The Cincinnati Insurance Company v. KT Health Holdings, LLC et al
Judge F. Dennis Saylor, IV: ORDER entered. MEMORANDUM AND ORDER on Plaintiff's Motion for Partial Summary Judgment (Docket No. 34) and Motions to Strike (Docket No. 53, 54). (Zaleski, Christine)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
THE CINCINNATI INSURANCE
KT HEALTH HOLDINGS, LLC, and KT
Civil Action No.
MEMORANDUM AND ORDER ON PLAINTIFF’S MOTION FOR PARTIAL
SUMMARY JUDGMENT AND MOTIONS TO STRIKE
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
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.
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).
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-13696GAO (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
The SAC states that the “claims asserted herein for physical injury to Plaintiff are not asserted as class
claims, but only on Plaintiff’s own behalf.” (Id. ¶ 2 n.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).
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).
The Insurance-Coverage Dispute
On July 14, 2016, defendants mailed Cincinnati a letter to tender a claim under the policy
concerning the class action. (Pl. SMF Ex. D). There is some dispute as to whether defendants
had already notified their local agent of the claim, and whether that notification constituted a
proper notification of Cincinnati. (Def. SMF ¶¶ 45–49). In any event, Cincinnati is now
providing a full defense to KTH and KTHH in the underlying action, subject to a reservation of
rights, on the basis that the underlying action asserts a single claim for bodily injury: the skin
irritation claim brought by Vuckovic individually. (Pl. Mem. at 2 n.1; Def. SMF ¶ 50; Compl. ¶
5). It contends that the class claims do not seek damages for bodily injury, and therefore are
outside the scope of coverage of the policy.
On August 24, 2016, Cincinnati filed the complaint in this action seeking a declaratory
judgment that the policy does not cover the class claims in the underlying action, as well as other
relief not relevant to the present motion. (Compl. at 14). On December 5, 2016, it amended the
On January 25, 2017, Cincinnati moved for partial summary judgment concerning the
policy’s coverage for the class claims asserted in the underlying action. On March 8, 2017, it
filed two motions to strike affidavits submitted by defendants in opposition to the motion for
partial summary judgment.
Motion for Summary Judgment
Standard of Review
The role of summary judgment is to “pierce the pleadings and to assess the proof in order
to see whether there is a genuine need for trial.” Mesnick v. General Elec. Co., 950 F.2d 816,
822 (1st Cir. 1991) (quoting Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir. 1990)).
Summary judgment is appropriate when the moving party shows that “there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). A genuine issue is “one that must be decided at trial because the evidence,
viewed in the light most flattering to the nonmovant . . . would permit a rational fact finder to
resolve the issue in favor of either party.” Medina-Munoz v. R.J. Reynolds Tobacco Co., 896
F.2d 5, 8 (1st Cir. 1990) (citation omitted). In evaluating a summary judgment motion, the court
indulges all reasonable inferences in favor of the nonmoving party. See O'Connor v. Steeves,
994 F.2d 905, 907 (1st Cir. 1993). When “a properly supported motion for summary judgment is
made, the adverse party must set forth specific facts showing that there is a genuine issue for
trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quotations omitted). The nonmoving party may not simply “rest upon mere allegation or denials of his pleading,” but instead
must “present affirmative evidence.” Id. at 256–57.
Principles of Contract Interpretation
Under Massachusetts and Utah law, an insurance policy is ordinarily construed according
to general principles of contract interpretation. See Brazas Sporting Arms, Inc. v. American
Empire Surplus Lines Ins. Co., 220 F.3d 1, 4 (1st Cir. 2000); Utah Farm Bureau Ins. Co. v.
Crook, 980 P.2d 685, 686 (Utah 1999).2 The court begins with “the actual language of the
polic[y], given its plain and ordinary meaning.” Brazas Sporting Arms, Inc., 220 F.3d at 4; see
also Utah Farm Bureau Ins. Co., 980 P.2d at 686 (“Courts interpret words in insurance policies
according to their usually accepted meanings and in light of the insurance policy as a whole.”).
This case presents a potential choice-of-law issue that need not be resolved. Sitting in diversity, a federal
court must apply the choice-of-law rule of the forum state (here, Massachusetts). See Klaxon Co. v. Stentor Electric
Manufacturing Co., 313 U.S. 487, 496 (1941). In insurance coverage disputes, Massachusetts courts apply a
“functional choice-of-law approach” guided by the Restatement (Second) of Conflict of Laws. Clarendon Nat. Ins.
Co. v. Arbella Mut. Ins. Co., 60 Mass. App. Ct. 492, 495–96 (2004). Under that approach, courts consider “the
interests of the parties, the States involved, and the interstate system as a whole.” Bushkin Assocs., Inc. v. Raytheon
Co., 393 Mass. 622, 631 (1985). Here, the policy was issued in Utah to a Utah insured, but the underlying action is
pending in Massachusetts and asserts claims under Massachusetts law. See Pl. Mem. at 8 n.3. The parties
apparently agree that the choice-of-law question is not outcome-determinative in this case, and have cited to both
Massachusetts and Utah law in arguing this motion. Rather than resolve the choice-of-law question, the Court will
adopt the parties’ approach and apply both Utah and Massachusetts law to the resolution of the present motion.
