EYEBLASTER, INC. v. FEDERAL INS. CO. Case Brief
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Case Brief Summary & Legal Analysis
tl;dr: An insurer denied its duty to defend its client, an online ad company, against a lawsuit alleging the company’s technology damaged a user’s computer. The court found the duty was triggered because the claims arguably fell within the policies’ coverage for ‘loss of use’ and ‘wrongful acts’.
Legal Significance: The case establishes that standard ‘property damage’ clauses in general liability policies can cover the loss of use of a computer, even without physical hardware damage. It also clarifies that a ‘wrongful act’ in an E&O policy can include intentional acts that cause unintended harm.
Case Facts & Court Holding
Key Facts & Case Background
Eyeblaster, Inc., an online advertising company, was sued by a computer user, David Sefton. Sefton alleged that Eyeblaster’s technology, including cookies and JavaScript, infected his computer with spyware, causing it to freeze, lose data, and become inoperable. Eyeblaster tendered the defense of the suit to its insurer, Federal Insurance Co., under two policies. The first, a General Liability (GL) policy, covered “property damage,” defined as either “physical injury to tangible property” or “loss of use of tangible property that is not physically injured.” The policy excluded software and data from the definition of tangible property. The second, an Information and Network Technology Errors or Omissions (E&O) policy, covered “financial injury” resulting from a “wrongful act,” which was defined as an “error, an unintentional omission, or a negligent act.” Federal denied its duty to defend under both policies. It argued the GL policy did not apply because Sefton alleged damage only to software and data, not tangible property, and the E&O policy did not apply because Sefton alleged Eyeblaster acted intentionally, which did not constitute a “wrongful act.” The district court granted summary judgment for Federal.
Court Holding & Legal Precedent
Issue: Does an insurer have a duty to defend its insured against claims that its software caused a computer to become inoperable, where the policies cover ‘loss of use of tangible property’ and financial injury from a ‘wrongful act’?
Yes. The court held that Federal had a duty to defend Eyeblaster Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate
IRAC Legal Analysis
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IRAC (Issue, Rule, Analysis, Conclusion) is the structure professors expect in exam answers. Each LSD.Law brief states the issue, the governing rule with citations, the court's application of that rule, and the conclusion - the same reasoning pattern you will use on exams and in practice.
Legal Issue
Does an insurer have a duty to defend its insured against claims that its software caused a computer to become inoperable, where the policies cover ‘loss of use of tangible property’ and financial injury from a ‘wrongful act’?
Conclusion
This case demonstrates the expansive nature of an insurer's duty to defend Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis no
Legal Rule
Under Minnesota law, an insurer's duty to defend is broader than its Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occ
Legal Analysis
The Eighth Circuit reversed the district court, applying Minnesota's broad standard for Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in volu
Flash-to-Full Case Opinions
Flash Summary
- An insurer has a duty to defend if any claim is