ve] been able to sell so much of this product at premium prices” and that “consumers, including Plaintiff and other Class members, have paid a premium price for a product that does not perform as claimed and advertised.” (Id. ¶¶ 7, 27).

         B. The Insurance Policy

         The Cincinnati Insurance Company issued a commercial general liability insurance policy, EPP 0184626, to Lumos Inc. doing business as KT Tape for the period from March 1, 2013 - March 1, 2016. (Policy, Pl. SMF Ex. E). Defendants were added as insureds to the policy by endorsement. (Id.).

         The policy provides, among other things, that Cincinnati will pay

those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply . . . .

(Pl. SMF Ex. E § I.1.a). It defines “bodily injury” as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these.” (Id. § V.4).

         C. The ...


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