2015 IL App (1st) 142919
Ill. App. Ct.2015Background
- Plaintiff Doctors Direct issued a professional liability policy with a cyber-claims endorsement to McAdoo Cosmetic Surgery (McAdoo). McAdoo sought coverage after a federal putative class action by David Bochenek alleging unsolicited advertising text messages.
- Bochenek’s federal complaints (original + amended) alleged violations of the TCPA and the Illinois Consumer Fraud Act; the amended complaint added that McAdoo obtained a spa customer list (names & phone numbers) without consent.
- The policy’s cyber endorsement defined a “privacy wrongful act” as “any breach or violation of U.S. federal, state or local statutes and regulations associated with the control and use of personally identifiable financial, credit or medical information” (only if committed by protected parties).
- Doctors Direct filed for declaratory relief, moving for judgment on the pleadings that it had no duty to defend or indemnify because the underlying claims were not covered privacy wrongful acts.
- The trial court granted judgment for Doctors Direct; the appellate court affirmed, holding the TCPA and the Consumer Fraud Act claims were not statutes “associated with” control/use of the covered categories of personal information and that the alleged list did not qualify as covered financial/credit/medical information.
Issues
| Issue | Bochenek’s Argument | Doctors Direct’s Argument | Held |
|---|---|---|---|
| Whether the policy’s definition of “privacy wrongful act” covers TCPA claims | TCPA governs telemarketing lists and selection methods; its prohibitions/regulations are associated with control/use of personal info, so TCPA falls within the policy | TCPA targets the act of calling/texting, not the control/use of financial/credit/medical information, so it is not a covered statute | TCPA is not a statute “associated with” control/use of the covered categories; TCPA claims are not covered |
| Whether the Consumer Fraud Act claim is a covered privacy wrongful act | Consumer Fraud Act can incorporate public-policy statutes (including TCPA); thus Consumer Fraud Act claims tied to TCPA are covered | Consumer Fraud Act itself is not associated with control/use of financial/credit/medical information; reliance on TCPA does not transform it into covered conduct | Consumer Fraud Act claim (as pled) not associated with control/use of covered categories and thus not covered |
| Scope and grammatical target of phrase “associated with the control and use of personally identifiable financial, credit or medical information” | Phrase is expansive; can qualify both the statutory/regulatory list and the preceding phrase “any breach or violation” — broad reading favors coverage | Under last-antecedent/plain-language rules, “associated with” modifies the immediately preceding phrase (statutes/regulations), not the phrase “any breach or violation” | Court construes “associated with” as qualifying the statutes/regulations (last antecedent rule); ambiguity resolved in favor of ordinary meaning for the phrase allocation |
| Whether a list of names + phone numbers (from a spa or as marketing prospects) qualifies as "personally identifiable financial, credit, or medical information" | A prospect list created by a medical provider conveys medical (and financial) information about recipients; thus it is covered | A bare list of names and phone numbers without details does not meet the policy’s covered definitions; cited financial/PII regulatory definitions don’t apply here | The alleged lists (as pled) do not constitute the policy’s defined personally identifiable financial, credit, or medical information; coverage not triggered |
Key Cases Cited
- Gillen v. State Farm Mut. Auto. Ins. Co., 215 Ill. 2d 381 (duty-to-defend standard; insurer must defend if complaint alleges facts potentially within coverage)
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90 (policy terms given their plain, ordinary meaning; ambiguity construed against drafter)
- General Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 215 Ill. 2d 146 (compare underlying complaint to policy language to determine duty to defend)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (duty to defend broader than duty to indemnify)
- Standard Mut. Ins. Co. v. Lay, 2013 IL 114617 (summary of TCPA purposes and prohibitions)
- Trans Union Corp. v. Federal Trade Comm’n, 245 F.3d 809 (discussion of target-marketing lists and consumer-report concept)