In Yahoo! Inc. v. National Union Fire Insurance Company of Pittsburgh, PA, No. 17-cv-00447 NC, 2017 WL 2405025 (N.D. Cal. June 2, 2017), the district court concluded there was no coverage for TCPA claims for unsolicited text messages under a “personal injury” enumerated offense providing coverage for “oral or written publication, in any manner, of material that violates a person’s right of privacy.”

Claimants filed several class action lawsuits against insured Yahoo seeking damages for Yahoo’s alleged transmission of unsolicited text messages in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA).  Yahoo’s CGL carrier National Union disclaimed any coverage obligations, and Yahoo filed the instant coverage action.  National Union filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).  The district court granted National Union’s motion to dismiss with leave to amend.

As an initial matter, the court noted that there are two recognized types of privacy: (1) secrecy (the right to prevent disclosure of private information to third parties); and (2) seclusion (the right to be left alone).  TCPA claims typically implicate a violation of the right to seclusion, because they involve unwanted faxes, calls, or text messages.  The court cited two cases decided by the California Court of Appeal finding no coverage for TCPA violations under CGL policies that contained an “invasion of privacy” enumerated offense with an express “publication” or “making known” requirement.  See State Farm Gen. Ins. Co. v. JT’s Frames, Inc., 181 Cal. App. 4th 429 (2010) (“oral or written publication of material that violates a person’s right of privacy”); ACS Sys., Inc. v. St. Paul Fire and Marine Ins. Co., 147 Cal. App. 4th 137 (2007) (“making known to any person or organization written or spoken material that violates an individual’s right of privacy”).

But the district court also applied California contract interpretation law, which requires interpreting the insurance policy as a whole.  The other “personal injury” offenses covered by the applicable National Union policies include slander and libel, which require the disclosure of information to third parties.  Therefore, reading the policies’ “invasion of privacy” offense in context indicates that the offense provides coverage for invasion of the right to secrecy, rather than invasion of the right to seclusion.  The district court expressly rejected Yahoo’s reference to cases applying non-California law, noting that in contrast to other states, California evaluates policy ambiguity with reference to the policy as a whole, and not in the abstract.  The district court granted National Union’s motion to dismiss with leave to amend, but on June 23, 2017, Yahoo advised that it is declining to amend.  The district court entered judgment on June 29, 2017, providing Yahoo an opportunity to appeal.