FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SONY COMPUTER ENTERTAINMENT 

AMERICA, INC.,

Plaintiff-Appellant, No. 05-17425

v. D.C. No.

AMERICAN HOME ASSURANCE  CV-04-00492-PJH

COMPANY and AMERICAN OPINION INTERNATIONAL SPECIALTY LINES

INSURANCE COMPANY,

Defendants-Appellees. 

Appeal from the United States District Court

for the Northern District of California

Phyllis J. Hamilton, District Judge, Presiding

Argued and Submitted

November 5, 2007—San Francisco, California

Filed July 15, 2008

Before: Mary M. Schroeder, Cynthia Holcomb Hall and

Jay S. Bybee, Circuit Judges.

Opinion by Judge Hall;

Partial Concurrence and Partial Dissent by Judge Bybee

8749
COUNSEL

Martin H. Myers, Heller Ehrman, San Francisco, California,

for the plaintiff-appellant. 

Thomas H. Sloan, Jr., Krieg, Keller, Sloan, Reilley & Roman,

San Francisco, California, for defendant-appellee American

International Specialty Lines Insurance Company. 

Lane J. Ashley and Rebecca R. Weinreich, Lewis, Brisbois,

Bisgaard & Smith, Los Angeles, California, for defendantappellee American Home Assurance Company.

OPINION

HALL, Circuit Judge: 

Sony Computer Entertainment America, Inc. appeals the

district court’s summary judgment in favor of defendants

American International Specialty Lines Insurance Company

and American Home Assurance Company. Sony sued the sister insurance companies for failing to indemnify and defend

it in a class action suit alleging product defects in a video

game system known as the Sony PlayStation 2. The district

court found that neither insurance company had a duty to

indemnify or defend Sony in the lawsuit. We affirm.

I. FACTS AND PROCEDURAL HISTORY

A. Sony and the PlayStation 2

Sony markets, distributes, and supports the PlayStation

family of products. The PlayStation 2 is the successor to the

SONY v. AMERICAN HOME ASSURANCE 8753
original PlayStation, an advanced computer console. The

PlayStation 2 plays video games designed for the system on

either CD discs or DVD discs, as well as games designed for

the original PlayStation. Unlike the original PlayStation, however, the Playstation 2 was marketed as a home entertainment

system, able to play audio and video CDs and DVDs as well

as video games. 

B. The Insurance Policies 

1. American International Specialty Lines Insurance

Company Policy 

Sony purchased a $10 million media liability insurance policy from American International Specialty Lines Company

(AISLIC) for the period of July 1, 2001 to July 1, 2002. The

policy, entitled “Multimedia Professional Liability Policy,”

provided that AISLIC would indemnify Sony in certain lawsuits. AISLIC promised to “pay on [Sony’s] behalf those

amounts . . . that [Sony] is legally obligated to pay as damages . . . resulting from any claim . . . during the policy period

for [Sony’s] wrongful act in the business of the insured.” The

term “wrongful act” was defined to include (a) defamation,

(b) invasion of privacy or publicity, (c) infringement of copyright, title, slogan, trademark, or trade dress, (d) unfair competition (but only in conjunction with wrongful acts described

in section (c)), (e) unauthorized use of name or likeness, (f)

unintentional failure to credit on a matter, and (g) defective

advice, incitement, or “negligent publication.”

1

 The policy

had a $100,000 deductible “for each wrongful act or series of

wrongful act(s).” 

The AISLIC policy did not obligate AISLIC to defend

Sony in every lawsuit alleging a covered wrongful act.

1Sony previously held an insurance policy with AISLIC that also covered “any error or omission, misstatement, misleading statement or misinterpretation,” but the 2001-2002 policy did not include such coverage. 

8754 SONY v. AMERICAN HOME ASSURANCE
Rather, it stated that AISLIC had “the right but not the duty

to defend any claim first made against [Sony] during the policy period and reported to [AISLIC] in writing for [Sony’s]

wrongful act.” However, the policy provided that AISLIC

would be responsible for at least part of Sony’s defense costs.

If Sony chose its own counsel in a suit alleging a covered

wrongful act, it would pay for its own defense until its deductible was exhausted, and then for a portion of it after the

deductible was exhausted. If Sony was defended by AISLIC’s

chosen counsel, AISLIC would be responsible for all defense

costs after Sony paid its deductible. 

The AISLIC policy excluded a number of claims from policy coverage. For example, AISLIC was not obligated to pay

damages arising from “unfair or deceptive business practices

including, but not limited to, violations of any local, state or

federal consumer protection laws” (Exclusion C), “alleging or

arising out of a breach of any express warranties, representations or guarantees” (Exclusion J), or “arising out of false

advertising or misrepresentation in advertising” (Exclusion

P). This last exclusion had an exception, whereby AISLIC

promised to “defend suits alleging [false advertising or misrepresentation in advertising] until there is a judgment, final

adjudication, adverse admission or finding of fact against

[Sony] at which time [Sony] shall reimburse [AISLIC] for

claim expense.” 

2. American Home Assurance Company Policy

Sony purchased a $2 million general commercial insurance

policy from American Home Assurance Company (American

Home) for the period of April 1, 2000 to April 1, 2001. The

policy, entitled “Commercial General Liability Coverage,”

provided that American Home would “pay those sums that the

insured becomes legally obligated to pay as damages because

of ‘bodily injury’ or ‘property damage,’ ” as well as “defend

the insured against any ‘suit’ seeking those damages.” Property damage was defined to include both “physical injury to

SONY v. AMERICAN HOME ASSURANCE 8755
tangible property, including all resulting loss of use of that

property” and “loss of use of tangible property that is not

injured.” 

As with the AISLIC policy, a number of exclusions in the

American Home policy limited American Home’s duties. In

particular, under Exclusion (m), the policy did not cover

“ ‘property damage’ to ‘impaired property’ or property that

has not been physically injured, arising out of . . . a defect,

deficiency, inadequacy, or dangerous condition in ‘[Sony’s]

product.’ ” Exclusion (m) had an exception for the loss of use

of property “arising out of sudden and accidental physical

injury to ‘[Sony’s] product’ or ‘[Sony’s] work’ after it has

been put to its intended use.” 

