MICHAEL PENZER, as assignee of SOUTHEAST WIRELESS, INC., Plaintiff–Counter-Defendant–Appellant, versus TRANSPORTATION INSURANCE COMPANY, a wholly owned subsidiary of CNA, a foreign corporation, Defendant–Counter-Claimant–Third-Party Plaintiff–Appellee, versus SOUTHEAST WIRELESS, INC., NEXTEL SOUTH CORP., Third-Party-Defendants.
No. 07-13827
United States Court of Appeals, Eleventh Circuit
October 23, 2008
D.C. Docket No. 04-61243-CV-AJ
Appeal from the United States District Court for the Southern
Before TJOFLAT and BLACK, Circuit Judges, and RESTANI, Judge.*
PER CURIAM:
This appeal involves an insurance coverage dispute. Appellant Michael Penzer (“Penzer”) is the assignee of Southeast Wireless, Inc. (“Southeast”). Appellee Transportation Insurance Company (“Transportation”) issued to Southeast a commercial liability policy that included coverage for “advertising injury.” Penzer and Southeast entered into a class action settlement1 of claims that Southeast violated the Telephone Consumer Protection Act (“TCPA”),
held unwanted intrusions, such as violations of the TCPA, are not covered advertising injuries. We certify the issue to the Florida Supreme Court.
I. BACKGROUND
On September 22, 2004, Penzer, as assignee of Southeast, filed a complaint against Transportation seeking a declaratory judgment as to Transportation’s duty to defend and indemnify Southeast under the insurance policy at issue. Under Southeast’s insurance policy, Transportation had the duty to indemnify and defend claims that fell under an “advertising injury” provision covering an “injury arising out of . . . [o]ral or written publication of material that violates a person’s right of privacy.” (Record Excerpts Tab 1 (Ex. C), Business Liability Coverage Form (“Policy”) at 10.) Penzer alleged that the claims against Southeast were covered by this provision because the transmission of an unsolicited facsimile advertisement constituted the publication of written material. Transportation filed a counterclaim seeking a declaration that Southeast was not covered under the provision, because it was unambiguous and did not encompass Penzer’s claims, or in the alternative, because coverage was not required due to several policy exclusions.
The district court granted a stay of proceedings pending the disposition of the appeal in Hooters of Augusta, Inc. v. American Global Insurance Co., a case
involving coverage under the same policy provision for an identical TCPA violation. In a non-precedential decision, and applying Georgia law, we held that the insurer
II. DISCUSSION
A. General Florida Insurance Law Principles
The parties agree that Florida law governs this case, but the Supreme Court of Florida has not construed the particular policy language at issue. Generally,
under Florida law, “in construing insurance policies, courts should read each policy as a whole, endeavoring to give every provision its full meaning and operative effect.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000); see also
B. The Relevant Policy Language
The policy defines “advertising injury” as follows:
[I]njury arising out of one or more of the following offenses:
a. Oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products, or services;
b. Oral or written publication of material that violates a person’s right of privacy;
c. Misappropriation of advertising ideas or style of doing business; or
d. Infringement of copyright, title or slogan.
(Policy at 10 (emphasis added).) The terms “publication,” “material,” and “right of privacy” are not defined by the policy.
There are two relevant exclusions in the policy for “advertising injury.” The first excludes coverage for “advertising injury” “[a]rising out of the willful violation of a penal statute or ordinance committed by or with the consent of the insured.” (Id. at 5.) The second excludes coverage for “advertising injury” “arising out of . . . [b]reach of contract, other than misappropriation of advertising ideas under an implied contract.” (Id. at 6.)
Penzer argues that broad dissemination of facsimile advertisements is consistent with the commonly understood definitions of “publication” and “material,” two terms used in the policy, and that sending unsolicited facsimile advertisements violates a person’s “right of privacy” as it is commonly
understood, because privacy includes not just a secrecy or content component but also the right to be left alone. Penzer maintains that because “right of privacy” has at least two meanings, the provision must be construed liberally in favor of coverage.
Transportation argues that the policy terms cannot be considered in isolation and that when the provision is read as a whole and in the context of the other offenses mentioned, it provides for coverage only of content-based privacy violations.
