Companies facing liability for possible violations of privacy protection statutes are continuing to look to their traditional commercial general liability policies (“CGL”) for coverage. But, as Redbox recently discovered, coverage for privacy issues remains a case-by-case question. In its recent CGL coverage dispute, Redbox argued that coverage for an alleged privacy violation was available under Coverage B for “personal injury and advertising injury” which included “[o]ral or written publication, in any manner, of material that violates a person’s right of privacy.” Unfortunately for Redbox, a court did not agree.
National Union filed a declaratory judgment action to deny coverage in connection with the class action against Redbox, alleging that Redbox retained rental and other private personal information of its customers for too long and used this information for Redbox’s marketing purposes in violation of the Video Privacy Protection Act (“VPPA”). Nat’l Union Fire Ins. Co. v. Coinstar, et al., No. 2:13-CV-01014 JCC (W.D. Wash. Feb. 28, 2014). The VPPA prohibits a “video tape service provider” from disclosing personally identifiable information about one of its customers, including rental or sales records for movies, video games, or other materials in a DVD format. (In the underlying action, the court found that Redbox had not violated the VPPA section that would have resulted in a payout for class members. Plaintiffs’ appeal is pending.)
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