Gauntlett on Intellectual Property/Antritrust Insurance : Insurance Policyholder Advocate & Attorney David Gauntlett : Gauntlett Law Firm : Insurance Recovery, Policy Interpretation : Irvine, Orange County, California

Analyzing whether personal jurisdiction arose in order to address the issue, it determined that JT’s, standing in place of the insured, freely chose to involve itself in the merits of the action, and even stipulated to have the court decide the summary judgment motion before the time prescribed by Cal. Code Civ. Proc. § 437c, subd. (a), thus waiving any jurisdictional objections to participation in the motion and to permitting the appellate court to resolve this issue.

The court relied upon the last antecedent rule in determining that there was no potential coverage. It thus took an approach directly contrary to that enunciated one day later by the Florida Supreme Court in addressing an issue certified to it by the Eleventh Circuit. Penzer v. Transportation Insurance Co., ___ So. 3d ___, 2010 WL 308043 (Fla. 2010).

Therein, the court found that plain meaning rules applied. Penzer, 2010 WL 308043, at *5 n.6 (“Because we apply a plain meaning analysis, we need not consult the rules of construction that apply when there is an ambiguity. Therefore, we reject Transportation’s rule of construction arguments, including the doctrine of noscitur a sociis.”).

The two concurrences in Penzer found that the Eleventh Circuit should have reached the issue of ambiguity and on that basis confirmed the same result. None applied a strict contextual analysis as did the California Court of Appeal.

In Terra Nova Insurance Company v. Fray-Witzer, 869 N.E.2d 565, 572 (Mass. 2007), the Massachusetts Supreme Court similarly analyzed whether unsolicited facsimile advertisements violated the TCPA. The Court found the facsimile advertisements to fall within the category of “[o]ral or written publication of material,” and also analyzed whether it was a violation of the “right to privacy” in the context of the precise policy language. Id.

[W]e must construe the phrase “right of privacy.” In interpreting these words, the judge relied entirely on two decisions from the Federal courts of appeals, namely, Resource Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631 (4th Cir.2005), and American States Ins. Co. v. Capital Assocs. of Jackson County, Inc., 392 F.3d 939 (7th Cir.2004). In the American States decision, the United States Court of Appeals for the Seventh Circuit noted that the “right of privacy” can be understood to mean either the right to secrecy, such as a person wishing to conceal a criminal conviction or bankruptcy, or a right to seclusion, such as a person asserting a desire to be free from door-to-door sales people ringing the doorbell at night. . . . [The] language at issue here pertains only to the right of privacy as that phrase concerns secrecy. . . . The court in Resource Bankshares Corp. . . . relied heavily on the American States analysis in interpreting policy language that was different from the language at issue here. [Emphasis added.]

JT’s Frames narrowly construed the right to privacy and mischaracterized American States by holding that a “right of privacy” violation is only implicated if a right to seclusion is implicated. JT’s Frames, 181 Cal. App. 4th at 445. In ACS Systems, the Panel recognized that “sending unsolicited faxed advertisements constitutes ‘making known’ of ‘written . . . material’ to the recipient.” But the outcome was different in ACS Systems because the policy language at issue there required the unsolicited fax to implicate the right of privacy based on the “material” in the fax itself, because of the “making known” language in the policy.

The JT’s Frames court said that it viewed the reasoning of American States Insurance Co. v. Capital Associates of Jackson County, 392 F.3d 939, 941 (7th Cir. (Ill.) 2004), as dispositive, observing:

“These three advertising injury offenses therefore all involve the insured’s making known or unauthorized taking or use of content which injures someone.” (147 Cal.App.4th at p. 151, 53 Cal.Rptr.3d 786.) It followed that construing the provision “ ‘[m]aking known to any person or organization written or spoken material that violates an individual’s right of privacy’ ” in context led to the conclusion that “[t]he covered advertising injury offense involves communication or making known of written or spoken material whose content injures someone else.” (Ibid.; accord, Resource Bankshares v. St. Paul Mercury Ins. Co. (4th Cir.2005) 407 F.3d 631, 641 . . . .)

Id. at 448-49.

The court reached a ruling consistent with that of a number of cases that the sender of the fax may be uncertain of violating the TCPA but knows that the faxes deplete the recipient’s consumables as every junk fax invades the recipient’s property interest in consumables. This is intentional, and the outcome is not covered.

The court found that an exclusion relied upon by the district court to avoid a defense was too broadly interpreted.

The SmartDownload utility does not provide an Internet connection, and, in fact, is useless without one; AOL therefore did not provide Internet access in making the SmartDownload utility available. Since the other enumerated activities included in the “online activities” exclusion also do not apply to the SmartDownload program, we reverse the district court's grant of summary judgment and remand for further proceedings.

Id. at *1.

the TCPA was to protect individuals from receiving unsolicited fax advertisements no matter what their content. See 47 U.S. § 227(b)(2)(B)(ii)(I) and 227(b)(2)(C). Id. at *4.

The unsolicited faxed advertisement itself is “material” that is offensive and violated the individual’s right of privacy. As the Valley Forge court, applying New Jersey law from the Supreme Court of Massachusetts observed, granting another’s claim would be tantamount to rewriting the policy for the insurer’s benefit.

The court also rejected the Insurer’s argument that a publication requires disclosure to a third person or party which did not happen here.

