Citizens Insurance Company of America v. Wynndalco Enterprises, LLC
70f4th987
7th Cir.
2023

Background

  • Wynndalco, an Illinois IT vendor, purchased and (directly or as Clearview’s agent) provided Clearview AI’s facial-recognition product to CDW-Government/The Chicago Police, prompting two putative Illinois class actions (Thornley and Calderon) alleging violations of Illinois’ Biometric Information Privacy Act (BIPA) and related common-law claims.
  • Wynndalco tendered defense to its insurer, Citizens Insurance Company of America, which filed this declaratory-judgment action seeking a ruling that it has no duty to defend or indemnify under a policy exclusion covering violations of certain statutes.
  • The policy insures "personal and advertising injury," defined to include publication that violates a person’s right of privacy, but contains a violation-of-statutes exclusion that lists several statutes and then a broad catch-all excluding injuries arising out of violations of "any other laws, statutes, ordinances, or regulations" addressing the "printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information."
  • Citizens argued the catch-all unambiguously covers BIPA because BIPA regulates collecting/recording/dissemination of biometric information; Wynndalco argued the catch-all is ambiguous because read literally it would nullify coverage the policy elsewhere provides.
  • The district court held the catch-all was "intractably ambiguous," construed the ambiguity against the insurer, and ordered Citizens to defend Wynndalco. The Seventh Circuit affirmed.

Issues

Issue Plaintiff's Argument (Citizens) Defendant's Argument (Wynndalco) Held
Does the policy's violation-of-statutes catch-all unambiguously exclude coverage for BIPA claims and relieve Citizens of the duty to defend? The catch-all expressly covers statutes (like BIPA) that address collecting, recording, dissemination, sending, transmitting or distribution of information, so BIPA claims are excluded. A plain reading of the catch-all would "swallow" coverage the policy elsewhere promises (e.g., statutory IP and other statutory privacy claims); that conflict creates an ambiguity that must be construed for the insured. The catch-all is ambiguous because it appears to negate coverage the policy otherwise grants; ambiguity construed against insurer — Citizens owes a duty to defend.
Do textual canons (ejusdem generis / noscitur a sociis) narrow the catch-all to statutes regulating communication or privacy so as to exclude BIPA? Apply ejusdem generis: the listed statutes share a common theme (privacy/communication), so the catch-all should be limited to similar statutes (arguably including BIPA). The exclusion’s text and heading contain no clear limiting theme; the listed statutes regulate different privacy interests (seclusion vs. secrecy) and no obvious common denominator "jumps off the page," so canons cannot plausibly resolve the ambiguity. The canons do not supply a reliable narrowing gloss here; they cannot eliminate the intractable ambiguity, so the exclusion is read against the insurer.
Does Citizens’ duty to defend extend to the common-law claims in Thornley as well as the BIPA claims? Citizens argued the exclusion bars coverage for the statutory claims and thus also should foreclose related claims. The common-law claims arise from the same acts/omissions as the BIPA claims and fall within the policy’s definition of "personal and advertising injury." Because the insurer must defend the BIPA allegations, Citizens must also defend the related common-law claims arising from the same conduct.

Key Cases Cited

  • West Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., 183 N.E.3d 47 (Ill. 2021) (Illinois Supreme Court limiting a similar catch-all to statutes regulating methods of communication under ejusdem generis)
  • Pipefitters Welfare Educ. Fund v. Westchester Fire Ins. Co., 976 F.2d 1037 (7th Cir. 1992) (application of ejusdem generis to interpret a catch-all phrase in an insurance definition)
  • Panfil v. Nautilus Ins. Co., 799 F.3d 716 (7th Cir. 2015) (canon of construing exclusions against insurer where ambiguity remains)
  • Capital Assocs. of Jackson Cnty., Inc. v. American States Ins. Co., 392 F.3d 939 (7th Cir. 2004) (distinguishing types of "privacy"—seclusion vs secrecy—relevant to coverage disputes)
  • Rosenbach v. Six Flags Entm’t Corp., 129 N.E.3d 1197 (Ill. 2019) (Illinois Supreme Court recognizing BIPA’s private right of action)
  • Bryant v. Compass Grp. USA, Inc., 958 F.3d 617 (7th Cir. 2020) (discussing BIPA in Seventh Circuit precedent)
  • Supreme Laundry Serv., L.L.C. v. Hartford Cas. Ins. Co., 521 F.3d 743 (7th Cir. 2008) (duty to defend is broader than duty to indemnify)
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