Caffeinated Boozemaker Sues Its Insurer

     CHICAGO (CN) – Phusion Projects, maker of the caffeinated alcohol drink Four Loko, sued an insurer for denying coverage in at least four of the many personal injury lawsuits Phusion faces.
     Phusion has been sued more than two dozen times for personal injury claims stemming from its caffeinated alcohol, according to the Courthouse News database. At least six of the claims involve deaths, often in car accidents, and at least two are class actions.
     In its own complaint, Phusion Projects sued Frank Crissie, A.F. Crissie & Co., and Selective Insurance of South Carolina in Cook County Court.
     Phusion’s Four Loko malt liquor was boosted with caffeine, guarana and taurine until 2011. Several states banned Four Loko in 2010 as it gained a reputation as being “blackout in a can.”
     A reformulated product, introduced in 2011 after the Federal Trade Commission accused Phusion of false advertising, does not contain caffeine, guarana and taurine.
     Phusion claims that its 23.5-oz. were equivalent to one or two cans of beer, but the FTC, in a modified settlement order, said in February that the cans were 11 to 12 percent alcohol by volume, making a single can of it equivalent to four or five 12-ounce cans of beer.
     The many plaintiffs who have sued Phusion claim that the caffeine makes drunk people underestimate their incapacity from the booze.
     In one case, a man’s family claimed he “accidentally shot and killed himself after consuming a number of cans of Four Loko and remaining awake for more than thirty hours.”
     In another case, a man claims he “developed a heart condition as a consequence of drinking Four Loko and that since that time he has required the care of a cardiologist.”
     In its own complaint, Phusion claims it bought a general liability policy with Selective Insurance, to “protect Phusion from risks of liability arising from its particular business operations as an alcoholic beverage manufacturer.”
     The complaint states: “Consistent with Mr. Crissie’s advice that ‘Dram Shop’ coverage was not necessary for a business that does not sell directly to consumers, the quote had line items for Liquor Liability Coverage, but did not include any proposed limits for such coverage. …
     “Phusion relied on Mr. Crissie’s explanation of the scope of Liquor Liability Coverage in accepting the Selective Policy as issued and not attempting to purchase separate Liquor Liability Coverage.”
     But when Phusion sought indemnification for four lawsuits filed between May 2010 and May 2011, Selective denied coverage and sought a declaration from the Chicago Federal Court “that it is not required to defend or indemnify plaintiffs against certain of the underlying lawsuits. In addition to alleging that the liquor liability exclusion in the selective policy avoided coverage for these underlying lawsuits, Selective also asserted that certain of the underlying lawsuits pleaded bodily injury or offenses that occurred outside of the Selective Policy’s policy period,” according to Phusion’s complaint.
     Phusion wants Selective ordered to indemnify it, and damages for breach of contract, negligence, and negligent misrepresentation.
     It is represented by John Vishneski III with Reed Smith.
     Last year, in a similar case, a federal judge ruled that the policy’s liquor liability exclusion was unambiguous, and “clearly provides that plaintiffs have no duty to defend any case arising from Phusion causing a person to become intoxicated.”

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