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Federal Trial in St. Louis Missouri

Tauler Smith Wins Federal Bench Trial for Insurance Consumer

Federal Trial in St. Louis Missouri

The insurance claim lawyers at Tauler Smith LLP recently won a major trial on behalf of a food & beverage manufacturer in a federal court in St. Louis, Missouri. The litigation began in a California courtroom with a business dispute over the manufacture of protein bars. Later, several of the parties in that case were also involved in insurance litigation heard by a U.S. District Court. Now, the judge has issued a ruling, with Tauler Smith winning a federal bench trial for their insurance consumer client.

The federal court’s decision can be read here. To learn more about Tauler Smith’s victory in the insurance claim lawsuit, keep reading this blog.

California Nutritional Supplement Lawyers Represent Food Manufacturer in Defective Protein Bar Lawsuit

One of the defendants in the nutritional supplement lawsuit was Eagle Mist Corporation, which does business as Osagai International and which is run by Kevin Laughlin. Eagle Mist is a company that invents and formulates functional foods, such as protein shakes and nutrition bars. They also provide other manufacturers with the technological ingredients they need for foods, beverages, and personal care products.

Nutritional Supplement Agreement

Eagle Mist entered into an agreement to supply ingredients to Sapphire Bakery, which would use the ingredients to reformulate and manufacture 13 types of nutritional protein bars. Sapphire then supplied the nutrition bars to Defense Nutrition, which finally supplied the bars to Julian Bakery.

Nutritional Supplement Dispute

Julian Bakery, the company that ultimately received delivery of the protein bars, alleged that the bars were defective due to the other companies modifying the formula of the bars, in addition to using certain processing agents during manufacturing. Julian Bakery sued Eagle Mist and Sapphire for breach of contract, damages related to defective goods, negligence, breach of warranty, unfair business practices, fraud, negligent misrepresentation, and promissory estoppel.

The lawsuit was filed in the Los Angeles County Superior Court, and the complex multi-party litigation included cross-complaints between seven (7) parties that all had a connection to the business dispute. Los Angeles nutritional supplement attorney Robert Tauler represented Eagle Mist in the California litigation, and successfully defeated three successive motions for summary adjudication in the case.

Insurance Coverage Dispute in California Food Supplement Case

Before starting production on the nutrition bars that were to eventually be delivered to Julian Bakery, Eagle Mist needed to get insurance coverage. At the time, Sapphire Bakery had a commercial general liability policy of insurance issued by Ohio Security Insurance Company. That policy called for Ohio Security to cover any legal expenses that Sapphire might one day become obligated to pay as damages in a lawsuit if sued. Since Sapphire’s insurance policy with Ohio Security allowed for the “named insured” to extend coverage to another company as an “additional insured,” Sapphire asked Ohio Security’s insurance broker to include Eagle Mist in its policy. The insurance broker then provided a certificate of liability insurance to Eagle Mist.

The insurance coverage became extremely important later when there was a business dispute over the manufacture of the nutrition bars. Sapphire Bakery’s insurance policy with Ohio Security meant that the insurance company would pay for Sapphire’s legal defense in the nutritional supplement litigation. The insurance company also agreed to pay for Eagle Mist’s legal defense in the civil suit because Eagle Mist was on the policy as an additional insured.

Texas Consumer Protection Attorney Camrie Ventry Wins Insurance Claim Litigation in U.S. District Court

The plaintiffs in the insurance claim litigation were Ohio Security Insurance Company and Ohio Casualty Insurance Company. The parent company of Ohio Security and Casualty is Liberty Mutual Insurance. Ohio Security and Liberty Mutual paid for Eagle Mist’s legal defense in the California nutritional supplement case. Later, the insurance companies argued at trial that Eagle Mist should be ordered to pay back their legal defense costs because they were never supposed to be covered under the insurance policy.

Dallas consumer protection attorney Camrie Ventry of Tauler Smith LLP represented Eagle Mist in the insurance coverage lawsuit. The case was heard by the United States District Court for the Eastern District of Missouri, with the court holding a one-day bench trial and issuing a memorandum opinion on December 16, 2022. The court was tasked with determining whether Ohio Security Insurance Company did, in fact, have a legal obligation to defend Eagle Mist under the terms of its insurance policy, as well as whether Ohio Security was entitled to reimbursement of the legal defense costs that they provided to Eagle Mist.

Federal Court Rules That Insurance Company Unreasonably Delayed Its Coverage Decision

Ohio Security’s argument at trial was that because Eagle Mist was never covered under the insurance policy, the insurance provider was entitled to recover all expenses it paid for Eagle Mist’s legal defense. The U.S. District Court rejected this argument and found that, under the circumstances, it was justified for Eagle Mist to retain the benefits of the legal expenses paid by the insurance company. Accordingly, the court entered judgment in favor of the Tauler Smith LLP client.

The court cited four main reasons for its ruling in favor of Eagle Mist and against the insurance company:

  1. Ohio Security voluntarily assumed the defense of Eagle Mist in the nutritional supplement lawsuit.
  2. Ohio Security had ongoing knowledge that Eagle Mist was not actually covered under the insurance policy.
  3. Ohio Security continuously paid the defense costs of Eagle Mist in the nutritional supplement lawsuit.
  4. Ohio Security unreasonably delayed for three (3) years before finally notifying Eagle Mist that they were not covered under the policy.