C. Kim/Kaen Lawsuits

In July 2002, PlayStation users sued Sony in two separate

class actions in California state court, later consolidated as the

Kim/Kaen case in San Mateo County. The Kim/Kaen plaintiffs alleged that the PlayStation 2s suffered from an “inherent” or “fundamental” design defect that rendered them

unable to play DVDs and certain game discs. The complaints

set forth causes of action for breach of express and implied

warranties, fraud, negligent misrepresentation, bad faith, violations of the Consumer Legal Remedies Act (Cal. Civ. Code

§ 1750 et seq.), false advertising (Cal. Bus. & Prof. Code

§ 17500 et seq.), and unfair business practices (Cal. Bus. &

Prof. Code § 17200 et seq.). The assertions in the false advertising and negligent misrepresentation claims primarily

revolved around Sony’s statements in press releases, advertising, product packaging, and instruction manuals that the

PlayStation 2 would function as a DVD player as well as a

game player. 

D. This Action

Sony tendered the Kim/Kaen claims to AISLIC and American Home, both of which eventually denied coverage. Sony

8756 SONY v. AMERICAN HOME ASSURANCE
filed this action in February 2004, claiming that AISLIC and

American Home had breached their contractual duty to defend

and indemnify Sony, and breached the implied covenant of

good faith and fair dealing. 

American Home moved for summary judgment on all

counts, and Sony moved for partial summary judgment on the

duty to defend claim. The district court granted summary

judgment in favor of American Home. It found that American

Home had no duty to defend Sony in the suit, and that,

accordingly, the indemnification and bad faith claims failed as

well. Sony Comp. Entm’t Am., Inc. v. Am. Home Assur. Co.,

No. CV 04-00492-PJH (N.D. Cal. Aug. 30, 2005). 

Later that year, AISLIC moved for summary judgment on

all claims and Sony cross-motioned with respect to the duty

to defend claim. The district court granted summary judgment

in favor of AISLIC, finding that AISLIC had no duty to

indemnify or defend Sony in the Kim/Kaen suits, and that

AISLIC had not engaged in any bad faith. Sony Comp. Entm’t

Am., Inc. v. Am. Home Assur. Co. and Am. Int’l Specialty

Lines Ins. Co., No. 05-17425, 2005 U.S. Dist. LEXIS 30424

(N.D. Cal. Dec. 1, 2005). Sony timely appealed. 

II. DISCUSSION

A. Standard of Review

A district court’s grant of summary judgment is reviewed

de novo. Suzuki Motor Corp. v. Consumers Union of United

States, Inc., 330 F.3d 1110, 1131 (9th Cir. 2003). “We must

therefore determine, viewing the evidence in the light most

favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law.” Id. at 1131-32

(citing Devereax v. Abbey, 263 F.3d 1070, 1074 (9th Cir.

2001) (en banc)). 

SONY v. AMERICAN HOME ASSURANCE 8757
B. Principles of Insurance Policy Interpretation

Though insurance contracts have special features, the general rules of contract interpretation still apply in California.

Bank of the W. v. Superior Court, 2 Cal. 4th 1254, 1264

(1992); MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 647

(2003). The interpretation of a contract must “give effect to

the ‘mutual intention’ of the parties . . . at the time the contract was formed.” Id. (citing Cal. Civ. Code § 1636). Such

intent is to be inferred, if possible, from the written provisions

of the contract based on their “ordinary and popular sense,”

unless a “technical sense or special meaning is given to them

by their usage.” Id. at 647-48 (citing Cal. Civ. Code §§ 1639,

1644, 1638). If the contractual language is clear and explicit,

it governs. AIU Ins. Co. v. Superior Court, 51 Cal. 3d 807,

822 (1990). 

[1] The terms in an insurance policy must be read in context and in reference to the policy as a whole, with each

clause helping to interpret the other. Cal. Civ. Code § 1641;

Bay Cities Paving & Grading, Inc. v. Lawyers’ Mutual Ins.

Co., 5 Cal. 4th 854, 867 (1993); Palmer v. Truck Ins. Exch.,

21 Cal. 4th 1109, 1115 (1999). Accordingly, a provision is

ambiguous “only if it is susceptible to two or more reasonable

constructions despite the plain meaning of its terms within the

context of the policy as a whole.” Id.; see also Bank of the W.,

2 Cal. 4th at 1265 (“ ‘[L]anguage in a contract must be construed in the context of the instrument as a whole, and in the

circumstances of that case, and cannot be found to be ambiguous in the abstract.’ ”) (quotation source and emphasis omitted). A court faced with an argument for coverage based on

an assertedly ambiguous policy language “must first attempt

to determine whether coverage is consistent with the insured’s

reasonable expectations,” id., and “[i]n so doing . . . must

interpret the language in context, with regard to its intended

function within the policy,” id. Thus, although unresolved

ambiguities in insurance policies are generally construed

against the insurer, AIU Ins. Co., 51 Cal. 3d at 822, that prin8758 SONY v. AMERICAN HOME ASSURANCE
ciple only applies if the meaning of a term is ambiguous in

light of the policy as a whole, and if coverage is within the

objectively reasonable expectations of the insured. Bank of

the W., 2 Cal. 4th at 1265. 

C. AISLIC Had No Duty to Indemnify or Defend Sony

The AISLIC policy obligated AISLIC to indemnify Sony

and provide defense costs for lawsuits arising from certain

“wrongful acts,” including “negligent publication.” Sony

argues that the district court erred in granting summary judgment in favor of AISLIC because the false advertising and

negligent misrepresentation claims in the Kim/Kaen lawsuits

allege “negligent publication.” Alternatively, Sony argues that

AISLIC is obligated to defend it in the Kim/Kaen suits by virtue of Exclusion P of the insurance policy. We disagree and

affirm the district court. 

1. The affirmative coverage provisions of the AISLIC

policy do not obligate AISLIC to indemnify or defend Sony

We begin our analysis by examining the policy’s affirmative coverage clauses, because if a claim does not fall within

those clauses, no coverage exists. Palmer, 21 Cal. 4th at

1115-16. Sony does not assert that any wrongful act besides

“negligent publication” applies to the Kim/Kaen lawsuits, thus

the question of whether AISLIC’s policy covers Sony turns

on whether the Kim/Kaen lawsuits assert claims within the

meaning of that term. 

i. Meaning of “negligent publication” 

[2] “Negligent publication” is not defined in the AISLIC

policy, nor does it appear in lay or legal dictionaries or in any

California statute. Because there is no evidence that the parties intended the term to carry a technical meaning, the ordinary and popular meaning of the term governs. AIU Ins. Co.,

51 Cal. 3d at 823; see also Cal. Civ. Code § 1644. 

SONY v. AMERICAN HOME ASSURANCE 8759
Sony argues that the term “negligent publication” should

have a broad meaning which it derives from stringing together

the dictionary definitions of “negligent” and “publication.”

According to Sony, “negligent publication” in the AISLIC

policy refers to “a communication of information to the public, lacking or exhibiting a lack of due care or concern.” Sony

argues that this definition, broad enough to include the false

advertising and negligent misrepresentation claims in the

Kim/Kaen lawsuits, is the plain meaning of the term. 