In interpreting a policy, the court must consider “what an objectively reasonable insured,
reading the relevant policy language, would expect to be covered.” Brazas Sporting Arms, 220
F.3d at 4 (quoting GRE Ins. Grp. v. Metro. Boston Hous. P'ship, Inc., 61 F.3d 79, 81 (1st Cir.
1995)); see also LDS Hosp., a Div. of Intermountain Health Care, Inc. v. Capitol Life Ins. Co.,
765 P.2d 857, 858–59 (Utah 1988) (finding that the ambiguity of a contract should be
determined according to whether the meaning would “be plain to a person of ordinary
intelligence and understanding”). Generally, ambiguities in policy language should be resolved
in favor of the insured. See City Fuel Corp. v. Nat'l Fire Ins. Co. of Hartford, 446 Mass. 638,
640 (Mass. 2006) (“Doubts created by any ambiguous words or provisions are to be resolved
against the insurer.”); Utah Farm Bureau, 980 P.2d at 686 (“Ambiguities are construed against
the drafter—the insurance company—and in favor of coverage.”).
Under both Utah and Massachusetts law, the insured bears the burden to prove that
coverage exists. See B & T Masonry Const. Co. Inc. v. Public Service Mut. Ins. Co., 382 F.3d
36, 39 (1st Cir. 2004) (citing Highlands Ins. Co. v. Aerovox Inc., 676 N.E.2d 801, 804 (Mass.
1997)); Young v. Fire Ins. Exch., 182 P.3d 911, 919 (Utah App. Ct. 2015).
Cincinnati has moved for partial summary judgment on its claim seeking a declaratory
judgment that that the policy does not cover the class claims in the underlying action because
those claims do not allege “bodily injury.” Defendants contend that the underlying action
implicates bodily injury, because the advertising claims at issue concern KT Tape’s painrelieving and injury-preventing qualities.
The policy provides coverage only for “sums that the insured becomes legally obligated
to pay as damages because of ‘bodily injury’ or ‘property damage . . . .’” Pl. SMF Ex. E § I.1.a.
The policy defines “bodily injury” as “bodily injury, sickness or disease sustained by a person,
including death resulting from any of these.” Id. § V.4.
The complaint does not allege direct harm to the class plaintiffs “because of bodily
injury.” In essence, the class claims in the SAC allege that defendants made false and
misleading statements in advertising KT Tape, and that consumers paid a premium for the Tape
because of those statements. The only allegations of direct harm to the class members in the
SAC are contained in two paragraphs:
Plaintiff and the other members of the proposed Class have paid a price premium
for KT Tape over traditional athletic tape. [Defendants] ha[ve] used deceptive
claims regarding the purported benefits of KT tape to charge a premium
approximately ten times the price of traditional athletic tape. . . .
[Defendants’] false, deceptive and misleading representations about the painrelieving and injury-treating properties of KT Tape were and are material; there
would be no reason for a consumer to purchase a KT Tape Product and pay a
premium price for it (over and above the price of traditional athletic tape) if not for
the claims and representations about KT Tape’s ability to relieve pain and treat a
variety of injuries.
SAC ¶¶ 29–30. Those allegations focus on the economic harm of having paid a price premium
for something that did not work as advertised. The SAC is devoid of any allegation that class
members, other than Vuckovic, actually experienced pain or physical injury while wearing KT
Tape. To the contrary, the SAC states, “[t]he claims asserted herein for physical injury to
[Vuckovic] are not asserted as class claims.” SAC ¶ 2 n.1.
The causes of action brought by the class provide further support for the conclusion that
the class allegations seek only economic remedies to redress economic harms. The SAC asserts
two class counts for money damages: (1) unfair and deceptive practices in violation of Mass.
Gen. Laws ch. 93A, § 2 and (2) unjust enrichment.3 Under both counts, the essential harm that
The SAC also alleges a claim for untrue and misleading advertising in violation of Mass. Gen. Laws ch.
266, § 91. That statute authorizes only injunctive relief, not money damages. Mass. Gen. Laws ch. 266, § 91.
must be shown is economic in nature.
First, courts have found that chapter 93A claims asserting similar harms to those at issue
here alleged economic injury. For example, in Kwaak v. Pfizer, 71 Mass. App. Ct. 293, 294
(2008), the plaintiff in a proposed class action alleged a chapter 93A violation against the
manufacturer of Listerine mouthwash, contending that the manufacturer claimed the mouthwash
was “as effective as floss” but lacked evidence to support that claim. The plaintiff did not seek
damages based on any injury to health, but instead based on the fact that Listerine had “an actual
value at the time of purchase less than the value paid for the product.” Id. at 296. The court
characterized that claim as alleging “economic injury” under chapter 93A. Id. at 299.
