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Vol. 7 - Issue 7
September 26, 2018


Interesting Look At The CGL Policy’s Definition of “Privacy”

Over the past several years there have been oodles of decisions addressing the meaning of right to privacy as used in the commercial general liability policy’s definition of “personal and advertising injury.” Many have arisen in the context of coverage for violations of the Telephone Consumer Protection Act, also known as junk faxes. The decisions have generally gone in two directions. In some cases, no coverage was owed because “privacy” means the right to secrecy -- to keep private facts private. And junk faxes don’t reveal private facts. Other courts found coverage to exist on the basis that privacy relates to a person’s right of seclusion -- to be left alone. And junk faxes interfere with that.

An Illinois federal court recently addressed the availability of coverage for an alleged violation of the right to privacy. The case did not involve junk faxes. But, since the relevant law provided coverage for junk faxes, an attempt was made by the insured to make the issue akin.

Before the court in NuWave, LLC v. Cincinnati Specialty Underwriters, No. 16-4504 (N.D. Ill. Sept. 5, 2018) was coverage for NuWave, for a suit filed against it by the West Virginia Attorney General, alleging that the company engaged in a variety of illegal telemarketing practices concerning the sale of its products. Most notably, it was alleged that NuWave used tactics to keep customers on the phone longer, to subject them to sales presentations.

NuWave sought coverage from Cincinnati, under CGL policies, on the basis that the West Virginia AG’s suit alleged “personal and advertising injury,” specifically, for injury arising out of “oral or written publication, in any manner, of material that violates a person’s right to privacy.” Cincinnati disclaimed coverage. NuWave filed a coverage action. The parties filed motions for summary judgment.

The court posed the issue this way: “Whether the consumer’s right to privacy could possibly include the right to be free from prolonged phone calls.”

NuWave argued that it did, pointing to the Illinois Supreme Court’s 2006 decision in Valley Forge Insurance Company v. Swiderski Electronics. Here, the Illinois high court held that coverage was owed, for sending junk faxes, on the basis that the right to privacy included the right to seclusion. NuWave attempted to extend Swiderski: “According to NuWave, this holding can be extrapolated to also find that, in a situation where the insured prolonged a phone call that the consumer voluntarily and intentionally made to the insured, the insured violated the consumer’s right to privacy. NuWave characterizes the Valley Forge holding as extending the right to privacy in this context to include the ‘right to be free from nuisance.’” However, the court was not convinced that, despite a couple of uses of the term “nuisance” in the Swiderski opinion, it was equating privacy and nuisance.

Instead, the court addressed the issue under the two generally accepted possible meanings of privacy – intrusion upon seclusion or disclosure of private facts -- and held that neither were caused by NuWave’s telemarketers. Simply put, as the court saw it, “[k]eeping a consumer on the phone longer than he wants to be, after he voluntarily and intentionally called, does not match the type of situation that qualifies as an intrusion on seclusion.”

Query: Would the outcome have been the same if the issue were your mother-in-law keeping you on the phone longer than you wanted?

On one hand, NuWave involves unique circumstances. So the decision could be seen as interesting, but with little chance of impacting future cases. Or perhaps not. Junk fax coverage litigation has led to two possible meanings of privacy. Broadly speaking, NuWave teaches that, going beyond the junk fax context, is not a basis to go beyond these established definitions.


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