address why there is coverage under the a i g a slick multimedia insurance policy then why there is coverage under the american home general liability policy and i will attempt to reserve a few minutes for closing as to ai g a slick there are two primary issues first the construction of the phrase negligent publication and whether that phrase includes the allegations in the cam and cain underlying lawsuits if sony is correct that negligent publication includes the allegations including kane the court must reversed and reman meaning because there doesn't appear to be any other accepted meaning we're going to reargue you plain meaning because we believe it's the correct meaning you are absolutely right that there are no judicial uniform judicial constructions the term does not have a special or technical meaning the phrase is not ambiguous nobody claims any of those things and under the rules of construction where the the words have a way to reflect the common in ordinary and popular sense in which words are used and under the rules of construction that plain meaning must apply here there's no ambiguity and there is no special or technical meaning in fact the district court's narrow construction of the term which was that category of court claims typified by defamation or misappropriation cannot be the meaning of negligent publication  this policy for several reasons first defamation and misappropriation are separately covered under different provisions of the policy explicitly  see that simply cannot be the controlling definition and your honour's the court below arrived at that narrow construction ignoring not ignoring but not applying the plain meaning through context and circumstances contacts in circumstances come into play or honors where there's an ambiguity or a special technical meaning which nobody contends here that there is and if you examine the district court's use of context and circumstances it simply does not hold up as defining the phrase negligent publication it's based in significant part on inadmissible testimony from a broker allegedly undisputed testimony where the broker and affiliates said we didn't think there was coverage or broker later changed his mind and said you know after looking at this and talking with people i think there is cover that nothing should not have been used at all to construe negligent publication under the rules of construction but even if you go there the district court erred by so applying it a slick's proposed construction of negligent publication also is inconsistent with uniform judicial construction of negligent publication all of the arrows point back to the plain meaning and that is what s e e s admits must govern alleging false advertising or misrepresentation and advertising must be enforced despite the fact that it appears in an exclusion is that ca is correct  duty to defend and remand for further proceedings counsel looking at exclusion p d yes your honor the the that that so many faces alleged false advertising or misrepresentation advertising it as i understand is that correct correct ok now so let's assume that you are covered under the general coverage provision because these are negligent publications yesterday exclusion p then steps from that coverage false advertising or misrepresentation so sone then would have no coverage for claims of false advertising or misrepresentation however a slick would have a duty to defend sony in those actions so the duty to defend would be separate and as a result of exclusion p d even though there would be any coverage for any for any recovery not exactly your honor if i may this policy the only place the duty to defend appears in the entire is like policy is an exclusion p that's part of the point here there is a duty to reimburse some defense fees and costs which is different under the rules from a traditional duty to defend the exclusion p presuming he is correct and negligent publication includes false advertising which we do believe is the case defense advertising and misrepresentation in advertising is excluded by exclusion p except that there is a duty to defend suits in which those claims are alleged the claimants in coming kane allege misrepresentations in advertising by a cea and misrepresentation outside of advertising your honor they allege that there are misrepresentations in correspondence in consumer service phone calls and in other contexts so your honour's even if  indemnity for false advertising in misrepresentation and advertising is excluded by exclusion p liability indemnity coverage for misrepresentations not in advertising still exists claims about misrepresentation outside of advertising is a claim that those things are not excluded and therefore come under the negative publication coverage exactly right your honor exactly right so we're talking about two different things one is whether they've got a duty to compensate is to cover any that exclusions don't create coverage therefore the district court did not analyze the language of exclusion p which the court was just focused on but said in light of that general rule there cannot be a there cannot be defen for these clients he's like has argued well that's true because exclusion which he has an exception can only carve back coverage which the ensuring agreement originally gave problem with that well what is help me if i should know this but what is the status of the underlying litigation yes your honor those cases have settled they have been fully and finally settled all settlement benefits have been distributed it i in the record the settlement agreement which is relevant on a couple of points is in the record at the time it was subject to final approval i believe that has since occurred that that's not in the record all of the cases on which the district courts you have no reason to believe that settlement isn't going through it has gone through it has yes we have resolved your honor and that goes to judge by these points in part that is there a right to come back after the final point i want to make on the defense provision is your honors it is plain and unambiguous the district court did not construe it simply because of this general rule that general rule is based on  line of cases concerning alleged ambiguity alleged ambiguity as between an exception to an exclusion and ensuring agreement cetera s c a does not rely on such ambiguity this is a plain and clear coverage provision and the california supreme court recently held in the t r p investment case which we submitted as a rule twenty eight j letter that a coverage provision can only appear in an we believe s he is entitle to indemnification based on the plain meaning of negligent publication i'd like to turn briefly to the american home general liability policy from a i g complaints to trigger the duty to defend that was error the district court's approach urged on the court by american homes here cannot be reconciled with the fundamental standard of the duty to defend that is if there's a duty to defend if based on the facts plenty and the extrinsic evidence it is possible that the insured could be for the last of use of property that is the play station two game desks these are repeated in several places throughout the record a quote inability to read blue bottoms t d games quote is made in fact the california courts have specifically rejected american homes position that a specific theory or claim