California high court ruling favors Yahoo in TCPA case vs. AIG


The California Supreme Court issued a ruling favorable to Yahoo Inc. on Thursday in a case where it was asked by the 9th U.S. Circuit Court of Appeals in San Francisco to consider whether an American International Group Inc. unit may have to defend it in Telephone Consumer Protection Act litigation.

AIG unit National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, sold Sunnyvale, California-based Yahoo five consecutive one-year policies, according to court papers in Yahoo Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania.

An endorsement negotiated by the two parties deleted an express exclusion arising from TCPA violations but limited the scope of coverage to “personal injury.”

Yahoo became a defendant in five putative class actions, including two in California, alleging the company had violated the TCPA by transmitting unsolicited text message advertisements to putative class members, according to the ruling.

National Union refused to defend the litigation, and Yahoo filed suit in U.S. District Court in San Jose for breach of contract. The district court granted National Union’s motion to dismiss, concluding the policy’s coverage of personal injury arising of “publication…of material that violates a person’s right of privacy” does not apply to Yahoo’s TCPA liability.

Two California appeals courts have ruled differently on this issue, which led the 9th Circuit to ask the state Supreme Court to consider the issue in 2019.

Privacy law recognizes a right to secrecy and a right to seclusion, which is defined as the ‘right to be free in a particular location, for disturbance by others,” says the California Supreme Court’s unanimous ruling.

A commercial general liability policy “can cover liability for violations of the right of seclusion if such coverage is consistent with the insured’s objectively reasonable expectations,” it said.

“Such a policy can also trigger the insurer’s duty to defend the insured against a claim that the insured violated the TCPA by sending unsolicited text messages that did not reveal any private or secret information, provided that the alleged TCPA violation amounts to a right-of-seclusion violation under California law.”

Attorneys in the case did not respond to requests for comment.

Timothy P. Law, a partner with Reed Smith LLP in Philadelphia, who submitted an amicus brief in the case on behalf of United Policyholders, said the ruling is a “clear victory” for Yahoo.

He said the ruling follows comparable decisions by the high courts in Illinois, Florida and Missouri in holding that such coverage is available. The California case “brings uniformity to the case law” in litigation decided by states’ high courts, he said.

 

 

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