#1 – Insurance Company Agreed to Extend Policy Benefits

One of the benefits of Ohio Security’s insurance policy with Sapphire Bakery (and with Eagle Mist) was that Ohio Security agreed to pay all legal defense costs if there was a lawsuit brought by a third party.

As soon as the defective protein bars lawsuit was filed, Kevin Laughlin and Eagle Mist contacted Ohio Security Insurance Company to confirm that Eagle Mist was covered under the insurance policy. The U.S. District Court said that Eagle Mist had a good faith basis to believe that they were covered under the insurance policy. Kevin Laughlin communicated both verbally and in writing with Ohio Security to confirm that Eagle Mist was an additional insured under the policy, and he did the same with Sapphire Bakery. Moreover, the court found, Laughlin reasonably believed that the Certificate of Insurance issued by the insurance broker explicitly conferred coverage.

#2 – Insurance Company Knew the Policy Was Invalid

Shortly after the supplement civil suit was filed, the insurance company conducted its own investigation to verify whether Eagle Mist qualified as an additional insured under the insurance policy. During this investigation, Eagle Mist provided Ohio Security with email communications, purchase orders, and contracts.

According to the U.S. District Court, Ohio Security knew for several years that Eagle Mist was not actually covered under the insurance policy. But rather than acting quickly to provide notice, the insurance company delayed for three (3) years before finally informing Eagle Mist at a time when it would be most inconvenient for the food & beverage ingredient supplier.

#3 – Insurance Company Continued to Pay Legal Bills

After the investigation, Ohio Security still agreed to cover Eagle Mist’s legal fees for the nutritional supplement lawsuit. For the next three (3) years, the insurance company paid all of Eagle Mist’s legal bills in the case. During this time, Ohio Security made no statements to indicate that Eagle Mist was not covered under the insurance policy, nor did they provide notice to Eagle Mist that the food and beverage company was not covered under the insurance policy. It was only when the lawsuit was set to start trial that Ohio Security suddenly revealed that Eagle Mist never should have been covered under the policy. Ohio Security withdrew their defense, stopped paying Eagle Mist’s legal bills, and demanded that Eagle Mist repay nearly $1 million in defense costs already paid.

#4 – Insurance Company Delayed Its Coverage Decision

Although Ohio Security assumed the defense of Eagle Mist in the case and agreed to cover all legal costs, the insurance company argued that they had explicitly reserved the right to opt out of the arrangement. The court found this argument unpersuasive because the insurance company “essentially buried their head in the sand,” only to later “ask the Court to claw back funds they voluntarily paid over a span of years without producing any evidence that Defendants acted unjustly or that a three-year delay in asserting their coverage position was justified or reasonable.”

The insurance company knew at the start of the California nutritional supplement litigation that Eagle Mist was not supposed to be covered under the policy, but nevertheless continued to pay all legal costs while telling Eagle Mist that there were no issues. Then, after delaying for several years, the insurance company suddenly informed Eagle Mist that they were not covered under the policy. This sudden change in coverage came just one month before trial in the supplement lawsuit, when Eagle Mist would be most vulnerable.

The insurance company tried to justify its decision to withdraw coverage by pointing to a single, vague sentence about “reservation of rights” buried in a 25-page boilerplate letter. The court rejected this argument by noting that “a single mention in a twenty-five-plus-page boilerplate reservation of rights letter, without any further action by Plaintiffs for three years, was insufficient to put Defendants on notice they might not be covered under the Policy.”

Tauler Smith Insurance Litigation Team Represents Businesses & Consumers in California, Texas, and Throughout the U.S.

The Tauler Smith consumer protection & insurance litigation team is proud of its strong track record in insurance claim cases in state courts across California and Texas, as well as in federal courtrooms. Insurance companies must be held accountable when they attempt to take advantage of customers, which is why Camrie Ventry and our Texas litigators always fight so hard for clients in these cases.

After successfully defending Eagle Mist against Ohio Security and Liberty Mutual, Ms. Ventry called it “a great victory” for businesses and individuals who are unfairly forced to pursue the insurance benefits to which they are entitled. Ms. Ventry added, “This ruling shows that insurance companies cannot overreach by demanding to recover an exorbitant amount of money from the very people they are charged with protecting. The court got it right.”

Contact the California and Texas Insurance Claim Lawyers at Tauler Smith LLP

The attorneys at Tauler Smith LLP represent businesses and individuals in a range of practice areas, including dietary supplement lawsuits, consumer protection litigation, and insurance litigation. Call us today or send an email to schedule a free initial consultation about your case.

