MEMORANDUM OPINION & ORDER Plaintiff Tzumi Innovations LLC (“Tzumi”) brings this insurance action against Defendant Twin City Fire Insurance Company (“Twin City”) with respect to Twin City’s alleged duty to defend and indemnify Tzumi in an underlying consumer protection action. At issue is whether the underlying action can be reasonably construed to allege a claim of commercial disparagement, which would bring it within the scope of the insurance policy’s coverage. Pending before the Court is Tzumi’s motion for partial summary judgment and Twin City’s motion to dismiss for failure to state a claim. For the reasons that follow, Twin City’s motion to dismiss is granted, and Tzumi’s motion for partial summary judgment is denied. BACKGROUND The relevant facts in this action are undisputed. Tzumi is the named insured under a commercial general liability policy issued by Twin City (the “Policy”), effective from June 14, 2020 to June 14, 2021. The Policy provides, with respect to business liability coverage: We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury,” “property damage” or “personal and advertising injury” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages, even if the allegations of the “suit” are groundless, false or fraudulent. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury,” “property damage” or “personal and advertising injury” to which this insurance does not apply…. First Am. Compl., Ex. 1 (Business Liability Coverage Form §A(1)(a)). The Policy defines the term “personal and advertising injury,” in relevant part, as injury arising out of “[o]ral, written, or electronic publication of material that…disparages a person’s or organization’s goods, products or services.” Id. (Business Liability Coverage Form §G(17)(d)). The Policy also includes the following exclusions: “Personal and advertising injury”: (1) Arising out of oral, written, electronic or any other manner of publication of material, if done by or at the direction of the insured with knowledge of its falsity [the "Knowledge of Falsity Exclusion"]; …. (5) Arising out of the failure of goods, products or services to conform with any statement of quality or performance made in your “advertisement” or on “your web site” [the "Non-Conformance Exclusion"]. Id. (Business Liability Coverage Form §B(1)(p)(1), (p)(5), and Cyberflex Coverage Endorsement §A(1)(5)). On July 12, 2022, Kari Proskin filed a nationwide consumer class action against Tzumi in the U.S. District Court for the Southern District of New York (the “Proskin Action”). See First Am. Compl., Ex. 3. Proskin later filed an amended complaint, along with additional named plaintiffs Iris Boling and John Gordon, on October 12, 2022 (the “Proskin Complaint”). Id., Ex. 2. The Proskin Complaint alleges, in relevant part, that during the COVID-19 pandemic, Tzumi “ma[de] false and misleading claims on the labels of” three of its products — Wipe Out! Wipes, Wipe Out! Multi-Surface Wipes, and Wipe Out! Multi-Surface Decontaminant Spray (the “Products”) — “that ma[de] the purchaser believe they were approved as safe and effective for use as an antimicrobial agent on surfaces in homes,” when in fact Tzumi had not received such approval from the Environmental Protection Agency (the “EPA”). Id.
2, 5. These allegedly deceptive labels included statements such as “Use it Anytime, Anywhere” and “KILLS 99.9 percent OF GERMS”; “pictures of surfaces such as kitchen appliances and bathroom fixtures”; and “instructions to ‘spray directly on the surface.’” Id.
