Sony insurers are engaged in litigation in New York state court to determine Sony entities’ claims for insurance coverage with respect to lawsuits, claims and potential attorney general actions arising out of the cyber-attacks earlier this year on the PlayStation Network (“PSN”), Sony Online Entertainment Network (“SOE”) and Sony Pictures Network, which allegedly resulted in unauthorized access to and alleged theft of personal identification and financial information of millions of customers. (You can read more information about the PlayStation hacking here.) The Complaint, which was filed by Zurich American Insurance Company and Zurich Insurance Company Ltd. (the “Zurich companies”) against Sony entities and other insurers, can be downloaded here.
The Complaint requests a determination by the court of questions concerning coverage under three policies issued by Zurich companies to various Sony corporate entities (“the Sony Defendants”) – two primary commercial general liability policies and an excess liability policy.
According to the Complaint, the Sony Defendants have been named as defendants in 55 class actions filed in the United States and 3 class actions instituted in Canada, and the class action complaints all generally allege that the “named plaintiffs and putative class members have suffered damages as a result of the unauthorized access to and alleged theft of their personal identification and financial information that was maintained by the Sony Defendants on the PSN and SOE Network.” Further, the Complaint states that “[t]he Class Action Complaints also generally allege that the named plaintiffs and putative class members suffered damages as a result of the Sony Defendants’ delay in notifying them of the cyber attack and unauthorized access to and theft of their personal identification and financial information” and “as a result of the shut down of the PSN and SOE Network following the cyber attacks.”
The Sony Defendants have purportedly tendered the Class Action Complaints, as well as several investigative inquiries and miscellaneous claims, to two Zurich companies, and have demanded that they defend and potentially indemnify the Sony Defendants. The Zurich companies seek a declaration that they are not obligated to defend or indemnify any of the claims asserted, and alternatively, apportionment and allocation among the Zurich companies, the Sony Defendants, and other insurers.
There are four causes of action in the DJ Complaint. Three are against the Sony Defendants, one with respect to each of the Zurich-issued policies. For example, with respect to one of the primary CGL policies, the Complaint states that the allegations in the Class Action Complaints “do not assert claims for ‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ so as to entitle the [Sony insured] to defense and/or indemnity.” Further, the Complaint alleges that “[e]ven if claims for ‘bodily injury,’ ‘property damage,’ and/or ‘personal and advertising injury’ were alleged, which is expressly denied, the … policy includes certain exclusions that apply to exclude coverage for the claims asserted in the Class Action Complaints.” The allegations with respect to the other Zurich CGL primary policy and the Zurich excess CGL policy are similar. The Complaint also asserts that only one of the Sony Defendants qualifies as a named insured under one of the Zurich primary policies in issue.
There is a fourth cause of action against several other primary and excess insurers of Sony, to which Sony also allegedly tendered the Class Action Complaints and miscellaneous claims. This cause of action seeks a declaration concerning the allocation and/or apportionment of any defense and indemnity obligations as between the Sony Defendants, the Zurich companies, and the other insurers, to the extent that the Sony Defendants are found entitled to coverage under the Zurich policies.