D. The District Court’s Resolution of the Coverage Issue
The district court determined that the policy was unambiguous and agreed with Transportation’s position that the content of the published material itself must violate the right to privacy, finding persuasive the analysis conducted in American States Insurance Co. v. Capital Associates of Jackson County, Inc., 392 F.3d 939, 940–43 (7th Cir. 2004), in denying coverage for TCPA claims under3
the same policy language. Penzer, 509 F. Supp. 2d at 1286–87. The district court relied on American States’s determination that the two principal meanings of privacy are secrecy and seclusion, and that “[t]he structure of the policy strongly implies that coverage is limited to secrecy interests” because “[i]n a secrecy situation, publication matters . . . [whereas] [i]n a seclusion situation, publication is irrelevant.” Id. (quoting Am. States, 392 F.3d at 941–43). Additionally, the district court found that the fact that the other offenses covered under the “advertising injury” provision were content-based (“defamation, misappropriation of advertising ideas or style of doing business, infringement of copyright”), provided further evidence that the disputed provision should also be read similarly. Id. at 1287–88.4
Although Resource Bankshares Corp. v. St. Paul Mercury Insurance Co., 407 F.3d 631, 641–42 (4th Cir. 2005), found the four “advertising injury” offenses
to “share the common thread” of being content-based, other courts have come to the opposite conclusion regarding the identical provision. See, e.g., Valley Forge, 860 N.E.2d at 318 (finding TCPA claim coverage and stating that such coverage “does not, in any way, prevent the policies’ alternative definitions of ‘advertising injury’ from being given effect or thwart their respective purposes”).
The district court’s holding that only content-based invasions of privacy, and not TCPA-based seclusion violations, are covered is also placed in doubt by the wide divergence in case law5 interpreting “right of privacy” as used in this and
similar provisions. See, e.g., Terra Nova, 869 N.E.2d at 573 (“It is fair to say that even the most sophisticated and informed insurance consumer would be confused as to the boundaries of advertising injury coverage in light of the deep difference of opinion symbolized in these cases.”).
The district court found our non-precedential opinion in Hooters unpersuasive because it applied Georgia, not Florida, law. Penzer, 509 F. Supp. 2d at 1284–86. General principles of Florida and Georgia law, however, are similar in this area. See Hooters, 157 Fed. App’x at 205 (finding that under Georgia law a “reviewing court must consider the ordinary and legal meaning of the words” used in the policy, construing ambiguous terms “in favor of the insured to provide maximum coverage”).
Additionally, the district court noted that Transportation’s main argument, that the policy only covers an intrusion into seclusion that communicates private information, was not addressed in Hooters. Penzer, 509 F. Supp. 2d at 1284. The Hooters court did note, however, that the tighter wording of the policies involved in various cases denying coverage for TCPA claims seemed to have been a significant factor in the courts’ decisions, that is “publication”
“does not suggest the focus on secrecy that ‘making known’ does.” Hooters, 157 Fed App’x at 208; Contra Resource Bankshares, 407 F.3d at 641 (“‘[M]aking known’ implies telling, sharing or otherwise divulging, such that the injured party is the one whose private material is made known, not the one to whom the material is made known.”).
Instead, the district court relied on Compupay, a case involving the duty to defend allegations of sexual harassment and discrimination pursuant to privacy tort coverage. Penzer, 609 F. Supp. 2d at 1284–85. Compupay held that the provision at issue did “not cover causes of action under the broader umbrella of invasion of privacy torts” but rather “cover[ed] actions within the traditional invasion of privacy tort: a publication of personal matter.” Compupay, 654 So. 2d at 949.6 Specifically, the district court noted that the clause at issue in Compupay covered only invasion of privacy claims involving the publication of a personal
matter, and that because no publication had been alleged, the allegations of offensive touching were not covered. Penzer, 509 F. Supp. 2d at 1284–85 (citing Compupay, 654 So. 2d at 948–49).
Compupay does not appear to be directly on point, as it involved whether there was a duty to defend sexual harassment claims under a policy provision providing coverage for “the publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual’s right of privacy.” Compupay, 654 So. 2d at 946 n.2. As the allegations at issue in Compupay involved only the physical invasion of the complainant’s person, there were no “allegations of publication which would bring the claim within this provision.” Id. at 949 (emphasis added). As the case involved a different type of conduct, the court had no occasion to consider whether the publication of unsolicited material into a recipient’s private domain violates that person’s right to privacy based on interests in seclusion.
