In Yahoo TCPA Case, California Court Asked to Consider Privacy in Insurance Policy
Yahoo headquarters in Sunnyvale, California.
The California Supreme Court is being asked to weigh in on a tricky insurance coverage question in a case where Yahoo Inc. has been accused of sending unsolicited text messages in violation of the Telephone Consumer Protection Act.
At the heart of the issue is when insurers have a duty to defend TCPA claims under a commercial liability policy covering a “personal injury” when that term is defined by contract to include violations of privacy rights.
Yahoo and its lawyers at Kilpatrick Townsend & Stockton sued National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, in 2017 claiming that the insurer has a duty to defend the company from TCPA claims under the terms of five consecutive one-year policies it purchased for commercial general liability insurance. The insurer and its lawyers at Nicolaides Fink Thorpe Michaelides Sullivan have argued in turn that the unsolicited text messages Yahoo sent did not reveal any third party's private information. They claim the policies therefore do not apply to the TCPA suits.
At the district court, U.S. Magistrate Judge Nathanael Cousins of the Northern District of California sided with the insurer in June 2017, finding that the underlying policies covered claims related to secrecy—the right to prevent disclosure of personal information to third parties—but not seclusion—to right to be left alone.
On Wednesday, however, a three-judge panel of U.S. Court of Appeals for the Ninth Circuit found that the dispute raises an unsettled issue. The Ninth Circuit panel asked the state's high court to consider whether under California law a provision such as the one in the Yahoo contract "covers injury solely to the right to seclusion, such as where the insured’s unsolicited advertising message disturbs the recipient’s privacy but does not reveal a third party’s private information."
In a 13-page order certifying the question to the California Supreme Court, the Ninth Circuit judges noted that courts across the country have gone either way on the issue: Courts in Missouri, Florida, and Massachusetts have found there is coverage under such policies, while the Seventh Circuit has found no coverage in such a case under Iowa law and the Fourth Circuit has found similarly in a case under Virginia law.
"We recognize that the California Supreme Court has a substantial caseload, and we submit this question because of its significance to the many class actions involving TCPA claims against insureds with these policies and the large amounts of potential liability at stake," the Ninth Circuit panel judges wrote.
Yahoo's lawyer, William Um, who has moved from Kilpatrick Townsend to Jassy Vick Carolan while the appeal has been pending, didn't immediately respond to a request for comment Wednesday. Daniel Graham Jr. of Nicolaides Fink, who represents the insurer, was out of the office Wednesday.
