OneBeacon America Insurance v. Urban Outfitters, Inc.
21 F. Supp. 3d 426
E.D. Pa.2014Background
- This declaratory judgment action involves cross-motions over whether OneBeacon and Hanover have a duty to defend Urban Outfitters and Anthropologie in three ZIP code privacy actions.
- Underlying actions are Hancock (DC), Dremak (California), and Miller (Massachusetts), alleging ZIP-code collection and use in violation of privacy laws and related statutes.
- OneBeacon issued several CGL and umbrella policies (some fronting with Hanover) naming Urban Outfitters and Anthropologie; Hanover issued primary CGL/umbrella policies as well.
- Hancock asserts DC privacy Act violations and misrepresentation theories; Dremak asserts Song-Beverly Act violations and related privacy theories; Miller asserts Massachusetts statute violations and privacy injury from junk mail.
- Exclusions at issue include Recording/Distribution of Material in Violation of Law and Material Published Prior To Policy Period, which target statutory privacy violations and pre-policy publications.
- Court applies Pennsylvania law to interpret the insurance contracts and determines policy scope by examining the underlying complaints and applicable exclusions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hancock triggers coverage for 'publication' of privacy material. | UO contends Hancock alleges publication of privacy material. | OneBeacon/ Hanover argue no publication under policy terms. | No duty to defend Hancock; no 'publication' as defined by policy. |
| Whether Dremak falls within 'personal and advertising injury' despite statutory basis. | Dremak asserts privacy violation via collection/recording and dissemination. | Exclusions apply due to statute-based claims and 'recording' prohibition. | Dremak falls within statutory exclusion; no defense obligation. |
| Whether Dremak's Ohio/CA allegations survive the policy exclusions for statutory violations. | Alleged dissemination constitutes privacy injury within policy coverage. | Exclusions for statutory violations bar coverage. | Exclusions apply; no defense obligation. |
| Whether Miller's unsolicited mail/privacy claims are within coverage for 'advertising injury'. | Miller alleges privacy invasion from junk mail derives from ZIP code data use. | Texas/Massachusetts cases align privacy right with secrecy; not covered as 'advertising injury'. | Miller claims are not covered; no defense obligation. |
Key Cases Cited
- Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 589 Pa. 317, 908 A.2d 888 (Pa. 2006) (interpretation of insurance contracts and coverage scope; court determines coverage at law)
- Erie Ins. Exch. v. Claypoole, 449 Pa. Super. 142, 673 A.2d 348 (Pa. Super. Ct. 1996) (duty to defend depends on whether underlying claims could be within policy coverage)
- Frog, Switch & Mfg. Co., Inc. v. Travelers Ins. Co., 193 F.3d 742 (3d Cir. 1999) (face of the complaint governs; liberally construe in insured's favor)
- D’Auria v. Zurich Ins. Co., 352 Pa. Super. 231, 507 A.2d 857 (Pa. Super. Ct. 1986) (duty to defend hinges on potentially covered claims)
- Melrose Hotel Co. v. St. Paul Fire & Marine Ins. Co., 432 F. Supp. 2d 488 (E.D. Pa. 2006) (privacy rights vs. advertising injury; 'privacy' limited to secrecy interests)
- Telecom. Network Design v. Brethren Mut. Ins. Co., 5 A.3d 331 (Pa. Super. Ct. 2010) (privacy injuries restricted to secrecy; dissemination through mass faxes not covered)
- Big 5 Sporting Goods Corp. v. Zurich American Ins. Co., 957 F. Supp. 2d 1135 (C.D. Cal. 2013) (ZIP code as personal identification information under Song-Beverly Act)
- Tyler v. Michaels Stores, Inc., 464 Mass. 492, 984 N.E.2d 737 (Mass. 2013) (ZIP codes as personal identification information under Massachusetts statute)