of damages must be made that's in the charles thomas vs trans america case honor all that is required is loss of use of tangible property the tangible property issue our desks media those under california law the war general case from the fourth district court of appeal and schaefer carp case from the second district court of appeal those media do constitute tangible property rights but if you can take and go put on a different machine and play out then what's the problem the whole point your honor as it is the play station two user who can play that game didn't ask only on a playstation two one cannot take a playstation two game guest and put it into a d v d player and start playing it we made this point in the record mr kincaid's declaration talked about the fact that the media is specifically designed for use on the p s two there was some confusion in the trial court on this issue as well some of the media which was the loss of use was alleged are plain old d v d s movies etc and sure those might be playable on another player but a significant proportion and there's no that shows that there is property damage your honor property damage includes two parts one is physical injury to can dribble property we don't allege physical injury to tangible property in the form of just was alleged in killing ten physical injury to the playstation units was they allege that there was banging and clicking noises and cetera and that's important and relevant to an exception to an exclusion of the american home policy specifically the impaired property exclusion s c a believes we have shown in satisfy the standard that it is possible that there was a physical injury to the p s two console which is what i call and that physical injury was sudden and accidental that's the banging and clicking noise the immediate freezing hocking and skipping which the plaintiff's note and that caused the loss of use of the playstation desks but most of what we have focused on your honor is the second prong of the property damage definition problem one being physical injury prone to loss of use of property which has not been physically injured you have playstation users who have forty to sixty dollar claim because of the defect and so that gives you under the american home policy what yes you are that gives us a duty to defend that's all we have sought that's all you want yes your honor and thank you for that clarification subject to reserving my two minutes and twenty seconds for the and i will cede the podium morning i'm tom sloan i represent american international's especially lines insurance company commonly called a slick by the acronym and i'll spend about ten minutes talking about negligent publication and then turn it over to cases which set forth what the definition is yet the term has been used historically in the tort law it is not a phrase that has never been used it has never been used however to our represent of false advertising or negative misrepresent representation for a product and indeed this policy is not a policy which is a product liability policy or does it intend to insure false representations in likewise the court of appeals in the near past case said that the function of the court in construing language in a policy is not to divine reasonable semantic meanings but rather to divine what the parties intended in the context of the policy well let me see if i can understand it when it's quite are you essentially saying that the term and trying to get the common i'd hear the broad narrows and all of that would need a lot of meaning to me are you are you suggesting actually that the phrase negligent representation in the context of this contract and we have to look at it in the context of a contract that's to typically badly harm such as a how to book that instructs how to do something someone falls it blows up in their face that's a negligent publication that tells the story the news now the ninth circuit used the term negligent publication means why would a slick specifically exclude false advertising or misrepresentation advertising if it wasn't covered in the first place well it could be covered very easily your honor under the  action could be brought based on an advertisement which in print is on someone's trademark and we do cover trademark infringement that wouldn't be false advertising well if it if it's if you falsely it could be false sure if you if you infringe but we also have an allegation here of false advertis which seems to be excluded under under p d correct yes so so the trademark infringement cause of action under the lanham act would be covered the cause of action alleging this represents false advertising out of the same wrongful would be coverage so it's possible to have an exclusion for instance in the old republic case which excluded something which the court found wasn't covered in the first place and the courts say it's the wrong analysis to look at the exclusion determine what meant by the coverage provisions i should also well if i have to say counsel i understand sort of as a general proposition that but it but it does strike me that it's funny that you would exclude some things very specifically if it wasn't covered in the first place that it if i'm looking at the exclusions to say well we're not going to cover x then it raises an inference in my mind that that you thought x was covered in the first place because that's why you specifically excluded but that's what the old republic says you shouldn't do that but what i'm saying your honor is i can understand the logic of that but taking someone in an advertisement infringe on someone else's trademark that is the coverage that trademark infringement itself is covered but the bigger problem you got it's covered in the coverage provisions because it's hornbook law that the exclusion cannot create coverage and exception in the exclusion cannot create coverage that doesn't exist in the coverage provisions to begin with but why would you exclude it if it wasn't  specific and exclusion of people rising out of all the advertising or misrepresentation advertising in trademark for example or under section whatever the trademark section was to see what i should say if they wanted to cover negligent misrepresentation or false advertising which  common words we all know what those mean it would be in the list of covered wrongs it's not negative publication is an old fashioned tort thing like incitement and defective advice it was never intended to cover false advertising and the positive side relate to products so we don't cover we exclude representations as to products so i think if you look at the context as a whole it's clear the policy was not intended by either side to cover this type of court and i'm hendrix we ask whether they can quote reasonably be construed close quote alleging a covered loss that kim and kayne complaints are exclusively about malfunctions in the play station two play station two are completely excluded of your product exception all of the allegations where the play station two wasn't working and when i say all the allegations i am including in that comment the quote that counsel offered you thirty minutes ago that specific allegations were quote inability to read desks d v d s c d s and so forth the entity the thing that is unable to read is the playstation two which is not covered not only is there no allegation of damages to the disks or problem