United National Insurance v. Spectrum Worldwide, Inc.

Spectrum Worldwide, Inc. (“Spectrum Worldwide”), Celebrity Products Direct, Inc. and Celebrity Products, Inc. (collectively “Celebrity”), Spectrum Worldwide’s president Murray Moss (“Moss”), CEO Lisa Tremain (“Tremain”), and CFO Howard Schwartz (“Schwartz”) (all of the defendants hereinafter referred to as “Spectrum”) asks this court to determine whether the “first publication” exclusion found in the United National Insurance Company’s (“United”) excess insurance policy applies to infringement claims. We hold that it does. Additionally, because Spectrum presents us with a legal position that is clearly inconsistent with the position it took and benefitted from in previous litigation, judicial estoppel prevents us from allowing Spectrum to argue that it first published infringing material after purchasing its excess insurance coverage. Further, the district court did not abuse its discretion when it held Schwartz and Tremain jointly and severally liable for repayment of United’s contribution.

I

In December 1997, Sunset Health Products, Inc. (“Sunset”) hired Spectrum to advertise and distribute the “Hollywood 48-Hour Miracle Diet” drink (“Miracle Diet”). Soon thereafter, Tremain…