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On the first day of trial in the case of Mondelez International Inc. v. Zurich American Insurance Co., case number 2018-L-011088, in the Circuit Court of Cook County, Illinois, a jury heard testimony on Thursday, citing a little-known “war-related” policy exclusion which Zurich used as a basis to reject the claim of snack giant Mondelez after it was hit by a malware attack in 2017 that impacted thousands of its servers and computers.

In his opening statements, counsel for Mondelez International Inc. told the jury that Zurich’s insurance policy exclusion for "hostile and warlike action" was improperly invoked to avoid paying more than $100 million in damages caused by the "NotPetya" cyberattack in June 2017, which affected its servers and computers in the U.S., and many in Ukraine.

Counsel for Mondelez also told the jury that Zurich previously offered to pay $10 million dollars as an advance toward adjusting the Mondelez claim, but later reneged and reasserted its rejection, and the $10 million dollar payment was never made.

Mondelez's attorney, David Kroeger of Jenner & Block LLP, told the jury that Zurich asserted the exclusion clause because it believes Russia was to blame for the cyberattack, and attorney Kroeger was quick to point out Zurich has never produced any credible evidence to support their theories, telling jurors, there are "accusations, maybe, but accusations are not evidence," he said.

Counsel for Mondelez doubled down on Zurich’s "hostile and warlike action" exclusion in the policy, stating "We are talking about computer malware that was released five years ago, not ... what is going on in Ukraine now … missiles, tanks, bombs, and death," Kroeger told the jury. "What is happening in Ukraine now is hostile or warlike action, and it stands in stark contrast to the NotPetya malware."

Zurich’s attorney, Philip Silverberg of Mound Cotton Wollan & Greengrass LLP, told the jury that Mondelez was simply "in the wrong place at the wrong time," calling the cyberattack on Mondelez "collateral damage" in Russia’s broader effort to attack the Ukrainian economy.

Holding fast to their assertions, Silverberg told the jury that it will be "pretty easy" to tell from evidence at trial that Russia's military was behind the attack, even though the country doesn't typically raise its hand to take credit for that kind of action.”

Silverberg claimed that "The evidence will show that Mondelez was not specifically targeted because someone hated Oreo cookies … or Trident gum." He said, "Mondelez just happened to be one of the many companies paying taxes to [Ukraine], and that's why it was damaged."

The NotPetya cyberattack was unleashed through a software update on a Ukrainian taxpaying platform, similar to "TurboTax for businesses."

In a 2018 White House statement issued at the time, the United States and some of its allies blamed the Russian military for the NotPetya attack, claiming that it was intended to target Ukraine's financial, energy, and government institutions, but quickly spread to business and other entities across the world.

However, in February 2018, Kremlin spokesman Dmitry Peskov called the allegations "unsubstantiated and groundless," and claimed the charges were part of a "Russophobic campaign that is not based on any evidence."

In referring to the damage Mondelez suffered from the attack, Kroeger told the jury during his opening statements that the malware was downloaded to two of Mondelez's servers on June 22, 2017, which caused the infected computers to render an error message on June 27, 2017, showing that their data had been encrypted and effectively locking them out of the system. From there further damage spread, infecting 1,700 of the company's servers and 24,000 of its computers.

Kroeger said that Mondelez took "extraordinary steps" in attempts to mitigate the damage and tried to shut down its computers worldwide after the messages began displaying, "but a lot of the damage had already been done," Kroeger said.

Kroeger told the jury that the attack severely crippled the company’s ability to do business, or to determine what products it needed to make, where it needed to make them, which stores needed the products, and how to ship them, which led to fewer of its products ending up on in stores and on shelves, which affected advertising, which in turn resulted in drastically reduced sales and revenue.

Kroeger said the snack giant invested a lot of time and money on restoring the infected computers to factory settings, re-installing software, and making sure that every computer operated normally.

Kroeger also told the jury that this is not the first time the two companies discussed the "hostile and warlike action" policy exclusion. Kroeger said that in 2014, following an incident where a plane was shot down by what was theorized at the time to have been a Russian attack. He said that in 2014, the director of global risk management for Mondelez sent an email to Zurich asking whether Zurich considered the affected area where the plane was shot down as a “war zone?” An executive of Zurich responded by saying it would be "pure conjecture" to determine as much.

In illuminating fashion, Kroeger told the jury "If a missile hitting a plane was not enough to constitute hostile or warlike action, then NotPetya certainly cannot be hostile or warlike action," Kroeger continued by saying "NotPetya did not involve tanks or missiles. It involved the encryption of computer data."

Counsel for Zurich objected to Kroeger's characterizations and claims, telling jurors that Mondelez was misleading and only telling half of the story. For example, the email Kroeger referenced did not relate to the policy exclusion at issue but rather a different policy provision relating to geographic locations.

Silverberg asserted that Zurich's policy exclusion does not only apply to warlike acts involving tanks and guns but hostile acts as well. He stressed that warlike actions can be taken during war and peace.

Silverberg pointed out the widespread damage NotPetya caused to the Ukrainian economy, including companies like Mondelez, "we don't think anybody could reasonably disagree" that it was a hostile act.

Silverberg told the jury, that since the annexation of the Crimean Peninsula by Russia, Ukraine and Russia have been engaged in an ongoing conflict, and that the NotPetya cyberattack was part of Russia's military strategy in waging cyberwarfare against its enemies.

Silverberg said that the evidence presented at trial will prove that only Russia had the means and motive to unleash such a devastating cyberattack. He also claimed that the evidence will show that "one way to cripple a nation's economy is to introduce a virus through its taxpayer software," he said.

Mondelez filed its lawsuit in 2018 relating to its claim for NotPetya-related coverage. The trial is expected to last for two weeks.