Inaccurately describing coffee beans’ source is not disparagement, a federal appeals court ruled Thursday in affirming a lower-court ruling in favor of a group of insurers, including units of Liberty Mutual Insurance Group, in a coverage dispute.

Nunica, Michigan-based L&K Coffee LLC, which roasts and sells coffee was sued along with other coffee companies for “false designation of origin, false advertising, and unfair competition” in violation of the federal Lanham Act by coffee growers in Hawai’i’s Kona region, according to the ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in L&K Coffee LLC, d/b/a Magnum Roastery; Kevin Kihnke v. LM Insurance Corp.; Liberty Insurance Corp.; Selective Way Insurance Co.; Valley Forge Insurance Co.; Continental Casualty Co.

The plaintiffs alleged the defendants had falsely designated their coffee’s origin as Kona, when most of the coffee beans contained in their products were sourced from other regions of the world.

L&K asked its insurers to defend and indemnify it under their policies’ “personal and advertising injury” coverage and sued them in U.S. District Court in Grand Rapids, Michigan, when they refused to do so.

The district court ruled in the insurers’ favor and was affirmed by a three-judge appeals court panel.

L&K contended the insurers had to defend it under the disparagement and slogan infringement components of its policies’ personal and advertising injury coverage.

The panel’s ruling, however, noted the word “disparagement” does not appear in the plaintiffs’ complaint. The substance of the complaint is that L&K falsely claimed its coffee’s source was the Kona region. 

“But this is not ‘disparagement’ as understood under Michigan law and therefore under the contract,” the ruling said.

L&K attorney Gregory M. Hatton of Hatton Petrie & Stackler APC  in Aliso Viejo, California, issued a statement that said in part, “I do not agree that any Kona farmer was harmed by any of the labeling issues in the underlying case. But this was a duty to defend case, and the allegations are what drive the carrier’s duty to defend. The fact that the allegations are meritless is irrelevant to the duty to defend.”

The insurers’ attorneys did not respond to requests for comment.