Similarly, in Bezdek v. Vibram USA Inc., 79 F. Supp. 3d 324, 338 (D. Mass. 2015), aff'd,
809 F.3d 78 (1st Cir. 2015), the plaintiff in a proposed class action brought a 93A claim against
the manufacturer of “Vibram FiveFingers footwear,” contending that it made “representations of
health benefits in advertising and marketing th[at] footwear, that these health benefits were not
supported by scientific evidence, that [it] knew that the scientific evidence did not support such
benefits, and that the advertising and marketing was false and deceptive.” The court found that
while a plaintiff may recover under chapter 93A for both economic and non-economic losses, the
claim at issue was “one of economic loss: that the plaintiffs would not have purchased the
footwear had they known it would not provide the advertised health benefits, or that the footwear
was not worth what the plaintiffs paid for it.” Id. at 338, 344 (citing Ruiz v. Bally Total Fitness
Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007)).
Second, a claim for unjust enrichment is based in contract law and is characteristically
economic in nature. The remedy for a claim of unjust enrichment is restitution of the benefit
conferred; here, the purchase price. See Metro. Life Ins. Co. v. Cotter, 464 Mass. 623, 644
(2013). Thus, both class causes of action for damages seek economic relief, as opposed to
compensation for bodily injury.
Despite the lack of any direct class allegation of bodily injury caused by KT Tape and the
essentially economic nature of the remedies sought, defendants contend that bodily injury is
implicated in the SAC by inference. They argue that the underlying action seeks damages
arising out of allegedly false claims in defendants’ marketing materials suggesting that users
could avoid injury and pain by using KT Tape during exercise. If these statements are false, they
argue, the implication is that users experienced injuries and pain while using KT Tape, thereby
sustaining bodily injury. However, courts in other jurisdictions have held that class action
lawsuits seeking compensation for the economic injury of having paid premium prices for
products that do not perform as advertised do not allege damages “because of ‘bodily injury’”
under general liability policies. See, e.g., HPF, L.L.C. v. Gen. Star Indem. Co., 338 Ill. App. 3d
912, 918 (2003).4
In HPF, LLC v. General Star Indemnity Company, the court considered an insured’s
claim for coverage under a policy that contained language that is identical to the language at
issue here. See id. at 916. The insured herbal supplement manufacturer was a defendant in a
class action alleging that it made misleading claims in marketing materials that suggested that a
supplement had “been proven safe and effective for the treatment of obesity.” Id. at 914. As
here, the class plaintiffs in the underlying action sought disgorgement of profits and requested
that the court order restitution to consumers who had purchased the product, as well as other
See also Hypoguard USA, Inc. v. St. Paul Fire & Marine Ins. Co., 2007 WL 4236427, at *4 (Minn. Ct.
App. Dec. 4, 2007) (finding no coverage under general liability policy covering for claims “for bodily injury” where
complaint in an underlying class action asserted that but for the insured’s concealment of certain facts, members of
the class “would not have purchased [the insured’s] blood glucose monitors or paid as much for the product as they
did,” because the injury alleged is “the purchase price of [the insured’s] products and is neither a bodily injury nor a
personal injury within the meaning of the policy”).
equitable relief. See id. at 914–15. The court found that “[d]espite [the insured’s]
characterization that the [class action] complaint generally alleges that [the supplement was] not
safe,” there was not a “single allegation that [the insured’s] herbal products caused bodily injury
or even that they may cause bodily injury.” Id. at 917. Instead, the court found that “the essence
of the . . . complaint is that [the insured] misrepresented that its herbal products were proven safe
and effective for the treatment of obesity when, in fact, those products had not been so
Here, the SAC asserts that “numerous recently published, peer-reviewed scholarly
articles reveal the ineffectiveness and useless nature of [KT] tape,” and that the purported
health benefits are “not supported by scientific evidence, and [are] not accepted by the medical
community.” SAC ¶¶ 22–23. As in HPF, the essence of the class allegations is that defendants’
marketing claims are false—not because class members have actually suffered bodily injury, but
because they have not been proved valid by the available scientific evidence.
In sum, the class allegations in the SAC do not allege a claim for bodily injury and
therefore do not seek “damages because of ‘bodily injury.’” Pl. SMF, Ex. E § I.1.a.
Accordingly, there is no coverage under the policy for the claims asserted in the class action.
Plaintiff’s motion for partial summary judgment will therefore be granted.
Motions to Strike
Plaintiff has filed two motions to strike portions of declarations submitted by defendants
in opposition to the motion for partial summary judgment. (Docket No. 53, 54). The motions
concern portions of the declarations of Ted Forcum and Peter Delahunt. Plaintiff contends that
those declarations present information that is irrelevant to the present motion. While the Court
did not rely on those declarations in ruling on the motion for partial summary judgment, the
information contained therein is not so irrelevant as to be struck on that basis alone.
Accordingly, plaintiff’s motions to strike the Forcum and Delahunt declarations will be denied.
For the foregoing reasons, plaintiff’s motion for partial summary judgment is
GRANTED. (Docket No. 34). Plaintiff’s motions to strike the Forcum and Delahunt
declarations are DENIED. (Docket No. 53, 54).
/s/ F. Dennis Saylor
F. Dennis Saylor IV
United States District Judge
Dated: March 27, 2017
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