Does the coverage in commercial general liability (CGL) policies for violations of the right to privacy extend to unwanted intrusions, or is it limited to the disclosure of personal information to a third party? On a recent request for clarification from the U.S. Court of Appeals for the Ninth Circuit in Yahoo Inc. v. National Union Fire Insurance Company of Pittsburgh, PA, the California Supreme Court may be poised to answer this question under California law, which could have wide-ranging effects on companies seeking CGL coverage for Telephone Consumer Protection Act (TCPA) claims.
The right of privacy is generally understood to encompass both (1) a right “to be free from unwanted intrusions,” also known as the right to seclusion, and (2) a right “to keep personal information confidential,” also known as the right to secrecy. CGL policies typically cover “injury … arising out of … [o]ral or written publication … of material that violates a person’s right of privacy.” California law is unclear as to whether this coverage applies to injury solely to the right to seclusion, such as where an insured’s unsolicited advertising message intrudes on the recipient but does not reveal private information. Inconsistent results from courts outside of California makes it even more difficult to predict how the California Supreme Court would rule on the issue. In American States Insurance Co. v. Capital Associates of Jackson County, Inc., the Seventh Circuit held that it was “clear” under Illinois law that TCPA claims were not “publication of material that violates a person’s right of privacy” triggering an insurer’s defense obligations. Two years later, the Supreme Court of Illinois held under Illinois law such a provision did indeed cover TCPA claims. (See Valley Forge Insurance Co. v. Swiderski Electronics, Inc.)
Yahoo involves five underlying putative class actions brought against Yahoo alleging it invaded putative class members’ privacy by sending them unsolicited text messages in violation of the TCPA. None of the class actions alleged that a putative class members’ confidential information was disclosed to a third party.
When Yahoo’s insurer refused to defend the company in those cases, Yahoo filed a coverage action in the Northern District of California for breach of contract. The district court granted National Union’s motion to dismiss, concluding the coverage provided by National Union’s CGL policy for injuries arising out of the “publication … of material that violates a person’s right of privacy” did not apply to the TCPA class action complaints brought against Yahoo.
Unable to predict how the California Supreme Court would resolve the issue, a three-judge panel of the Ninth Circuit asked the California justices to decide whether a CGL policy that covers “[personal] injury … arising out of … [o]ral or written publication … of material that violates a person’s right of privacy” triggers an insurer’s duty to defend the insured against a TCPA claim alleging the insured sent “unsolicited text message advertisements that did not reveal any private information.”
The California Supreme Court’s decision—if it decides to render one—may have a sweeping effect on insurance coverage for insureds facing TCPA claims. As the Ninth Circuit justices noted:
We recognize that the California Supreme Court has a substantial caseload, and we submit this question because of its significance to the many class actions involving TCPA claims against insureds with these policies and the large amounts of potential liability at stake.
Any direction offered by the California Supreme Court would not only provide clarification to California litigants, it could also influence other courts across the country on this issue.