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****************************************************** The ``officially released'' date that appears near the beginning of each opinion is the date the opinion will be published in the Connecticut Law Journal or the date it was released as a slip opinion. The operative date for the beginning of all time periods for filing postopinion motions and petitions for certification is the ``officially released'' date appearing in the opinion. In no event will any such motions be accepted before the ``officially released'' date. All opinions are subject to modification and technical correction prior to official publication in the Connecticut Reports and Connecticut Appellate Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the Connecticut Law Journal and subsequently in the Connecticut Reports or Connecticut Appellate Reports, the latest print version is to be considered authoritative. The syllabus and procedural history accompanying the opinion as it appears on the Commission on Official Legal Publications Electronic Bulletin Board Service and in the Connecticut Law Journal and bound volumes of official reports are copyrighted by the Secretary of the State, State of Connecticut, and may not be reproduced and distributed without the express written permission of the Commission on Official Legal Publications, Judicial Branch, State of Connecticut. ****************************************************** QSP, INC., ET AL. v. THE AETNA CASUALTY AND SURETY COMPANY ET AL. (SC 16269) (SC 16270)
Borden, Katz, Palmer, Sullivan and Vertefeuille, Js.* Argued November 28, 2000--officially released June 5, 2001 Counsel

Frances J. Brady, with whom were Jerold Oshinsky and, on the brief, Samuel L. Jefferson, Jr., Michael T. Sharkey and Marilyn B. Fagelson, for the appellants (plaintiffs). Alan H. Barbanel, pro hac vice, with whom were Michael C. Deakin and, on the brief, Peter D. Clark, Stephen D. Treuer, pro hac vice, and Thomas E. Greiff, pro hac vice, for the appellee (defendant General Star National Insurance Company). Bruce D. Celebrezze, pro hac vice, with whom were Linda L. Morkan, Theodore J. Tucci and, on the brief, Jeffrey A. Meyers, pro hac vice, and Stephen E. Goldman, for the appellees (defendants American Manufacturers Mutual Insurance Company et al.). David F. Bennett, William T. Corbett, Jr., pro hac

vice, and William J. Metcalf, pro hac vice, filed a brief for the appellee (defendant Federal Insurance Company).
Opinion

SULLIVAN, J. This appeal arises from a declaratory judgment action filed by the plaintiffs, Reader's Digest Association, Inc. (Reader's Digest), and QSP, Inc. (QSP), with respect to a controversy with the defendants, American Manufacturers Mutual Insurance Company and American Motorists Insurance Company (collectively American Motorists), General Star National Insurance Company (GenStar) and Federal Insurance Company (Federal),1 over potential insurance coverage to be provided by the defendants under commercial general liability and excess liability policies that they had issued to the plaintiffs. The policies covered, among other things, the defense of actions based on advertising or personal injury. The plaintiffs sought a declaration as to whether they were entitled, under the terms of any or all of the policies effective during the relevant time period, to the defense of and indemnification for an underlying antitrust class action filed in federal court and entitled Roman Catholic Bishop of San Diego v. Reader's Digest Assn., Inc., & QSP, Inc., United States District Court, Docket No. 93-1953-IEG (CM) (S.D. Cal.) (Bishop action).2 The trial court concluded that the defendants were not under a duty to defend the plaintiffs in the Bishop action. We agree and therefore affirm the judgment. The following facts and procedural history are relevant to the disposition of the issues on appeal. QSP is a corporation organized and existing under the laws of the state of Delaware, with its principal place of business in Ridgefield. It is a wholly owned subsidiary of Reader's Digest. Reader's Digest is a corporation organized and existing under the laws of the state of Delaware, with its principal place of business in Pleasantville, New York. American Motorists sold commercial general liability insurance coverage to Reader's Digest for the period from 1990 to 1996.3 GenStar and Federal provided excess liability coverage to Reader's Digest from 1989 to 1994. QSP, as a subsidiary of Reader's Digest, is covered as an insured under the relevant policies. In December, 1993, the plaintiffs in the Bishop action filed their federal antitrust class action lawsuit, alleging that QSP and Reader's Digest had violated federal antitrust laws by monopolizing the school and youth group magazine fund-raising market. The class of plaintiffs in the Bishop action consisted of all school-related entities in the continental United States that had purchased magazine fund-raising programs from QSP in any one or more years from 1990 to 1993. The Bishop plaintiffs alleged that QSP and Reader's Digest had eliminated or weakened competition in the school fund-raising

