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Vol. 6, Iss. 6
July 12, 2017

Yahoo! Search For Invasion Of Privacy Coverage

Coverage litigation over the meaning of invasion of privacy has been equator-hot over the past several years. It has mainly arisen in the context of junk faxes that allegedly violate the Telephone Consumer Protection Act. The issue has been whether invasion of privacy means violation of the right to seclusion, i.e., the right to be left alone, or violation of the right to secrecy, i.e., the right to keep private facts private. The cases are fairly similar. In each the court decides which of the two privacy camps it should join.

In Yahoo! Inc. v. National Union Fire Insurance Company, No. 17-447 (N.D. Cal. June 2, 2017), a California federal court recently addressed this privacy issue in the context of junk fax’s brother – junk texts.

Yahoo! was sued in several class actions for sending unsolicited text messages in violation of the TCPA. The internet giant sought coverage from National Union under several consecutive commercial general liability policies. Coverage litigation ensued.

The policies provided coverage for “personal and advertising injury.” Personal injury was defined to include “injury, including consequential ‘bodily injury’, arising out of one more of the following offenses: . . . (e) oral or written publication, in any manner, of material that violates a person’s right of privacy.”

The decision reads like a junk fax coverage case. The court started out by setting the stage, noting that “[c]ourts have identified two meanings for the right to privacy: (1) secrecy and (2) seclusion. The privacy right of secrecy involves the right to prevent disclosure of personal information to third parties. The privacy right of seclusion involves the right to be let alone. Invasion of the privacy right of secrecy involves the ‘content of communication,’ whereas invasion of the privacy right of seclusion involves means, manner, and method of communication. For example, a person who wants to conceal a criminal conviction from an employer asserts a claim for secrecy privacy. A person who wishes to prevent solicitors from calling on the telephone asserts a claim to the privacy right of seclusion.”

As in junk fax cases, the court, after setting out the two possible meanings of privacy, looked at the policy language and policy context to decide which one to adopt.

Looking at the policy language, the court focused on the word “publication” and stated that, for information to be made known or published, the information must be disclosed to a third party. But that is not what happened: “Here, Yahoo made the text messages known to the recipients, but did not make the content of the text messages known to third parties. It is the content of the material that violates a person’s right to privacy when that material is made known. . . .Here, the disputed provision therefore only plausibly covers injury caused by the disclosure of private content to third parties based on the word ‘publication’ in the provision. Thus, the disputed provision does not cover Yahoo’s alleged legal violations because Yahoo did not disclose the content of the material to third parties, but only to the underlying plaintiffs.”

The court also considered the language at issue in the context of its placement in the policy. In other words, as the saying goes, words can be defined by the company they keep: “The provision immediately before the disputed one – “oral or written publication, in any manner, of material that violates a person’s right of privacy” -- provides coverage for ‘oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products, or services.’ Libel or slander involves ‘a publication of defamatory content about someone to a third person.’ . . . That provision only provides coverage when content is disclosed to third parties. Because the disputed provision immediately follows the provision covering slander and libel, it is reasonable to infer that the disputed provision also provides coverage only when material is disclosed to third parties. This type of disclosure violates the privacy right of secrecy, not seclusion.” Again, because Yahoo! did not disclose the content of the material to third parties, sending the texts was not oral or written publication, in any manner, of material that violates a person’s right of privacy.”

In addition to these reasons, the court was also guided by existing California case law addressing the privacy issue – secrecy versus seclusion -- in the junk fax arena.

Lastly, despite the fact that the court listed six ways from Sunday why no coverage was owed, it added these parting words: “[B]ecause Yahoo’s claim for coverage could possibly be amended by the allegation of additional facts, or by other reasons why the court should not dismiss this case with prejudice, the Court Grants leave to amend.”

Based on the court’s decision, I couldn’t imagine what Yahoo! could possibly say in an amended complaint to bring its claim within coverage. The court gave Yahoo! until June 23 to file an amended complaint. I guess Yahoo! couldn’t either. It declined the court’s invitation.


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