Here's a case that is likely going to make its way to our state's highest court, but we're not quite sure why.
Kobrand Corporation -- a purveyor of alcoholic beverages -- was involved in a dispute with its insurance company, Great Northern Insurance Company, over the insurer's responsibility to defend a series of lawsuits involving Kobrand's marketing practices. (Kobrand was being sued for allegedly encouraging underage drinking.)
Kobrand contended that its insurance policy covered "all damages" from "injury" arising from "selling, serving or furnishing of any alcoholic beverage" and that Great Northern thus had a obligation to defend.
The New York County Supreme Court did not believe that coverage was triggered. And, in its affirmance on appeal, the Appellate Division, First Department, noted as follows:
Since the underlying complaints seek damages based on alleged unlawful marketing of alcohol to minors, the court properly held that advertising and marketing techniques do not constitute "selling, serving or furnishing" of an alcoholic beverage, and thus there is no duty to defend.
A lone dissenter took issue with the majority's analysis and suggested that there is no true difference between "advertising" and "selling" a product. But that can't be right.
The way we learned it in law school, an advertisement is an "offer" to sell a product or service. It is not an actual sale. (After all, you can spend a fortune on promotion, but if people ain't buying your product or service, it could all be for naught.) To characterize "advertising" as "sales" would expand the range of parties that would be subject to liability for a product's promotion and would needlessly stifle the ability of businesses to bring products to market.
Would you drink to that?
For a copy of the Appellate Division's decision, please use this link: Great Northern Insurance Co. v Kobrand Corp.