market by conducting ``anticompetitive, predatory and exclusionary acts'' including, but not limited to: (1) defamation of the character and competence of their competitors; (2) commercial disparagement; (3) unfair competition; and (4) threatening and instituting bad faith litigation as part of a campaign of anticompetitive disparagement4 as a result of the alleged unlawful conduct of Reader's Digest and QSP. The Bishop plaintiffs claimed that they were deprived of substantial magazine fund-raising revenues that they otherwise would have received if there were competition in the market. They further claimed that, because of the diminished revenue, they were forced to cut important educational and extracurricular programs and activities. QSP and Reader's Digest entered into a settlement agreement with the Bishop plaintiffs in October, 1996. The terms of the settlement expanded the class of Bishop plaintiffs to include all United States schools that had purchased magazine fund-raising programs from QSP between 1990 and 1995, and obligated Reader's Digest and QSP to pay members of the class of Bishop plaintiffs $15 million, plus certain additional cash equivalents.5 QSP and Reader's Digest gave notice of the lawsuit and settlement to their primary carriers, American Motorists, which refused either to defend them in the Bishop action or to reimburse them for costs incurred in defending or settling the class action lawsuit. American Motorists stated that their insurance policies covered only claims by competitors, and did not cover claims by customers, like the Bishop plaintiffs, who alleged damages flowing from the anticompetitive conduct of the insured. Additionally, American Motorists argued that their policy provisions covering ``advertising injury,'' ``advertising offense,'' and ``personal injury'' did not cover federal antitrust violations when those violations ``arose out of'' covered offenses, such as defamation, disparagement, malicious prosecution or unfair competition, where those offenses had not been committed against the Bishop plaintiffs.6 GenStar and Federal, as Reader's Digest's excess liability carriers, also refused to defend Reader's Digest and QSP or indemnify them for damages awarded in the Bishop action under the ``advertising offense'' section of their policies, claiming that the Bishop plaintiffs' injuries arose out of the existence of a monopoly, rather than out of unfair competition committed in the course of advertising activities.7 QSP and Reader's Digest filed the present action in the Superior Court in response to the insurance companies' refusal to defend or indemnify them in the underlying Bishop action. In their complaint, QSP and Reader's Digest alleged that because the antitrust complaint in the underlying Bishop action alleged defamation, commercial disparagement, bad faith litigation and unfair competition, they were entitled to defense and indemnification on the ground that their insurance policies

expressly covered claims arising out of those offenses. The defendants responded that there was no duty to defend because: (1) the Bishop action was based solely on allegations of illegal monopolization and antitrust violations, rather than any offenses enumerated under the relevant policy provisions; and (2) the Bishop plaintiffs did not suffer any direct injury as a result of the alleged offenses. In a thorough and well reasoned decision, the trial court, Levin, J., granted the cross motions by the defendants for summary judgment.8 The trial court found that ``the defendants were not under a duty to defend [QSP and Reader's Digest] in the Bishop action because (1) the Bishop plaintiffs [did] not state facts showing defamation, disparagement, malicious prosecution or unfair competition [as recognized under the `personal injury,' `advertising injury' or `advertising offense' sections of the American Motorists and GenStar policies]; (2) the Bishop plaintiffs did not allege that they were the targets of those offenses; and (3) the antitrust injuries which the Bishop plaintiffs [did] allege [did] not `arise out of' these torts.'' QSP and Reader's Digest appealed to the Appellate Court on their motion, and the matter was transferred to this court pursuant to Practice Book

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