PepsiCo Sues Insurers Over Ultra-Processed Food Litigation
PepsiCo has initiated legal action against four of its insurance providers, alleging they failed to fulfill their duty to defend the company in a lawsuit filed by the City of San Francisco. The complaint, filed on October 23, 2026, in New York Supreme Court and subsequently moved to federal court on November 5, 2026, names ACE American Insurance Company, ACE Property and Casualty Insurance Company, Westchester Surplus Lines Insurance Company, and Vigilant Insurance Company as defendants.
The dispute centers on the San Francisco City Attorney’s December 2025 lawsuit, which targets PepsiCo and several other major food manufacturers. That underlying action alleges that products such as Cheetos, Doritos, Lay's, Gatorade, and Mountain Dew are ultra-processed and addictive, contributing to chronic health issues like obesity, diabetes, heart disease, and cancer among city residents. PepsiCo argues that its insurers have inconsistently applied coverage, pointing to the fact that ACE American agreed to defend the company in multiple individual consumer lawsuits involving similar allegations of health complications linked to ultra-processed foods.
According to the filing, ACE American agreed to provide a defense for an individual case, Bryce Martinez v. Kraft Heinz Company, Inc., et al., in June 2025. Furthermore, the complaint notes that the insurer agreed to defend five additional individual lawsuits with nearly identical claims shortly after denying coverage for the San Francisco action. PepsiCo contends that the distinction between the individual suits and the city’s action is merely procedural rather than substantive, as both seek relief for the same alleged conduct and health outcomes.
The insurers denied coverage in a letter dated May 1, 2026, asserting that the San Francisco lawsuit does not seek damages to compensate for bodily injury, but rather seeks to recover the city's own economic losses. PepsiCo’s complaint argues that this denial is inconsistent with policy language. The company claims that the city's expenditures on public hospitals, emergency services, community clinics, and other healthcare-related costs fall within the policies' definition of damages resulting from bodily injury. PepsiCo is seeking a court ruling to confirm the insurers' obligation to defend the company and cover potential liabilities, as well as damages for breach of contract to recoup defense costs already incurred.
In their notice of removal, the defendant insurers denied any breach of obligation and stated that PepsiCo is not entitled to the requested relief. The case highlights a growing tension between food manufacturers and insurers as litigation regarding ultra-processed food products expands from individual consumer claims to government-backed actions, potentially forcing a reevaluation of how standard liability policies respond to these emerging product risks.
Why it matters
This coverage dispute could set a significant precedent for how insurers handle the expanding wave of government-led litigation against food and beverage manufacturers.
FAQ
Which insurance companies is PepsiCo suing?
PepsiCo is suing ACE American Insurance Company, ACE Property and Casualty Insurance Company, Westchester Surplus Lines Insurance Company, and Vigilant Insurance Company.
What is the basis for the insurers' denial of coverage?
The insurers claimed the San Francisco lawsuit does not seek to recover damages for bodily injury, but rather seeks to recover the city's own economic losses.
What specific brands are mentioned in the underlying San Francisco lawsuit?
The lawsuit mentions Cheetos, Doritos, Lay's, Gatorade, and Mountain Dew.
Source: Insurance Business America. See the original source for full details.
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