What you need to know:

The US Court of Appeals for the Eighth Circuit ruled that, under Minnesota law, the sending of unsolicited fax advertisements in violation of the Telephone Consumer Protection Act constituted “advertising injury” defined as “oral or written publication of material that violates a person’s right of privacy.” Accordingly, the commercial general liability and commercial umbrella insurance policies at issue covered the insured’s liability from sending the fax advertisements.

What you need to do:

Companies should consider the impact of the Eighth Circuit’s ruling in determining whether claims constitute “advertising injury” under their liability policies.

Background

The insured, an auto repair company named Autopia, faxed 5,000 advertisements to potential customers. Recipients of the fax advertisements sued Autopia under the Telephone Consumer Protection Act. Autopia’s commercial general liability and commercial umbrella policies covered sums that “the insured becomes legally obligated to pay as damages because of . . . ‘advertising injury.’” The policies defined “advertising injury” as, among other things, injury arising out of “oral or written publication of material that violates a person’s right of privacy.” The policies did not define the terms “publication” or “right of privacy,” and they did not contain an exclusion for TCPA-related losses.

The federal trial court granted summary judgment for the insured that the TCPA claims were claims for “advertising injury” under Minnesota law and were therefore covered under the policies. The Eighth Circuit affirmed. See Owners Ins. Co. v. European Auto Works, Inc., No. 11-3068, 2012 U.S. App. LEXIS 19458 (8th Cir. Sep. 17, 2012).

The Court’s Ruling

The Eighth Circuit held that:

  • The sending of unsolicited fax advertisements in violation of the TCPA constitutes “oral or written publication of material that violates a person’s right of privacy,” under Minnesota law. The court noted that the majority of circuit courts have concluded that advertising injury covers TCPA violations.
  • The court concluded that “advertising injury” was not limited to liability from disclosure of private information about someone other than the recipient, but also included liability from “intrusion on solitude.” It ruled that the ordinary meaning of “right of privacy” encompasses “seclusion based privacy protected by the TCPA.”
  • The court also concluded that the plain meaning of “publication” includes the dissemination of fax advertisements. The court distinguished the wording “publication of material that violates a person’s right of privacy” from different phrasing – present in some policies not at issue in this case – such as “making known to any person or organization covered material that violates a person’s right of privacy.” The court noted that while the “making known” wording “suggests disclosure . . . to a third party,” the “publication” wording “can mean either revealing information or . . . the act itself of conveying material considered apart from its content.”

Dissent. Judge Colloton dissented, concluding that the definition of “advertising injury” focuses on the content of an advertisement rather than harm from mere receipt of an advertisement.

  • “[A]dvertising injury” was defined to include “publication of material that slanders or libels a person,” “misappropriation of advertising ideas,” and “infringement of copyright, title, or slogan.” In Judge Colloton’s view, those harms “depend on an examination of the content of the advertisement to determine whether the content caused harm.”
  • Judge Colloton concluded that the phrase “oral or written publication of material that violates a person’s right of privacy” “likewise . . . refer[s] to an act of publicizing material, the content of which causes injury.” Judge Colloton accordingly determined that the policies did not cover liability from unsolicited fax advertisements, and would have reversed the trial court’s decision in favor of the insured.

Conclusion

The Eighth Circuit ruled that the sending of unsolicited fax advertisements in violation of the TCPA constituted “advertising injury” defined as “oral or written publication of material that violates a person’s right of privacy,” under Minnesota law.