Sony’s definition is not the proper plain meaning of the

term. While Sony is correct that courts often consult dictionaries to derive the ordinary and popular meaning of terms in

insurance contracts, see Scott v. Continental Ins. Co., 44 Cal.

App. 4th 24, 29-30 (Ct. App. 1996), Sony’s definition is

inconsistent with the context of the AISLIC policy as a whole,

see id. at 29 n.4 (“[T]he multiple meanings of a word as found

in a dictionary cannot be inserted into the text of an insurance

policy without regard to the document construed as a whole,

[and] the exact context of the language.”); MacKinnon, 31

Cal. 4th at 649 (“Although examination of various dictionary

definitions of a word will no doubt be useful, such examination does not necessarily yield the ‘ordinary and popular’

sense of the word if it disregards the policy’s context.”);

Palmer, 21 Cal. 4th at 1116-17. 

[3] The policy Sony purchased from AISLIC covered Sony

for wrongful acts defined in seven different sections, each

including a list of related terms. For example, part (a)

included “defamation, disparagement, or harm to the character or reputation of any person, or entity”; part (b) listed “invasion, infringement, or interference with rights of privacy or

publicity”; parts (c), (d), (e), and (f) covered copyright

infringement, unfair competition, unauthorized use of name or

likeness, and unintentional failure to credit on a matter,

respectively. Part (g) read that wrongful acts also consisted of

“defective advice, incitement, and negligent publication.”

Given that sections (a)-(f) each listed a series of related torts,

8760 SONY v. AMERICAN HOME ASSURANCE
the placement of “negligent publication” within the policy

suggests that the term refers to a narrow tort relating to defective advice and incitement, not a broad tort distinct from those

terms. See Am. Motorists Ins. Co. v. Allied-Sysco Food Services, Inc., 19 Cal. App. 4th at 1347, 1350-51 (Ct. App. 1993)

(agreeing with the insurer that “the policy’s coverage for

damages arising out of ‘humiliation’ is limited to those cases

in which humiliation damages arise out of the types of torts

in which it is grouped — i.e., libel, slander, defamation of

character, and invasion of the right to privacy”), overruled on

other grounds in Buss v. Superior Court, 16 Cal. 4th 35, 50

& n.12 (1997). Yet, Sony’s expansive definition of “negligent

publication” disregards the term’s placement in wrongful act

(g) next to incitement and defective advice. If “negligent publication” were defined as Sony suggests — a communication

of information to the public, lacking or exhibiting a lack of

due care or concern — then the term would be broad enough

to subsume virtually all of the other wrongful acts defined in

the policy, such as defamation, misappropriation, infringement of copyright, unauthorized use of name or likeness, and

unintentional failure to credit on a matter. Such a reading

ignores the maxim that “a court must interpret . . . [policy]

language in context, with regard to its intended function in the

policy,” Bank of the W., 2 Cal. 4th at 1265. 

[4] Further, the AISLIC policy was a media liability policy.

Its affirmative coverage provisions were strictly limited to the

types of claims normally faced by media publishers, such as

defamation, copyright infringement, and so on. Notably

absent from those provisions was any coverage for product

defects. In fact, the exclusions in the policy made clear that

it was not intended to protect Sony from suits like Kim/Kaen.

AISLIC explicitly disclaimed liability for suits alleging

breach of warranties, representations, or guarantees (Exclusion J); for suits arising from violations of consumer protection laws (Exclusion C); and for suits alleging false

advertising or misrepresentation in advertising (Exclusion P).2

2Sony argues that Exclusion P “provides strong evidence of coverage”

because AISLIC would only have included the exclusion if it believed that

SONY v. AMERICAN HOME ASSURANCE 8761
Sony’s expansive interpretation of “negligent publication”

fails to recognize the limited coverage in the AISLIC media

liability policy, and thus fails to properly construe “the language in a contract . . . in the context of that instrument as a

whole.” Bank of the W., 4 Cal. 4th at 1265. 

Sony’s construction of “negligent publication” is also

unpersuasive because it is not supported by the case law,

which we look to as further evidence of the proper meaning

of the term. See AIU, 51 Cal. 3d at 825-28. Though the cases

do not yield one clear definition of “negligent publication,”

the cases that reference the term are a limited set, none of

which use the term as broadly as Sony does. 

For example, in one line of cases, “negligent publication”

is used to describe a cause of action in which plaintiffs

attempt to hold publishers liable for material that led readers

to engage in harmful conduct. See, e.g. Way v. Boy Scouts of

Am., 856 S.W.2d 230, 232-34 (Tex. App. 1993) (plaintiff sued

magazine for the “negligent publication” of an advertisement

for firearms that she alleged led her son to accidentally kill

himself); Smith v. Linn, 563 A.2d 123, 125 (Pa. Super. Ct.

1989) (plaintiff sued the publisher of a diet book, claiming

that his wife — who read the book and followed its instructions — died of cardiac arrest due to the book’s “negligent

publication”); Hyde v. City of Columbia, 637 S.W. 2d 251,

253 (Mo. Ct. App. 1982) (abduction victim brought action

against newspaper for the negligent publication of her name

and address while her assailant was still at large); see also

Eimann v. Soldier of Fortune Magazine, Inc., 880 F.2d 830

(5th Cir. 1989) (son and mother of murder victim sued magafalse advertising was otherwise covered. This type of argument has been

rejected by California courts as “superficial and contrary to proper coverage analysis.” Old Republic Ins. Co. v. Superior Court, 66 Cal. App. 4th

128, 145 (Ct. App. 1998), overruled on other grounds in Vandenberg v.

Superior Court, 21 Cal. 4th 815, 838 n.12, 839 (1999). 

8762 SONY v. AMERICAN HOME ASSURANCE
zine for publishing gun for hire advertisement through which

victim’s husband hired assassin to kill her). 

Other courts have used the term “negligent publication” to

explain that creative pleading does not change the analysis of

a defamation-based claim or applicable privileges, see, e.g.,

Newcombe v. Adolf Coors Co., 157 F.3d 686, 695 (9th Cir.

1998); Block v. Sacramento Clinical Labs, Inc., 131 Cal. App.

3d 386, 392-93 (Ct. App. 1982), or to describe one of the elements of a defamation action, see, e.g., Mandel v. Boston

Phoenix, 456 F.3d 198, 209 (1st Cir. 2006); Reilly v. Associated Press, 797 N.E. 2d 1204, 1209 n.3 (Mass. App. Ct.

