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Vol. 5, Iss. 2
February 10, 2016

One Of A Kind Case: Court Addresses Coverage For Breach Of DNA Privacy

 

There’s an Alaska statute called the Genetic Privacy Act. That’s certainly news to me. It prohibits the disclosure of a person’s DNA analysis without their written and informed consent. A company called Gene by Gene, Ltd. owns and operates a genetic genealogy website. Users take a DNA test and can analyze their genetic information to learn more about their ancestry. Users can also connect with other users whose DNA results match in varying degrees.

You knew where this was going. Gene by Gene was sued in a Texas federal court, by a website user, seeking to certify a class of individuals whose DNA was published by Gene by Gene, without their consent, in violation of the Alaska Genetic Privacy Act. An award of actual and statutory damages was sought. Gene by Gene requested coverage for the suit from Evanston, its Professional Liability insurer, under a policy that provided coverage for oral or written publication of material that violates a person’s right of privacy. Evanston denied coverage and filed a declaratory judgment action.

It doesn’t appear that anyone was disputing that the underlying class action, against Gene by Gene, alleged the publication of material -- the DNA results -- that violated a person’s right of privacy. At issue in Evanston Insurance Co. v. Gene by Gene, Ltd., No. 14-1842 (S.D. Tex. Jan. 6, 2016) was the applicability of an exclusion that precluded coverage for claims based upon or arising out of any violation of:

(a) the Telephone Consumer Protection Act of 1991 (TCPA) and amendments thereto or any similar or related federal or state statute, law, rule, ordinance or regulation;
(b) the CAN–SPAM Act of 2003 and amendments thereto or any similar or related federal or state statute, law, rule, ordinance, or regulation; or
(c) any other statute, law, rule, ordinance, or regulation that prohibits or limits the sending, transmitting, communication or distribution of information or other material.

We’ve all seen this exclusion. It’s the one that, for the past few years, has been knocking out coverage for many TCPA/junk fax claims. However, Evanston argued that it precluded coverage for the DNA privacy claims under provision (c): “any other statute, law, rule, ordinance, or regulation that prohibits or limits the sending, transmitting, communication or distribution of information or other material.”

Gene by Gene argued that the exclusion did not apply, as Evanston’s construction of section (c) was too broad. Gene by Gene argued that “the canon of construction of ejusdem generis should apply to Section C. According to that canon, ‘Where general words follow specific words in a statutory enumeration, the general words are [usually] construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words.’ (citation omitted) The Telephone Consumer Protection Act (‘TCPA’) referenced in Section A of the Exclusion generally regulates the use of unsolicited telephone calls and fax transmissions to consumers. Similarly, the CAN–SPAM Act of 2003 (‘CAN–SPAM’) referenced in Section B of the Exclusion generally regulates the use of unsolicited, fraudulent, abusive, and deceptive emails to consumers. Accordingly, Gene by Gene contends Section C also refers generally to other forms of unsolicited communication to consumers ‘that intrude[ ] into one’s seclusion.’”

Not so fast according to Evanston: “Gene by Gene’s reliance on ejusdem generis is misplaced because the ‘intent’ of each statute is different. For example, the TCPA regulates ‘unsolicited, automated’ telephone calls and fax transmissions, while the CAN–SPAM Act regulates ‘false or misleading unsolicited e-mail.’”

However, the court sided with Gene by Gene and its ejusdem generis argument, noting that “while the two statutes regulate different forms of communication, the intent—to protect consumers from unsolicited communication that invades their seclusion—is the same.” From there, the court concluded that the exclusion did not apply: “Applying the claim in the Underlying Suit to the Exclusion as construed by Gene by Gene, the Court finds the claim does not fall under the Exclusion. The Genetic Privacy Act does not concern unsolicited communication to consumers, but instead regulates the disclosure of a person’s DNA analysis. The facts upon which the claim is based deal solely with Gene by Gene’s alleged improper disclosure of DNA test results on its public website and to third-parties. The facts alleged in the complaint do not address the type of unsolicited seclusion invasion contemplated by the Exclusion. Accordingly, the Underlying Lawsuit is not excluded from Gene by Gene’s policy coverage.”

 

 
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