with the disks or inability of the disc to do anything the underlying class actions specifically go out of their way to point out that disks are far there is no problem with the disks notwith standing sony's quote growth grows we misleading disclosure statements that's the language we use and pain at the surface of record to fifty four to fifty five or in him at the class members the underlying class actions go out of their way to say the disks are fine the problem is the playstation two so when the complaint is kind of my client it appropriately looks at the the allegations in the complaint to determine whether they can be quote reasonably construed as alleging some kind of covered loss and the answer is they cannot and moreover i might add that the class actions have all the standard allegations of class commonality all of the proposed you look at the complaints allegations quote read in can connection with the ensuring an exclusionary clauses in the policy close quote to determine of coverages precluded it's fairly straightforward you have underlined complaints that say a product manufactured by your insured doesn't work on its face that's not covered as far back as grey vs very quote we look to the nature and kind of risk covered by the policy as a limitation upon the duty to defend close quote so there are two steps to look at the allegations in the complaint the nature of the claims and you ask whether the policy covers it and they don't the last of used issues that console alluded to this idea that they couldn't use the game disks i think he's i think sony is sort of agreeing we all agree that everything over there and the specific sony play station two just could be used anywhere if you have a cd or a d v d and it doesn't work on the playstation two everybody has agreed you can go to your cd or your d v d player or your home allegation then you can play it somewhere else the issue is can you play it somewhere else council's argument that will be paid forty dollars to buy one of the and that somehow a measure of loss of use turns on its head it's only a measure of loss of  what the consumers are going to do is go out and buy a lot more properly working disks they have stacks of properly working just they don't need any more properly working just what they need is a playstation two to play them so the argument that when they spent forty dollars to buy something that works for the measure of damages if they want to have another forty dollars to buy another thing that works which they also can't play anywhere because the playstation two doesn't work it's just circular sony isn't arguing i don't think that every play station to the every ever manufactured is defective and doesn't work what complaints was tendered to us was not a website of consumer complaints what was tendered to us were two complaints campaign their class actions they have specific allegations i take yes you are so if it was somebody would would you work would you or would your power cover property damage to something other you know c d s that were from somebody else i see typically not yet started typically not there is and exception to the exclusion actually for what's called southern accidential and that's if your play station two bursts into flames for example something happened completely unexpectedly and i thought it was ok so i thought it was because it has to be sony property also any property is already excluded under exclusion k that's a your product exclusion am goes on to exclude property damage to other and to do other people's property their own last thing burst into flames and to drop a footnote there the issue of sudden next time there is no allegation in the record of anything remotely like excess of what it says it clicks and it's freezes and if you turn it off and come back and play it again it may work for a while they will click and freeze again sudden accidental bursting into flames loose wires smoke the smell of burning electrical unit parts falling off and those sorts of things are what we would consider something accidental the fact that sometimes it clicks sometimes it read sometimes it's resist sometimes it doesn't that's not certain x then all in fact the underlying complaints point out that they may use this thing more than once and sometimes  happens and sometimes it doesn't so that there isn't any coverage for the playstation two there isn't any coverage for the discs that sony made specifically for the playstation two and there isn't any cover coverage for potential  usable for any purpose for some period of time hendrickson it was the fields strawberry plants were planted the strawberry plants did not yield the allegation was the sellers of the strawberry plants and we'll just leave them there for a while and they will eventually return a crop for you and so long as the farmer think that their field was useless to them they lost the use of their fields unlike in hendrickson here you push a button that just pops out and go to your brother to your neighbor and you play it and you are and you're fine ellsworth there is a built in overhead grain conveyor system that will not deposit grain into a particular bin you can simply lift all that and plop it into another barn in a matter of a few seconds to make it work it is completely unavailable it is there is a loss of use similarly anthem when the when the boards go into the scanners and they freeze you have to take the time to repair them and so forth we simply don't have that we don't have any kind of temporal the later you push a button the disk comes out and there's no lo use because you can use it somewhere else and again at the point of the issue about the scratches it's important to remember that under upper back some of the other cases that looked at the scope of a class action my client looks at the allegations in a a term that one finds in for example a general liability policy out there in extreme why use as news like i correctly noted this is in a manuscript policy which is more specific policy used for negotiated for a particular situation so that the courts construction of it here will have an impact but perhaps not the same as it might for a general liability policy the policy has many specific wrongful act coverage provisions and the one the only one that we have before us is negligent publication it has a lot of very specific different types of claims that are covered but as i think judge was pointing out it the false advertising in this representation in advertising has to be subsumed under one of those many alleged wrongful acts in order to have an exclusion provision which covers quote infringement of dot dot dot trademark and quote that's wrongful act see it's already covered somewhere else your honor that's the fallacy in that argument negligent strongly disagree as he said no court has applied the phrase negligent publication in the context of such false advertising or misrepresentation california appellate court of appeal did in people versus superior court for as to the american you know you're running over you want to be very very certainly you are as to the american home policy it's generally ability coverage for third party desks the notion that one does not have the loss of use of the desk because you could go and go to a plate on a different playstation assumes you have got a different playstation available and my son and his best friend has an x box