2003). In addition, “negligent publication” has been used to

describe negligence on the part of advertisers who breached

contracts by erroneously printing plaintiff’s information. See,

e.g., Continental Kennel Club, Inc. v. Fancy Publ’ns, Inc.,

763 So. 2d 827, 828 (La. App. 2000); Discount Fabric House

of Racine, Inc. v. Wisconsin Tel. Co., 345 N.W.2d 417, 425

(Wis. 1984). 

Thus, while the term “negligent publication” has been used

in a variety of cases, no case uses the term as expansively as

Sony suggests. Sony would have “negligent publication”

mean “a communication of information to the public, lacking

or exhibiting a lack of due care or concern,” yet the case law

is essentially limited to plaintiffs suing publishers for the contents of books, articles, or advertisements. A couple of cases

have involved plaintiffs suing individuals or governments —

rather than publishers — for defamation or related claims,

see, e.g., Block, 131 Cal. App. 3d at 392-93, but even their use

of the term remains entirely distinct from Sony’s proffered

definition. 

In light of the above, we cannot adopt Sony’s definition of

“negligent publication” as the meaning of the term in the AISLIC policy. A more limited definition of the term is appropriate, one that is consistent with the context of the policy and

supported in the case law. We find that defining the term

SONY v. AMERICAN HOME ASSURANCE 8763
“negligent publication” as a narrow tort in which the publication of material leads the reader to commit a harmful act

meets these criteria. 

This definition of “negligent publication” is supported by

the Smith, Way, and Hyde line of cases, which involved plaintiffs who sued publishers for harm resulting from the contents

of a book, magazine, or newspaper. The legal literature is also

helpful in this respect; scholars have recognized “negligent

publication” as a cause of action in which plaintiffs attempt

to hold a publisher liable for harm encouraged or instructed

by a publication.3

More importantly, defining “negligent publication” in this

manner is consistent with the context of the AISLIC policy.

Recall that “negligent publication” was placed next to defective advice and incitement in the AISLIC policy. Our definition of “negligent publication” appropriately describes a tort

similar to those wrongful acts. For example, in incitement

cases, like in “negligent publication” cases, the plaintiff

alleges that defendant’s publication of material encouraged or

instructed the reader to commit a harmful act. However, the

plaintiff asserts incitement on the part of the defendant as well

as negligence in an effort to avoid First Amendment problems. See, e.g., Herceg v. Hustler Magazine, Inc., 814 F.2d

3

See, e.g., Susan M. Gilles, “Poisonous” Publications and Other False

Speech Physical Harm Cases, 37 Wake Forest L. Rev. 1073, 1081-83

(2002) (“[A]ctions for negligent publication . . . [involve plaintiffs who]

sue publishers and assert that by publishing false statements that cause

physical harm, the defendants have breached a duty to independently

investigate the accuracy of the text.”) (citing Smith as an example); see

also Mark Sableman, Link Law Revisited: Internet Linking Law at Five

Years, 16 Berkeley Tech. L.J. 1273, 1316 n.235 (2001) (“ ‘[N]egligent

publication’ theory seeks to hold a publisher liable for publishing material

that instructs and/or encourages readers in committing violent or other

unlawful conduct.”); Charles A. Glasser, Jr. & Mark A. Sirota, Outline of

Decisions Involving “Negligent Publication” and Products Liability

Claims Against Publishers, 516 Practising Law Inst. 719, 721 (1998) (citing Way). 

8764 SONY v. AMERICAN HOME ASSURANCE
1017, 1018-19 (5th Cir. 1987) (plaintiff claimed that a Hustler

article about erotic asphyxiation incited her son to attempt the

practice, which led to his death); Yakubowicz v. Paramount

Pictures Corp., 536 N.E.2d 1067, 1070-71 (Mass. 1989)

(plaintiff claimed film incited teenagers to kill his son);

McCollum v. CBS, Inc., 202 Cal. App. 3d 989, 999-1001 (Ct.

App. 1988). The term defective advice can be described as a

related theory of liability, in which plaintiffs argue that the

“advice” in a publication is a “defective product,” and attempt

to hold the publisher strictly liable. See, e.g., Winter v. G.P.

Putnam’s Sons, 938 F.2d 1033, 1034-36 (9th Cir. 1991)

(plaintiffs became ill after eating poisonous mushrooms

labeled as edible in book and asserted defective product

claims against the publisher); Lewin v. McCreight, 655 F.

Supp. 282, 282-83 (E.D. Mich. 1987) (plaintiffs experienced

an explosion while following instructions in a book and sued

the publisher for “defective ideas”); Aetna Cas. & Sur. Co. v.

Jeppesen & Co., 642 F.2d 339, 341-43 (9th Cir. 1981); see

also Sandra Davidson, Blood Money: When Media Expose

Others to Risk of Bodily Harm, 19 Hastings Comm. & Ent.

L.J. 225, 248-90 (1997) (describing plaintiffs’ efforts to hold

media entities liable for harmful content under negligence,

incitement, and products liability theories); Terri R. Day,

Publications that Incite, Solicit, or Instruct: Publisher

Responsibility or Caveat Emptor?, 36 Santa Clara L. Rev. 73

(1995) (same). 

We find that defining “negligent publication” as a tort

faced only by publishers also properly construes the policy as

a whole, because it takes into account the AISLIC policy’s

status as a media liability policy with limited coverage provisions. Bank of the W., 4 Cal. 4th at 1265. And whereas a

broader reading of the term would disregard the other

“wrongful acts” listed in the policy,4 defining negligent publi4For example, the district court relied on Newcombe to hold that “negligent publication” referred to “that category of tort claims typified by defamation and misappropriation,” Sony Comp. Entm’t, 2005 U.S. Dist.

LEXIS 30424, at *14, but the AISLIC policy defines defamation and misappropriation as separate wrongful acts in coverage provisions (a) and (c).

SONY v. AMERICAN HOME ASSURANCE 8765
cation as a cause of action in which a plaintiff alleges that a

defendant’s publication led to harmful conduct does not overlap with any of the other “wrongful acts.” See Boghos v. Certain Underwriters at Lloyd’s of London, 36 Cal. 4th 495, 503

(2005) (disfavoring constructions of contractual provisions

that would render other provisions surplusage). 