Anxiety Supplement Lawsuit

Natrol Class Action for Anxiety Supplements

Anxiety Supplement Lawsuit

Tauler Smith LLP, a California law firm focusing on consumer fraud litigation, recently filed a class action complaint against supplement manufacturer Natrol LLC. The Natrol class action for anxiety supplements complaint asserts that Natrol is violating the Consumers Legal Remedies Act (CLRA) by marketing its Relax+ Ultimate Calm supplement as a remedy for anxiety when it contains “ineffectual herbs, extracts, and other vitamins that plainly do not have the ability to treat anxiety.” The nutritional supplement lawsuit also alleges that when an individual uses unapproved anxiety medications like Relax+ Ultimate Calm instead of seeking treatment from a licensed doctor, they could worsen their mental health.

The Los Angeles false advertising lawyers at Tauler Smith LLP are bringing civil actions against companies that market and sell dietary supplements claiming to remedy anxiety. If you purchased one of these supplements, you may be eligible to join a class action lawsuit. Contact us today to discuss your options.

Nutritional Supplement Manufacturers Endanger Consumers with Unapproved Anxiety Drugs

Anxiety is a recognized mental disorder. When a person suffers from anxiety, they may be stricken with feelings of worry or fear while attempting to perform everyday activities. This is a major mental health concern for millions of Americans, with statistics showing that more than 40 million U.S. adults are affected by anxiety disorders. This includes millions of young children and teenagers who struggle with mental health problems.

According to the Mayo Clinic, the best way to treat an anxiety disorder is with medications prescribed by a licensed physician and psychotherapy provided by a mental health counselor. Additionally, the National Institute of Public Health (NIH) has stated that individuals should not self-diagnose or use over-the-counter supplements to treat anxiety. The nutritional supplement industry has attempted to capitalize on the country’s worsening mental health crisis in the aftermath of the COVID-19 pandemic by making unsupported claims regarding the ability of their products to relieve conditions like anxiety. When anxiety is left untreated, it can be ruinous to individuals and lead to more serious conditions and diseases.

Natrol Accused of False Advertising of the Relax+ Ultimate Calm Supplement as a Remedy for Anxiety

Natrol is a U.S. manufacturer of vitamins, minerals, and nutritional supplements. The company’s headquarters are in Chatsworth, California. According to Dun & Bradstreet, Natrol’s annual revenues surpass $121 million, which is part of the $140 billion market for dietary supplements.

The complaint alleges that Natrol puts consumers at risk by advertising its Relax+ Ultimate Calm supplement as a treatment for anxiety. The U.S. Food and Drug Administration (FDA) has issued a warning about the use of unapproved drugs to treat anxiety. Consumers who place their trust in nutritional supplement manufacturers may be more likely to forego seeking medical treatment for their health conditions, which can compound the effects of the disorders. Additionally, these individuals may be more likely to develop other mental and physical conditions because anxiety can cause depression, substance misuse, social isolation, and suicide.

Supplements Claiming to Treat Anxiety Violate the California Consumers Legal Remedies Act

The California Consumers Legal Remedies Act (CLRA) is a consumer protection statute that is meant to safeguard individuals against business fraud, including “unfair methods of competition and unfair or deceptive acts or practices in a transaction.” The CLRA, which is codified in Cal. Civ. Code §§ 1750, makes it illegal for companies to mislead consumers in advertising or sales transactions. The statute explicitly prohibits companies from “representing that goods…have…characteristics, ingredients, uses, benefits, or quantities that they do not have.” Plaintiffs can bring private civil actions under the CLRA when they have been deceived by the acts or practices of a company in the sale of consumer goods such as nutritional or dietary supplements.

Natrol has been accused of making unsupported claims about the ability of its Relax+ Ultimate Calm product to relieve anxiety. On the product packaging, Natrol prominently represents that use of the Relax+ Ultimate Calm supplement will reduce “stress, anxiety & tension” and offer other health benefits. According to the complaint, these representations are untrue and unlawful.

Class Action Lawsuit Filed Against Natrol for Violating the CLRA

The Los Angeles business fraud attorneys at Tauler Smith LLP have brought a class action lawsuit against Natrol for violating the CLRA. The legal complaint was filed in the Los Angeles County Superior Court. The complaint explains that an individual who consumes the Relax+ Ultimate Calm product “in lieu of a professional medical evaluation and treatment” is at risk of exacerbating their anxiety, as well as developing additional mental health disorders. Anyone who purchased the Relax+ Ultimate Calm supplement may be eligible to join the class action.

The class action lawsuit against Natrol seeks relief and judgment that includes the following:

  • An injunction that orders Natrol to correct its alleged deceptive marketing scheme and stop claiming that Relax+ Ultimate Calm is a remedy for anxiety.
  • An award of actual, punitive, and statutory damages to compensate the plaintiffs who purchased Relax+ Ultimate Calm.
  • Reimbursement of attorney’s fees for the plaintiffs.
  • Any other relief that the court may deem just and proper.

Did You Buy a Supplement That Claims to Treat Anxiety? Contact a California Consumer Fraud Lawyer Today

The California consumer fraud attorneys at Tauler Smith LLP are committed to protecting consumers against deceptive business practices. If you purchased a dietary supplement that claims to remedy anxiety, you should contact our legal team today to discuss your eligibility to join a class action lawsuit. Call 310-590-3927 or email us to schedule a free consultation.