E. Exclusions
Transportation also argues that policy exclusions prevent coverage here. Provisions excluding or limiting the liability of the insurer are construed even more strictly against the insurer than those provisions that allow coverage, Auto-Owners, 756 So. 2d at 34, and “the burden of proof rests on the insurance
company to demonstrate that the coverage was inapplicable,” U.S. Concrete Pipe Co. v. Bould, 437 So. 2d 1061, 1065 (Fla. 1983). If exclusions are reasonably susceptible to more than one meaning, they are considered ambiguous and are to be construed in favor of the insured. Swire Pac. Holdings, 845 So. 2d at 165.
The relevant exclusions in the policy exclude coverage for “advertising injur[ies]”
the district court.”). Transportation, however, has not met its burden to prove that coverage is inapplicable under any of the policy exclusions or other defenses.
Transportation first alleges that coverage is excluded because Penzer’s claims actually arose from Southeast’s willful violation of a penal statute, namely,
Transportation also alleges that the breach of contract exclusion applies because Southeast breached a contract with Nextel by failing to get Nextel’s
approval before sending the facsimile advertisements and by sending facsimiles containing Nextel’s trademark, as prohibited by their “Authorized Representative Agreement.” Penzer maintains that the breach in question must have occurred between Southeast and the party claiming injury, i.e. Penzer, and that because there was no contractual relationship between the parties, no breach has occurred. The language of the breach of contract exclusion does not clearly indicate who the applicable contracting parties must be for the exclusion to apply, but Penzer’s reading is reasonable and, in fact, the most obvious one. Because Transportation has not demonstrated that its broad reading of the exclusion is the only reasonable one and because exclusions must be strictly construed against the insurer, this exclusion does not prevent coverage.
Florida’s public policy against insuring one’s own intentional misconduct also does not apply here.8 This public
401 F.3d at 882 (“[I]ntent is not a prerequisite to liability under the [TCPA].”); Park Univ. Enters., Inc. v. Am. Cas. Co. of Reading, PA, 314 F. Supp. 2d 1094, 1103 (D. Kan. 2004) (“The TCPA is essentially a strict liability statute” where liability can be found for erroneous unsolicited faxes). Thus, this public policy exclusion does not apply.
Finally, Florida’s public policy prohibiting insuring against punitive damage liability does not apply. The TCPA provides for $500 statutory damages and for treble damages for willful or knowing conduct,
punitive damages under Florida law “must be based on behavior which indicates a wanton disregard for the rights of others.” U.S. Concrete, 437 So. 2d at 1064.
Neither the policy exclusions nor Florida public policy lead to denial of coverage. Accordingly, an unsettled issue of Florida law as to insurance policy coverage controls the disposition of this case. A pure legal question of the interpretation of widely used language in commercial liability insurance is at issue. “Where there is doubt in the interpretation of state law, a federal court may certify the question to the state supreme court to avoid making unnecessary Erie guesses and to offer the state court the opportunity to interpret or change existing law.” Tobin v. Mich. Mut. Ins. Co., 398 F.3d 1267, 1274 (11th Cir. 2005). There appear to be no controlling Florida Supreme Court law and no intermediate appellate court decisions on point. Thus, we certify the issue to the Florida Supreme Court.
III. CERTIFICATION TO THE FLORIDA SUPREME COURT
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA, PURSUANT TO ARTICLE V, SECTION 3(B)(6) OF THE FLORIDA CONSTITUTION.
TO THE SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES:
DOES A COMMERCIAL LIABILITY POLICY WHICH PROVIDES COVERAGE FOR “ADVERTISING INJURY,” DEFINED AS “INJURY ARISING OUT OF . . . ORAL OR WRITTEN PUBLICATION OF MATERIAL THAT VIOLATES A PERSON’S RIGHT OF PRIVACY,” SUCH AS THE POLICY DESCRIBED HERE, PROVIDE COVERAGE FOR DAMAGES FOR VIOLATION OF A LAW PROHIBITING USING ANY TELEPHONE FACSIMILE MACHINE TO SEND UNSOLICITED ADVERTISEMENT TO A TELEPHONE FACSIMILE MACHINE WHEN NO PRIVATE INFORMATION IS REVEALED IN THE FACSIMILE?