[5] In sum, we hold that the term “negligent publication”

in the AISLIC policy refers to a very narrow tort in which the

publication of material encourages or instructs readers to

engage in harmful conduct. We reject Sony’s expansive definition as inconsistent with the context of the policy as a whole

and unsupported by the case law. Sony, a sophisticated purchaser, clearly could have purchased coverage for product

defects or false advertising — indeed, Sony previously held

an insurance policy with AISLIC that covered “any error or

omission, misstatement, misleading statement or misinterpretation” — yet the policy at issue in this lawsuit did not include

such coverage. Sony’s attempt to expand the meaning of

“negligent publication” to cover all negligent communications

with the public fails. 

ii. The Kim/Kaen suits do not allege “negligent 

publication” 

[6] To determine whether the Kim/Kaen lawsuits alleged

claims of “negligent publication,” we must compare the allegations of the complaints with the coverage language of the

policy. Palmer, 21 Cal. 4th at 1115-16 (“If a claim does not

fall within the terms of [the coverage] clauses, then no coverage exists.”). The Kim/Kaen lawsuits alleged claims for false

advertising, negligent misrepresentation, breach of warranty,

and other claims based on fraud. They did not allege that

Sony published material that led readers to engage in a harmful act, nor did they allege that Sony engaged in any actions

typified by the body of case law discussing “negligent publication.” 

8766 SONY v. AMERICAN HOME ASSURANCE
[7] Therefore, we hold that AISLIC does not have an obligation to indemnify or provide any defense costs for Sony in

the Kim/Kaen suits under the “negligent publication” coverage provision of the policy. Sony does not allege coverage

under any other wrongful act, thus no affirmative coverage

provision in the AISLIC policy requires AISLIC to insure

Sony with respect to the class action suits. 

2. Exclusion P does not create an independent duty to

defend

Sony argues that even if the Panel does not agree that AISLIC must indemnify Sony or pay its defense costs under the

coverage provisions, AISLIC nonetheless has a duty to defend

Sony under the exception language in Exclusion P. Exclusion

P disallows coverage for claims “arising out of false advertising or misrepresentation in advertising” but goes on to state:

“However, we will defend suits alleging any of the foregoing

conduct until there is a judgment, final adjudication, adverse

admission or finding of fact against [Sony].” 

[8] The district court properly held that Exclusion P cannot

establish coverage that does not exist under the affirmative

coverage provisions. While an insurer’s duty to defend is

broad in scope, Montrose Chem. Corp. v. Superior Court, 6

Cal. 4th 289, 295 (1993), proper coverage analysis begins by

considering whether the policy’s insuring agreements create

coverage for the disputed claim. See Stanford Ranch, Inc. v.

Md. Cas. Co., 89 F.3d 618, 627 (9th Cir. 1996). If coverage

exists, then the court considers whether any exclusions apply.

If coverage does not exist, the inquiry ends. The exclusions

are no longer part of the analysis because “they cannot expand

the basic coverage granted in the insuring agreement.” Id. 

[9] The rule is no different for exceptions to exclusions. A

“carve back” within an exclusionary provision merely restores

already-existing coverage. “[T]here is no cure for a lack of

coverage under the insuring clause. Even if the effect of an

SONY v. AMERICAN HOME ASSURANCE 8767
exception is to render a particular exclusion inoperative, the

insured must still prove the loss is covered.” Old Republic, 66

Cal. App. 4th at 145.5

Sony argues that a ruling for AISLIC on this issue would

render the defense exception to Exclusion P meaningless,

because if AISLIC has no duty to defend false advertising

claims, then the carve-back for defense has no purpose. This

is not necessarily the case. As AISLIC points out, the defense

exception could apply to claims that allege false advertising

in conjunction with a covered wrongful act, such as wrongful

act (c), infringement of copyright or trade dress. See, e.g.,

Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532

U.S. 424, 428 (2001) (plaintiff alleged false advertising in

conjunction with infringement of trade dress); Herman Miller,

Inc. v. Palazzetti Imports and Exports, Inc., 270 F.3d 298, 306

(6th Cir. 2001) (same). In such a situation, AISLIC would

indemnify the policyholder and provide certain defense costs

with respect to the trade dress claim,6 but only defend the

insured with respect to the false advertising claim. 

5Sony vigorously argues that coverage provisions can and do appear in

exclusions to policy coverage. The cases it cites fail to prove its point. See,

e.g., Aydin v. First State Ins. Co., 18 Cal. 4th 1183, 1191-92 (1998)

(exception to a pollution exclusion was properly construed as a coverage

provision, but only for the purpose of allocating the burden of proof on the

insured); Marie Y. v. Gen. Star Indem. Co., 110 Cal. App. 4th 928, 959-

60 (Ct. App. 2003) (exception to exclusion clause supported duty to

defend where coverage otherwise existed); TRB Investments, Inc. v. Fireman’s Fund Ins. Co., 40 Cal. 4th 19, 22-23 (2006) (“under construction”

exception to “vacancy” exclusion did not create coverage but merely

restored coverage that exclusion took away); Nat’l Union Fire Ins. Co. v.

Lynette C., 228 Cal. App. 3d 1073, 1080 (Ct. App. 1991) (insured properly

read the exception to the exclusion “in light of the basic coverage clause”).

6Recall that the AISLIC policy did not lay out a clear “duty to defend”

lawsuits alleging covered acts. Rather, it had a “right but not a duty to

defend” such suits, but promised to pay a varying portion of Sony’s

defense costs in excess of Sony’s deductible depending on whether Sony

chose its own lawyer or used AISLIC’s counsel. 

8768 SONY v. AMERICAN HOME ASSURANCE
[10] In light of the above, we hold that because there is no

coverage under the insuring provisions of the AISLIC Policy,

there is no coverage under the carve-out for defense of false

advertising within Exclusion P. Therefore, we affirm the district court’s grant of summary judgment on the issues of AISLIC’s duties to indemnify and defend Sony. AISLIC did not

engage in bad faith when it refused coverage because coverage did not exist, thus summary judgment on that claim was

also appropriate. See Love v. Fire Ins. Exch., 221 Cal. App.

3d 1136, 1152-53 (Ct. App. 1990). 

D. American Home Had No Duty to Defend or Indemnify

Sony 

The American Home policy provided that American Home

had a duty to indemnify and defend Sony against any lawsuit

seeking bodily injury or property damage. Property damage

was defined to include “physical injury to tangible property”

as well as “loss of use of tangible property that is not physically injured.” However, the policy excluded coverage for

property damage to Sony’s own product (Exclusion (k)), as

well as coverage for “impaired property or property not physically injured” arising out of “a defect, deficiency, inadequacy,

or dangerous condition in ‘[Sony’s] product’ ” (Exclusion

(m)). The impaired property exclusion had an exception for

“the loss of use of other property arising out of sudden and

accidental physical injury” to Sony’s product after it was put

to its intended use. 

