An insurer that issued a school district liability policy to the Lower Merion School District has filed a declaratory judgment action, seeking a ruling that a recent privacy-related civil rights lawsuit against the school district is not covered by the policy. Graphic Arts Mutual Ins. Co. v. Lower Merion School District, 2:10-cv-01707-JD (E.D. Pa.).
The underlying civil rights lawsuit is a putative class action filed on behalf of all students attending two high schools, who were issued laptop computers equipped with webcams by the school district. Robbins v. Lower Merion School District, 2:10-cv-00665-JD (E.D. Pa.). The civil rights lawsuit alleges that the school district defendants “have been spying” on the students’ activity, including through the remote activation of the webcams, whereby the school district defendants could view and capture images. It contains seven counts: violation of the Electronic Communications Protection Act, the Computer Fraud and Abuse Act, the Stored Communications Act, the Civil Rights Act, and the Pennsylvania Wiretapping and Electronic Surveillance Act; invasion of privacy under the Fourth Amendment; and common law invasion of privacy.
In its declaratory judgment action, the insurer alleges that the allegations and claims contained in the civil rights lawsuit do not fall within the definitions of “personal injury” contained in the policy’s Personal and Advertising Injury coverage section. The insurer also argues that the claims in the underlying complaint are subject to an exclusion for personal or advertising injury “caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict ‘personal injury’ or ‘advertising injury.’” The insurer also relies on an exclusion for claims arising out of or relating to violations of many statutes and regulations that, among other things, prohibit or limit the collection, transmission and dissemination of material or information. Finally, the insurer argues that punitive damages are not insurable under the law of the Commonwealth of Pennsylvania.