U.S. Court of Appeals for the 11th Circuit

In Creative Hospitality Ventures, Inc. v. U.S. Liability Ins. Co., 2011 WL 4509919 (11th Cir. (Fla.) Sept. 30, 2011), the U.S. Court of Appeals for the 11th Circuit held that a commercial general liability policy does not provide coverage to a restaurant owner for a class action alleging that the restaurant violated federal law by issuing credit card receipts that revealed five or more digits of consumers' credit card numbers and expiration dates.

The insured, E.T. Limited (ETL), operated a restaurant in Miami, Florida, and was sued in a Florida state court class action alleging violations of the federal Fair and Accurate Credit Card Transaction Act (FACTA).  The class action plaintiffs alleged that the restaurant's practice of printing five or more digits of credit card numbers and/or the cards' expiration dates on restaurant receipts violated FACTA.

ETL tendered its defense and indemnity to its general liability carrier, Essex Insurance Company.  Essex's policy provided coverage for sums that ETL became legally obligated to pay because of "personal and advertising injury," and defined "personal and advertising injury" to mean injury arising out of a certain number of enumerated offenses, including "oral or written publication, in any manner, of material that violates a person's right of privacy."  Essex denied coverage to ETL.

Thereafter, ETL joined other insureds who had been sued under FACTA, but whose insurers had denied coverage, in a federal class declaratory judgment action commenced in the U.S. District Court for the Southern District of Florida against various insurers, including Essex. Essex moved to dismiss for failure to state a claim, arguing that the printing of a credit card receipt did not constitute a "publication" within the meaning of the Essex policy. 

The magistrate judge hearing the motion to dismiss noted that the allegations against ETL in the underlying state court action could be fairly read to include both negligent and willful noncompliance with FACTA, and recommended that the complaint proceed against Essex.  However, the district court converted Essex's motion to one for summary judgment and granted the motion  The district court noted that the Florida Supreme Court, in Penzer v. Transp. Ins. Co., 29 So.3d 1000 (Fla. 2010), defined "publication" as "communication (as of news or information) to the public:  public announcement."  The court concluded that "printing a non-truncated credit card receipt and providing it to the cardholder does not constitute publication because there is no dissemination of information to the public." 

On appeal, ETL argued that the district court erred in construing the policy language "publication, in any manner."  ETL contended that the phrase "in any manner" broadened the scope of "publication" so that it included a written credit card receipt.  ETL also contended that "publication" was not defined in the policy and therefore was ambiguous.  The 11th Circuit affirmed summary judgment for Essex finding that a credit card receipt is neither broadcasted nor disseminated to the general public.  Thus, the court held that there was no "publication" within the meaning of the Essex policy.  The court also rejected ETL's argument that the phrase "in any manner" expanded the definition of "publication" to include the provision of a written receipt, holding that the phrase "in any manner" merely expanded the categories of publication covered by the policy.