Sony argues that the Kim/Kaen suits allege both “loss of

use of tangible property,” and “physical injury to property,”

therefore the district court erred when it granted summary

judgment in favor of American Home on the duty to defend

and indemnity claims. We disagree. While an insurer must

defend any claim potentially covered by a policy, Montrose

Chem. Corp., 6 Cal. 4th at 295, Sony has not proven potential

coverage of the Kim/Kaen claims under the American Home

policy. 

SONY v. AMERICAN HOME ASSURANCE 8769
1. Loss of use claims

[11] The Kim/Kaen complaints did not allege that the

defects in the PlayStation 2 caused them to experience a loss

of use of game discs or DVDs. Nonetheless, Sony argues that

the Kim/Kaen plaintiffs asserted “classic ‘loss of use’ ” claims

covered by the American Home policy. Sony cites to allegations that the PlayStation 2 was unable to read or play CDs,

DVDs, or original PlayStation games, and complaints of discs

skipping and freezing, accompanied by banging or clicking

noises. 

[12] These allegations are far from “classic ‘loss of use’ ”

claims. As the district court noted, the statements regarding

discs freezing and skipping referenced the defects in the

PlayStation 2, not defects in the discs themselves. Sony Comp.

Entm’t, No. C 04-0492 PJH, at 6 (N.D. Cal. Aug. 30, 2005).

Indeed, though it is undisputed that certain discs did not properly play on the PlayStation 2, the complaints never suggested

that the discs themselves did not function properly on other

devices. Id. In this respect, the suit is easily distinguishable

from the loss of use cases Sony cites, in which the insured’s

defective property rendered the property of a third party unusable. See Anthem Elecs., Inc. v. Pac. Employers Ins. Co., 302

F.3d 1049, 1057 (9th Cir. 2002) (defective circuit boards

inserted into scanners of third party plaintiff rendered scanners unusable); Hendrickson v. Zurich American Ins. Co., 72

Cal. App. 4th 1084, 1091-92 (Ct. App. 1999) (defective

strawberry plants planted in fields caused loss of use of fields).7

Moreover, the Kim/Kaen plaintiffs did not allege any recognized measure of loss of use of discs, such as rental value.

See, e.g., F&H Constr. v. ITT Hartford Ins. Co., 118 Cal.

App. 4th 364, 377 (Ct. App. 2004). Last, Sony’s citation to

the Kim/Kaen settlement agreement, which references “loss of

7Sony’s citation to Park Univ. Enter. v. American Cas. Co., 442 F.3d

1239, 1244-45 (10th Cir. 2006) is also unhelpful because the loss of use

in that case was not disputed. 

8770 SONY v. AMERICAN HOME ASSURANCE
use” of discs, is irrelevant, because the duty to defend is based

on the complaints and facts known to the insurer at the time

of tender only. We Do Graphics, Inc. v. Mercury Cas. Co.,

124 Cal. App. 4th 131, 136 (Ct. App. 2004) (“The duty to

defend is not measured by hindsight, but turns ‘upon those

facts known by the insurer at the inception of a third party

lawsuit.’ ”) (citing Montrose, 6 Cal. 4th at 295). 

[13] Even if Sony could establish coverage for the Kim/

Kaen suits under the loss of use provision, the lawsuits fall

squarely within the purview of Exclusion (m). That provision

excludes coverage for “loss of use” property damage arising

out of “a defect, deficiency, inadequacy, or dangerous condition in ‘[Sony’s] product.’ ” Any loss of use of the discs

inserted into the PlayStation 2 is the result of a defect in

Sony’s product, and is therefore excluded from coverage

under Exclusion (m). See America Online, Inc. v. St. Paul

Mercury Ins. Co., 347 F.3d 89, 98-99 (4th Cir. 2003) (loss of

use coverage barred by similar exclusionary provision). 

Sony’s only response to the Exclusion (m) argument is that

the “sudden and accidental” physical injury exception to the

exclusion applies. Sony unconvincingly contends that because

the complaints allege that the freezing and locking of the discs

can happen at any time and that the defects in the console

generally manifest at certain time periods, the allegations

“evince[ ] the possibility that the loss of use of discs resulted

from a sudden and accidental physical injury to the PlayStation 2s.” But these allegations provide far more support for

the theory that the devices deteriorated over time than that

each and every class member’s devices experienced a sudden

and accidental physical injury. Sony analogizes to Anthem, in

which this court held that the insured presented a possibility

that a similar “sudden and accidental physical injury” exception to an exclusion applied, but in that case extrinsic evidence in the form of diagnostic reports suggested that

SONY v. AMERICAN HOME ASSURANCE 8771
physical damage had occurred to the insured’s product. Here,

no such evidence exists. Anthem, 302 F.3d at 1059-60.8

[14] Accordingly, we hold that the Kim/Kaen lawsuits are

not covered under the “loss of use” coverage provision, and

that, even if they were, they are excluded from coverage

under Exclusion (m). The sudden and accidental injury exception to Exclusion (m) is inapplicable. 

2. Physical damage claims 

[15] The Kim/Kaen complaints themselves did not allege

any property damage to discs. In fact, in depositions, all three

class representatives specifically denied any claims of physical injury to discs inserted into the PlayStation 2. Further,

none of the customer statements in the original complaint or

motions for class certification or jury trial referenced

scratched or damaged discs. 

Despite the lack of reference to property damages in the

lawsuit, Sony argues that the Kim/Kaen complaint potentially

includes claims of physical damage to discs inserted into the

PlayStation 2. It argues that merely because class plaintiffs

did not suffer physical injury to the discs does not mean the

class could not have recovered on such a theory, and that

Sony’s retender of the Kim/Kaen complaint to American

Home in October 2003 was accompanied by evidence of customer complaints of physical injury to discs and/or games.9

8Sony also argues that the district court improperly placed the burden

on Sony to establish that the “sudden and accidental” exception applies.

While the district court cited a case dealing with an indemnity provision

rather than a duty to defend provision, see Aydin, 18 Cal. 4th at 1188,

Sony still bears the initial burden of proving that there is a possibility that

the exception to the exclusion applies. See Anthem, 302 F.3d at 1059 &

n.3. 

9The customer complaints are properly part of the duty to defend analysis because they were known to American Home at the time of tender.

Montrose, 6 Cal. 4th at 295. 

8772 SONY v. AMERICAN HOME ASSURANCE
[16] We find these arguments unpersuasive. Though the

duty to defend is broad, “the insured may not speculate about

unpled third party claims to manufacture coverage.” Hurley

Construction Co. v. State Farm Fire & Cas. Co., 10 Cal. App.

4th 533, 538 (Ct. App. 1992). California courts have held that

no duty to defend attaches where, as here, the third party complaint did not allege the type of damages covered by the policy, and the class representatives explicitly disavowed any

interest in the type of damages covered by the policy. See Low

v. Golden Eagle Ins. Co., 99 Cal. App. 4th 109, 113-14 (Ct.

