In Owners Insurance Company v. European Auto Works, Inc., 695 F.3d 814 (8th Cir. 2012), the Eighth Circuit, applying Minnesota law, affirmed the trial court’s entry of summary judgment for a general liability insurance policyholder, holding that a CGL policy’s “advertising injury” provision covered violations of the Telephone Consumer Protection Act (TCPA).
The insurer had sought a declaration that its policy did not cover claims that alleged violations of the TCPA based on the transmission of unsolicited fax advertisements. The policy provision at issue covered damages arising from “oral or written publication of material that violates a person’s right of privacy.” The Eighth Circuit, in a split decision, began its analysis by recognizing the distinction between two kinds of privacy rights—“secrecy based torts that punish disclosure of private information about someone other than the recipient” and “seclusion based torts that involve intruding on another’s solitude.” It also recognized that courts have disagreed whether advertising injury provisions like the one at issue cover the seclusion-based right of privacy protected by the TCPA. According “right of privacy” its “plain and ordinary meaning,” the majority concluded that the term “easily includes violations of the type of privacy protected by the TCPA” under Minnesota law. Focusing on the word “publication,” the majority concluded that while it “can have the narrower, tort based meaning urged by the insurers of publicizing ‘secret or personal information,’ its ordinary meaning is broader.” The court also reasoned that to the extent the term “can mean either ‘revealing information or . . . the act itself of conveying material considered apart from its content,’” the ambiguity must be construed against the insurer. It thus joined “the majority of courts which have found coverage for TCPA claims under similar provisions.”
In contrast, the dissent focused on the context of the advertising injury provision at issue. Concluding that the policy’s three other kinds of “advertising injury” were premised on the content of the advertisement rather than its receipt, the dissent concluded that the meaning of “right to privacy” was not ambiguous and encompassed only secrecy-based privacy. It also noted that many of the decisions finding coverage for damages in this situation “seem to construe the subsection in isolation without discussing the surrounding provisions.” It thus opined that the “better reasoned decisions” are those denying coverage.
The European Auto Works decision is important for at least two reasons. First, insurers who do not intend to cover seclusion-based rights of privacy may wish to (re)assess the language of their advertising injury provisions. The majority reasoned, for example, that, “[h]ad the insurers wanted to exclude TCPA violations from the advertising injury provision, they ‘could have specifically [so] defined the term.’” The majority also differentiated between provisions employing the term “publication” and those using the phrase “making known to any person . . . covered material that violates a person’s right of privacy,” finding that the former is broader. Second, given the split of authority and number of courts that have not yet rendered an opinion on this issue, insurers with advertising injury provisions may wish to give closer attention to choice-of-law consequences, both when drafting their policies and if litigation arises.