In Los Angeles Lakers, Inc. v. Federal Insurance Company, the US District Court of the Central District of California, applying California law, held that the insurer had no duty to defend because the allegations of the underlying claim fit within a broad exclusion in the policy. See No. 14-7743, 2015 LEXIS 62159 (C.D. Cal. Apr. 17, 2015). More specifically, the court held that the Directors and Officers Policy’s broad exclusion for invasion of privacy claims excluded a claim under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227 et seq. See id. at *16.
The underlying claim originated when an attendee at a Lakers game responded to the insured’s “solicitation to send a text message that would be posted on the arena’s scoreboard during the game.” See id. at *2. The insured allegedly sent a text message back soliciting business from the attendee. See id.
The attendee sued the insured under the TCPA, and alleged that the insured’s “illegal actions . . . invad[ed] [attendee’s] privacy.” Id. at *2-3. The complaint discussed the TCPA’s purpose to “protect the privacy of citizens,” and that Congress found that certain types of calls were an “invasion of privacy.” See id. at *3. The attendee’s claim was dismissed after the court held that “no violation of TCPA had occurred because . . . [attendee] expressly consented to receiving a confirmatory text from the Lakers.” See id. at *3-4.
After the dismissal of the underlying claim, the insured filed suit alleging that the insurer breached its duty to defend. See id. at *1, 5. The court analyzed the insurer’s duty to defend by reviewing the underlying TCPA claim and the policy, which included an exclusion for any claim “based upon, arising from, or in consequence of . . . invasion of privacy . . . .” Id. at *3-5. Next, the court examined legislative history and case law and stated that “[w]hile it is true that the text of TCPA does not use the word ‘privacy,’ it is the conceptual wellspring of the TCPA’s protections.” Id. at *12.
The court held that “because the Policy specifically excludes claims arising from invasions of privacy, the TCPA claims alleged in the [Complaint] are not covered under the Policy.” Id. at *16. The court also held that “[a]lthough [insurer] could have included a more specific TCPA exclusion in the Policy, this does not mean that the broader invasion of privacy exclusion in the Policy does not apply to TCPA violations,” and that the “allegations . . . fit within this broad exclusionary clause.” Id.at *21-22. Therefore, the court found that the insurer had no duty to defend the underlying suit.
The Los Angeles Lakers decision adds to the growing body of case law examining whether TCPA claims constitute invasions of privacy—this time, in the context of a policy exclusion. It is an important example of a court reviewing both legislative history and case law to determine that a more specific type of claim falls within a more general and broad exclusion.