App. 2002) (no duty to defend where “the . . . complaint is . . .

couched overwhelmingly in class action terms, but the named

plaintiff expressly disclaims any interest in seeking recovery

of damages for [the type of damages] . . . required to trigger

coverage and a related duty to defend under the policy”); see

also The Upper Deck Co. v. Federal Ins. Co., 358 F.3d 608,

615 (9th Cir. 2004) (“Upper Deck asked us to remember that

the underlying suit is a class action and that, even if the

named plaintiffs did not suffer bodily injury, members of the

class could have suffered bodily injury. This argument contradicts the complaint itself, which states [that the named class

plaintiffs are typical of the class as a whole.]”). Moreover, the

customer complaints of scratches and other damage to discs

— which could potentially establish physical damage — were

never incorporated into the third party lawsuit. Gunderson v.

Fire Ins. Exch., 37 Cal. App. 4th 1106, 1116 (Ct. App. 1995)

(no duty to defend where “none of the allegations concerning

damage to the fence [which could have been covered under

the policy] . . . were ever incorporated in [the] complaint

against appellants”) (emphasis in original). Further, American

Home need not rely on the assertions of Sony’s own counsel

about potential covered claims in determining whether it has

a duty to defend. Hurley, 10 Cal. App. 4th at 538. 

[17] Accordingly, we affirm the district court’s summary

judgment in favor of American Home on the duty to defend

issue. Sony has not established the potential for coverage

either under the loss of use or physical damage provisions of

SONY v. AMERICAN HOME ASSURANCE 8773
the policy. Sony’s indemnification claim fails as well for the

duty to defend is broader than the duty to indemnify. Montrose, 6 Cal. 4th at 295. The bad faith claim against American

Home is similarly rejected because if there is no coverage,

there can be no bad faith in refusing coverage. Love, 221 Cal.

App. 3d at 1153. 

III. CONCLUSION

We AFFIRM the district court. 

BYBEE, Circuit Judge, concurring in part and dissenting in

part: 

I agree with the majority that American Home Assurance

Company had no duty to indemnify or defend Sony Computer

Entertainment America, Inc. (“Sony”). I thus concur in Section II.D of the majority opinion. I also agree that American

International Specialty Lines Insurance Company (“AISLIC”)

had no duty to indemnify Sony. For the reasons I explain

below, however, I disagree with the majority’s conclusion that

AISLIC had no duty to defend Sony. I respectfully dissent

from that portion of Section II.C of the majority opinion.

I

Like the majority, I begin my analysis by examining the

policy’s coverage clauses; if a claim does not fall within those

clauses, no coverage exists. Palmer v. Truck Ins. Exch., 21

Cal. 4th 1109, 1115-16 (1999). The insurance policy between

Sony and AISLIC provided that AISLIC would indemnify

Sony for damages resulting from any claim for “a wrongful

act” in Sony’s business. The policy defined the term “wrongful act” by listing a number of actions including “negligent

publication.” Therefore, I agree with the majority that “the

question of whether AISLIC’s policy covers Sony turns on

8774 SONY v. AMERICAN HOME ASSURANCE
whether the Kim/Kaen lawsuits assert claims within the meaning of [negligent publication].” Maj. Op. 8759. 

A

In interpreting the phrase1“negligent publication,” under

California law courts must give effect to the mutual intention

of the parties. See MacKinnon v. Truck Ins. Exch., 31 Cal. 4th

635, 647 (2003). The parties’ intent, in turn, is inferred solely

from the written provisions of the contract. Id. The words in

an insurance contract are to be “interpreted in their ordinary

and popular sense, unless used by the parties in a technical

sense or a special meaning is given to them by usage.” Id. at

648 (internal quotation marks omitted). Furthermore, “insurance coverage is interpreted broadly so as to afford the greatest possible protection to the insured.” Id. (internal quotation

marks omitted). The majority and I are in agreement on these

principles of California insurance contract interpretation. It is

in their application that our disagreement arises. 

AISLIC does not contend that the parties gave the phrase

“negligent publication” a technical or special meaning.

Accordingly, the words “negligent publication” are to be “interpreted in their ordinary and popular sense.” Id. at 648

(internal quotation marks omitted). 

Sony contends that the ordinary and popular meaning of the

phrase “negligent publication” can be determined by combining the dictionary definitions of the individual words in the

two-word phrase. I agree. When a layperson encounters an

1The majority refers to “negligent publication” as a “term.” I believe

that “phrase” is more appropriate and therefore refer to it as such.

Although this may seem like mere semantics, my disagreement with the

majority turns on the fact that the majority believes that “negligent publication” must be a single term with a single definition, whereas I believe

that “negligent publication” is not a single term at all, but a phrase made

up of two individual words that have meaning both individually and in

combination. 

SONY v. AMERICAN HOME ASSURANCE 8775
unknown phrase, absent a technical or special meaning, that

layperson interprets the phrase by combining the meanings of

the individual words comprising that phrase. In this case, a

layperson would understand that “negligent publication”

would simply refer to a publication distributed negligently.

“In seeking to ascertain the ordinary sense of words [in an

insurance policy], courts in insurance cases regularly turn to

general dictionaries.” Scott v. Cont’l Ins. Co., 51 Cal. Rptr. 2d

566, 569 (Ct. App. 1996). Turning to the dictionary, the word

“negligent” means “lacking or exhibiting a lack of due care or

concern.” WEBSTER’S II NEW COLLEGE DICTIONARY 732 (1999).

The word “publication” means “communication of information to the public.” Id. at 895. Given the ordinary meaning of

those words, a layperson might properly understand that the

phrase “negligent publication” means something like “communication of information to the public lacking or exhibiting

a lack of due care or concern.” 

B

Applying this definition of “negligent publication,” the

Kim/Kaen lawsuits assert claims — namely, false advertising

and negligent publication — within the meaning of “negligent

publication.” The majority concedes as much. Maj. Op. 8759.

The Kim complaint claims that Sony’s “press releases and

advertisements have not and do not disclose the defect or the

viewing or software compatibility problems described in this

Complaint.” The Kim complaint clearly complains about

Sony’s press releases and advertising, that is, its communication of information to the public. Furthermore, by alleging

that those communications fail to disclose certain defects, the

Kim complaint can be understood to contend that Sony’s communications were “negligent” or “exhibit[ed] a lack of due

care or concern.” Similarly, the Kaen complaint claims that

Sony issued advertisements that were “untrue, misleading,

and likely to deceive the public.” Unless there was an applicable exclusion, the affirmative provisions of the insurance con8776 SONY v. AMERICAN HOME ASSURANCE
tract provided coverage for the Kim/Kaen claims, and AISLIC

had a duty to indemnify Sony. 

