Fax Blasting Claims Are Covered Under Advertising Injury Provision, Says Eighth Circuit

As discussed in our March 2010 and October 2011 Alerts, courts are split as to whether claims brought pursuant to the Telephone Consumer Protection Act (commonly known as “fax blasting” claims) constitute advertising injury under a general liability policy. In a recent decision, the Eighth Circuit ruled that damages sustained as a result of unwanted fax blasting were within the scope of coverage provided by an advertising injury provision. Owners Ins. Co. v. European Auto Works, Inc., 2012 WL 4052406 (8th Cir. Sept. 17, 2012).

A class action lawsuit against Autopia, an auto repair company, alleged that unsolicited faxes sent by the company violated the class members’ right to privacy. Autopia’s general liability and umbrella insurers agreed to defend the action under a reservation of rights, but filed a declaratory judgment action seeking a ruling that the TCPA claims were not covered under the relevant policies. The policies covered damages arising from “advertising injury,” defined as injury arising out of, among other things, “oral or written publication of material that violates a person’s right of privacy.” A Minnesota district court granted summary judgment in favor of Autopia, finding that the claims were covered under the plain meaning of the advertising injury provision. The Eighth Circuit affirmed.

Courts have acknowledged that the right to privacy can refer to either the right to secrecy (i.e., to keep certain information private), or the right to solitude (i.e., to be free of unwanted intrusions). Courts that have declined to find coverage for TCPA claims have generally interpreted the phrase “right to privacy” in the advertising injury provision to mean only the right to secrecy. In contrast, in Owners Insurance, the Eighth Circuit held that the phrase “right to privacy” also includes the right to solitude and thus encompasses the receipt of unsolicited fax advertisements. In so ruling, the court rejected the insurers’ argument that “the provision’s placement in the policy next to other types of advertising injuries which require an evaluation of the content of the advertisement” justifies a finding that the advertising injury provision was intended to cover only content-based violations of privacy. The court noted, “[h]ad the insurers wanted to exclude TCPA violations from the advertising injury provision, they ‘could have specifically [so] defined the term.’”

Outcomes in this context have been largely factdependent, based primarily on the particular language used in the advertising injury provision at issue. Interpreting policies with varying advertising injury language, the Fifth, Tenth and Eleventh Circuits have found advertising injury coverage for TCPA claims whereas the First, Third and Seventh Circuits have rejected such arguments.