913 F.3d 923
9th Cir.2019Background
- Yahoo! obtained commercial general liability policies from National Union; policies included coverage for “personal injury” defined to include “oral or written publication . . . of material that violates a person’s right of privacy,” with an endorsement that removed a TCPA exclusion and limited coverage to specified personal-injury offenses.
- Yahoo! was sued in multiple putative class actions alleging violations of the Telephone Consumer Protection Act (TCPA) for sending unsolicited text advertisements that did not disclose any private information.
- National Union refused to defend; Yahoo! sued for breach of contract. The district court dismissed, holding the policy’s “right of privacy” language did not cover Yahoo!’s TCPA liability.
- The Ninth Circuit panel found California law unsettled on whether such “right of privacy” policy language covers invasions of seclusion (unwanted intrusions like unsolicited texts) as opposed to violations of secrecy (disclosure of confidential information).
- Because California Court of Appeal decisions are split (ACS Systems v. St. Paul suggesting no coverage; State Farm Gen. Ins. v. JT’s Frames holding no coverage for similar language, but other authorities reach opposite conclusions), the Ninth Circuit certified the question to the California Supreme Court under Cal. R. Ct. 8.548.
Issues
| Issue | Plaintiff's Argument (Yahoo!) | Defendant's Argument (National Union) | Held |
|---|---|---|---|
| Whether policy language covering publication that "violates a person’s right of privacy" triggers duty to defend TCPA claims based on unsolicited texts that reveal no private info | Phrase should be read to cover publication that invades seclusion; TCPA protects seclusion and thus falls within the policy | Phrase limits coverage to publication of material that reveals confidential information (secrecy), so TCPA claims (seclusion only) are not covered | Court did not decide; certified the question to the California Supreme Court for resolution |
| Whether the clause "that violates a person’s right of privacy" modifies "publication" (covering publication that invades seclusion) or only "material" (covering materials that disclose secrets) | Reads clause as qualifying "publication" (or both), so covers seclusion-based harms | Relies on last-antecedent canon to restrict clause to "material," limiting coverage to secrecy violations | Court found conflicting appellate authority on this interpretive rule in California and certified question |
| Whether TCPA’s privacy interest (seclusion) is a species of "right of privacy" under the policy | TCPA protects privacy by preventing intrusions; thus insured’s liability for unsolicited messages implicates policy privacy language | Policy language refers to disclosure of private facts, not unwanted intrusions; TCPA claims do not allege disclosure | Court observed TCPA implicates seclusion and noted coverage turns on whether policy encompasses seclusion; certified question to state supreme court |
| Whether California precedent controls interpretation or whether out-of-state decisions are persuasive | Argues California can adopt approach covering seclusion; points to some out-of-state holdings recognizing coverage | Points to JT’s Frames and similar decisions limiting coverage under California law | Court concluded conflicting California appellate decisions prevent a clear prediction and thus sought California Supreme Court guidance |
Key Cases Cited
- State Farm Gen. Ins. v. JT's Frames, 104 Cal. Rptr. 3d 573 (Ct. App. 2010) (interprets "right of privacy" clause as modifying "material," limiting coverage to secrecy-based disclosures)
- ACS Sys., Inc. v. St. Paul Fire & Marine Ins., 53 Cal. Rptr. 3d 786 (Ct. App. 2007) (construes similar policy language as addressing disclosure of private material, not seclusion)
- Penzer v. Transp. Ins., 545 F.3d 1303 (11th Cir. 2008) (discusses the common policy language and other courts’ divergent readings)
- Penzer v. Transp. Ins., 29 So. 3d 1000 (Fla. 2010) (holds such policy language can cover TCPA-type claims)
- Terra Nova Ins. v. Fray-Witzer, 869 N.E.2d 565 (Mass. 2007) (finds coverage for unsolicited-fax/TCPA claims under similar wording)
- Auto-Owners Ins. v. Websolv Computing, 580 F.3d 543 (7th Cir. 2009) (concludes no coverage under similar language in that jurisdiction)
- Res. Bankshares Corp. v. St. Paul Mercury Ins., 407 F.3d 631 (4th Cir. 2005) (holds no coverage where policy language read to require disclosure of private facts)
- Park Univ. Enters., Inc. v. Am. Cas. Co. of Reading, PA, 442 F.3d 1239 (10th Cir. 2006) (recognizes TCPA protects seclusion and discusses its relation to policy privacy language)
- L.A. Lakers, Inc. v. Fed. Ins., 869 F.3d 795 (9th Cir. 2017) (observes TCPA’s explicit purpose is to protect privacy rights)
- Valley Forge Ins. v. Swiderski Elecs., Inc., 860 N.E.2d 307 (Ill. 2006) (finds coverage under Illinois law for TCPA claims under similar policy wording)