II

The majority comes to a contrary conclusion. It does not

contend that “negligent publication” has a technical or special

meaning. On the contrary, the majority acknowledges that

“[b]ecause there is no evidence that the parties intended the

term to carry a technical meaning, the ordinary and popular

meaning of the term governs.” Maj. Op. 8759. The majority,

however, rejects the dictionary-derived meaning of “negligent

publication,” because it believes that this meaning would be

inconsistent with the context of the insurance policy as a

whole, and because it finds no judicial case using the phrase

in precisely this way.

A

The majority argues that we should not apply the dictionary

definition of the phrase “negligent publication” because it is

inconsistent with the context of the AISLIC policy as a whole.

Maj. Op. 8760. I agree with the majority that the “meanings

of a word as found in a dictionary cannot be inserted into the

text of an insurance policy without regard to the document

construed as a whole.” Scott, 51 Cal. Rptr. 2d at 569 n.4. The

majority argues that the placement of the phrase negligent

publication in the list “defective advice, incitement, and negligent publication” tends to supports the majority’s interpretation that the term refers to a narrow tort somehow relating to

“defective advice and incitement.” Maj. Op. 8761. Similarly,

the majority suggests that the fact that this is a media policy

cuts against the plain and ordinary meaning of the phrase.

Maj. Op. 8762. 

Other indications in the policy, however, support Sony’s

interpretation of “negligent publication,” in particular, Exclusion P. Exclusion P disallows indemnity coverage for claims

SONY v. AMERICAN HOME ASSURANCE 8777
“arising out of false advertising or misrepresentation in advertising” but goes on to carve back a duty to defend in those

cases. Although I agree that an exclusion cannot expand coverage that does not exist under the affirmative coverage provisions, see Stanford Ranch, Inc. v. Md. Cas. Co. 89 F.3d 618,

627 (9th Cir. 1996), it “can help to resolve an ambiguity in an

insuring clause in favor of coverage.” Am. Alternative Ins.

Corp. v. Super. Ct., 37 Cal. Rptr. 3d. 918, 924 n.2 (Ct. App.

2006). “Unquestionably, it may be considered part of the general circumstances impacting an insured’s objectively reasonable expectations as to the scope and extent of coverage under

a policy.” Id. Exclusion P provides contextual evidence for

the phrase “negligent publication” within the affirmative coverage section of the AISLIC policy. If there was no affirmative coverage for false advertising or misrepresentation in

advertising then the policy would have no need for an exclusion specifying that those claims were not covered. Why

recite that certain acts are expressly excluded from the policy

if they were never covered in the first place? The majority’s

interpretation leaves Exclusion P meaningless. At best, the

context of the policy sends mixed signals. In light of this

ambiguity, I would apply the plain meaning of the words and

construe the insurance policy in favor of the insured. See

Bank of the W. v. Super. Ct., 2 Cal. 4th 1254, 1265 (1992)

(insurance policies are construed against the insurer if the

meaning of a term is ambiguous in light of the policy as a

whole). 

B

The majority also finds the dictionary definition of “negligent publication” unpersuasive because it is not supported by

the case law. Maj. Op. 8762. I fear that in the course of implementing the common law system, we have become so adept

at looking to judicial cases to obtain the solutions to the challenges we encounter, that we have come to believe that even

when determining the ordinary and popular meaning of

words, the solution is to be found in case law. The California

8778 SONY v. AMERICAN HOME ASSURANCE
Supreme Court has admonished that absent evidence that the

parties intended the provision to have a specialized meaning

that a term must be construed as would a layperson, and not

as it might be analyzed by an attorney or an insurance expert,

or, I might add, a judge. See E.M.M.I. Inc., v. Zurich Am. Ins.

Co., 84 P.3d 385, 390 (Cal. 2004). I am quite certain that a

layperson looks to a dictionary to determine the meaning of

a phrase, not to case law. 

The consequences of the majority’s methodology would

surely befuddle a layman. On the one hand, the majority finds

that the term “negligent publication” cannot encompass the

definition that Sony proposes because none of the cases “use

the term as broadly as Sony does.” Maj. Op. 8762. On the

other hand, the majority acknowledges that “the cases do not

yield one clear definition of ‘negligent publication.’ ” Maj.

Op. 8762. The very fact, however, that courts across the country have applied the phrase “negligent publication” liberally

and loosely to a broad variety of claims and theories of recovery is evidence that each of those courts is individually applying the plain meaning of the phrase. If the phrase does not

have a consistent meaning, cited by the majority, then why

prefer the cases over the dictionary? 

The only commonality in the “variety of cases” cited by the

majority involving the phrase “negligent publication” is that

all of them use a definition that is consistent with the ordinary

or popular meaning of the words. That is, they all involve the

publication of something in a negligent matter. Although it is

true that none of the cases encompass Sony’s proffered definition, I am puzzled as to why cases that “do not yield one clear

definition of ‘negligent publication’ ” should be seen as a

“limited set.” Maj. Op. 8762. If the first court to use the

phrase had been deemed to have created a closed set, then

none of the subsequent cases could have created separate definitions. I am unaware that Sony missed any secret deadline

after which a term may no longer be used in new judicial contexts, and the possible usages for the term is closed to the conSONY v. AMERICAN HOME ASSURANCE 8779
junction of the ways in which it had thus far been used.

Absent such a deadline, I would do what every court to have

used the phrase “negligent publication” has done, and I would

look to the plain meaning of the words to determine their

meaning. That plain meaning is better determined by looking

in a dictionary than in court cases. 

III

Having concluded that the policy’s affirmative insuring

agreements create coverage for Sony’s disputed claim, I next

turn to the exclusions, to determine whether coverage has

been otherwise excluded. See Stanford Ranch, 89 F.3d at 627.

Exclusion P of the policy disallows coverage for claims “arising out of false advertising or misrepresentation in advertising.” This language removes Sony’s claim from the coverage

granted it by the “negligent publication” provision. Exclusion

P, however, then states: “[h]owever, we will defend suits

alleging any of the foregoing conduct until there is a judgment, final adjudication, adverse admission or finding of fact

against [Sony].” Although Exclusion P excludes indemnity

coverage of Sony’s claim, it affirms a duty to defend. Consequently, I would conclude that AISLIC had a duty to defend

Sony’s claims and would reverse that portion of the district

court’s judgment. 

8780 SONY v. AMERICAN HOME ASSURANCE