Foster Farms Asks Insurers to Cover Antitrust Lawsuit Expenses

Foster Farms, LLC and Foster Poultry Farms (Foster) are suing Everest National Insurance Company (Everest) and demanding a trial by jury over allegations that the insurance company breached the insurance policy contract they held with Foster. After signing an insurance policy with Everest, Foster was brought into a series of antitrust lawsuits involving the turkey market and Everest subsequently denied coverage. Foster claimed that this was a breach of the agreement between the two companies.

Foster, according to the complaint, is a family-owned and operated company that makes food products that are conventional, organic, and antibiotic-free. They assert that the ongoing litigation falls within the antitrust coverage of their insurer, Everest. In contrast, Everest maintains a position that they are under no responsibility to give coverage due to the “Specific Matter Exclusion.”

The insurance policy sold to Foster by Everest is a liability insurance policy with an antitrust coverage endorsement. The limit on the antitrust coverage is $5 million. The plaintiff alleged that Everest deleted certain antitrust exclusions from the initial policy to make it clear that antitrust coverage was provided. Foster claimed to have paid “hundreds of thousands of dollars in premiums to Everest and otherwise complied with all terms and conditions of the [insurance] policy.”

The insurance policy between the two reportedly stated that Everest would insure “all Loss for which the Company becomes legally obligated to pay on account of any Anti-Trust Claim first made against the Company during the Policy Period…” Loss is further defined in the contract and is a definition which the plaintiff argues fits the current antitrust suit in dispute.

The lawsuits at issue was filed during the insurance policy period, and Foster asserts that they provided “timely notice” to Everest regarding the claims. However, they describe that Everest has since “denied any coverage obligation.” Because Everest considers the Turkey-Market lawsuits to be related to previous litigation involving Broiler Chicken which took place before the insurance policy began, they conclude that this antitrust case is excluded from coverage under the Specific Matter Exclusion.

Foster said that this denial is in direct violation of the insurance contract, and that in denying coverage Everest is ignoring “numerous differences between the Turkey-Market lawsuits and the Broiler Chicken Litigation.” They also contended that the cases involve different defendants, conduct, markets, and products, causing an Illinois judge to ultimately agree that the antitrust suits were “entirely distinct.”

The plaintiffs argued the insurance policy as “a valid and enforceable contract,” and they are seeking a “declaration that the Policy obligates Everest to fully fund Foster’s defense for the Turkey-Market Lawsuits and that the Specific Matter Exclusion does not apply.” They are also demanding a trial by jury and citing breach of contract. The plaintiffs are represented by Lowenstein Sandler LLP.