(CN) – An insurance company must defend the maker of Crayola crayons from accusations that its “certified non-toxic” labels misrepresented a product containing trace amounts of asbestos, the Illinois Court of Appeals ruled.
Binney & Smith, a division of Hallmark Cards, makes Crayola crayons. In 2000, the company settled a class action alleging that Crayolas contained traces of asbestos, a toxic mineral known to cause serious illnesses, such as lung cancer and asbestosis.
Federal Insurance Co. filed a complaint for declaratory judgment that it was not required to defend Binney in the lawsuit. Binney filed a counterclaim for breach of contract, alleging that Federal failed to cover a total of four lawsuits against the company,
The trial court sided with Binney and awarded it slightly over $1 million. Justice Wolfson affirmed the decision on appeal.
One of the items covered under Federal’s policy was consumer fraud. The class action leveled Consumer Fraud Act violations based on the “certified non-toxic” label on the crayon box.
“Because Binney was not specifically authorized … to use the terms ‘Certified Non-Toxic’ on its crayon labels, we find the Consumer Fraud Act did not provide an absolute defense to the claims raised in the (class) action,” Wolfson wrote.
“Based on the record before us, we see no reason to disturb the trial court’s finding.”