[A]n invasion-of-privacy claim based upon seclusion does not require that its factual underpinning include an allegation of publication to a third person. See, e.g., Sustin v. Fee (1982), 69 Ohio St.2d 143, 145-46 (“One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of privacy, if the intrusion would be highly offensive to a reasonable person.”).

Id. at *5.

The court found no difficulty in finding that faxed advertisements are an act of “publication” in the ordinary sense of the word.

The “few marginal, direct” contacts were sufficient to constitute an intrusion because the TCPA presumes that all advertising, so long as it is unsolicited, is an offensive intrusion upon the recipient’s solitude.

Rejecting the argument that since Ohio prohibits insuring against punitive damages and treble damages were authorized by the TCPA that public policy bars any indemnity.

But the claimants are not seeking punitive damages; they are seeking damages under the TCPA. The amounts of such damages are specified by the statute. The TCPA provides for the higher of actual damages, or damages of $500 per violation. 47 U.S.C. § 227(b)(3)(B). The award may be increased to “not more than 3 times the amount available under subparagraph (B)” if the violation was committed “willfully or knowingly.” 47 U.S.C. § 227(b)(3).

Id. at *6.

There was no evidence that TCPA was intended to be punitive in nature as it was not based on purely punitive or deterrent goals.

[There] is no showing that intentional malice required to obtain treble damages under the TCPA if the fax advertisements were sent “willfully.” . . . Thus, a willful or knowing violation of the TCPA is different from an intentionally malicious act that could give rise to punitive damages. See, also, Penzer v. Trans. Ins. Co. (C.A.11, 2008), 545 F.3d 1303, 1311 (public policy prohibiting insuring against punitive damage liability not applicable to TCPA claims because statutory damages not designed to be punitive and punitive damages require “wanton disregard for the rights of others”).

Id. at *7,

The court addressed each and every potential argument that could be asserted in connection with a coverage analysis of a “blast fax” claim implicating the TCPA. It rejected each in turn thoughtfully and succinctly, putting to rest questionable rejections of coverage that continue to proliferate despite clear law requiring a contrary result.

ruling in Insurance Corp. of Hanover v. Shelborne Associates, ___ N.E.2d ___, 2009 WL 884898 (Ill. App. Ct. (1st Dist.) March 31, 2009), entered three days before the April 2, 2009 Brother Int’l Order.

The court conceded that under New Jersey law subjective intent is applicable to determine an intent to injure.

The court found Melrose Hotel Co. v. St. Paul Fire & Marine Ins. Co., 432 F. Supp. 2d 488, 501 (E.D. Pa. 2006), aff’d, 503 F.3d 339 (3d Cir. 2007) dispositive as it addressed the same policy.

Melrose's knowledge about the TCPA and its lack of intent to violate the TCPA are irrelevant to whether it intended to cause harm that befell Class members.

Id. at *5.

“Without Atkins' valid authority or informed consent, IMT and Thane have invaded and continue to invade Atkins' privacy by appropriating Atkins' name and likeness by using Atkins' name and image on the EFL package and Atkins' name and image in at least one infomercial which was aired on television. Atkins' image on the EFL package and in the infomercial is readily identifiable in that any person viewing these images with the naked eye can reasonably determine that the person depicted in these images is Atkins because Atkins' face is clearly visible and distinguishable, the image depicting Atkins on the EFL package is situated next to Atkins name on the package and the image depicting Atkins in the EFL infomercial is shown with a verbal statement of Atkins' name.”

Id. at *3.

A duty to defend these fact assertions was owed by Hartford.

All causes of action were covered because the defendant refused to defend citing, Buss v. Superior Court, 16 Cal. 4th 35, 48-50 (1997).

The fair market value of the goods, i.e., the EFL units, or $492,793.62, that Thane agreed to relinquish in consideration for the settlement of all claims against it in the underlying lawsuit is recoverable as damages arising from Defendants’ breach. Earth Elements, Inc. v. Nat'l Am. Ins. Co. of Calif., 41 Cal.App.4th 110, 116-17, 48 Cal.Rptr.2d 399 (1995); McMahan's of Santa Monica v. City of Santa Monica, 146 Cal.App.3d 700-701 (1983), disapproved on other grounds, Bunch v. Coachella Valley Water Dist., 15 Cal.4th 432, 63 Cal.Rptr.2d 89, 935 P.2d 796 (1997).

Id. at *6.

The court also found 10% prejudgment interest was recoverable on the fair market value of the goods relinquished as well as on defense fees from the date incurred.

It reversed the district court’s ruling on all matters, determining in accord with its earlier decision applying Georgia law, Hooters of Augusta, Inc. v. American Global Ins. Co., No. 04-11077, 157 Fed. Appx. 201, 210, 2005 WL 3292089 (11th Cir. (Ga.) 2005), that neither the willful penal acts exclusion nor breach of contract exclusion barred coverage.

The penal statute exclusion was logically limited to the statute giving rise to liability, Fla. Stat. § 365.1657, which is not a penal statute.

The court noted that the breach of contract exclusion does not clearly indicate who the applicable contracting parties must be for the exclusion to apply. The court found the insured’s reading reasonable and more obvious. The contract breach was between the claimant and the insured, not between the insured and Nextel, who sent the facsimile advertisements.