In Case over Lead in Heinz Baby Food, Jury Denies Insurer Right to Revoke Policy

Insurer Starr Surplus Lines and H.J. Heinz Co. are suing each other after Chinese regulatory authorities found high levels of lead in Heinz’s baby food sold there. Starr, who has a $25 million insurance policy with Heinz, refused to pay for the damages; the insurer argued that the policy was void because Heinz lied on its insurance application. Heinz filed a suit against the insurer in May, and Starr filed a rescission counterclaim. Law360 reports that a Pennsylvania federal jury found that Heinz lied on its application by failing to mention previous food contamination problems, but found that Starr cannot rescind its $25 million insurance policy.

Heinz says the source of the lead in the tainted high-protein dry baby cereal is soy powders supplied by Qingdao Longhi Food Co. Ltd. In its lawsuit, the company accuses Starr of breaching its $25 million-per-occurrence policy by failing to pay for damages, including business interruption costs that could reach an estimated $30 million.

Starr alleges in its counterclaim for rescission that the policy is null because Heinz failed to list prior recalls, such as Chinese baby food contaminated with nitrate in 2014. The court proceeded with Starr’s counterclaim first, Law360 reports. The company asked the judge to dismiss allegations that it agreed to sell the insurance policy and accept premiums despite knowing about previous contamination incidents, which is grounds to void the policy. The court has not ruled on this motion yet.

from Parker Waichman http://www.yourlawyer.com/blog/in-case-over-lead-in-heinz-baby-food-jury-denies-insurer-right-to-revoke-policy/