New Ninth Circuit decision on insurance coverage for UCL and CLRA claims: Sony Computer Entertainment America, Inc. v. American Home Assurance Co.

In Sony Computer Entertainment America, Inc. v. American Home Assurance Co., ___ F.3d ___ (9th Cir. July 15, 2008), the Ninth Circuit held that the defendant's "professional liability" and "general liability" policies did not obligate the insurers to indemnify or defend against a UCL and CLRA class action alleging:

that the PlayStation 2s suffered from an “inherent” or “fundamental” design defect that rendered them unable to play DVDs and certain game discs. The complaints set forth causes of action for breach of express and implied warranties, fraud, negligent misrepresentation, bad faith, violations of the Consumer Legal Remedies Act (Cal. Civ. Code § 1750 et seq.), false advertising (Cal. Bus. & Prof. Code § 17500 et seq.), and unfair business practices (Cal. Bus. & Prof. Code § 17200 et seq.). The assertions in the false advertising and negligent misrepresentation claims primarily revolved around Sony’s statements in press releases, advertising, product packaging, and instruction manuals that the PlayStation 2 would function as a DVD player as well as a game player.

Slip op. at 8756.