Welcome to The Perkins Coie Tech Risk Report, a source for updates on, and analysis and interpretation of, insurance issues relevant to emerging technologies. We will address coverage issues related to cyber coverage, privacy, digital assets like cryptocurrency, Blockchain and other emerging technologies. The blog is written for start-ups and other companies dealing with emerging
The Los Angeles Lakers are still dealing with the fallout from having sent confirmatory text messages to spectators in 2013, after having invited text messages from those spectators for potential display on the scoreboard. The ensuing Telephone Consumer Protection Act (TCPA) class action settled, but the Lakers’ suit against its insurer seeking coverage for defense costs and indemnification remains pending. The outcome of this dispute could have deep implications for any business using text messaging as part of its platform.
Oral argument in the Lakers’ appeal from the district court’s judgment of no coverage was held on February 15, 2017, with the opinion pending. See Recording of oral argument in LA Lakers v. Fed. Ins. Co., No. 15-55777 (9th Cir.).At issue in the case is whether Federal Insurance Company (Federal) had to defend and indemnify the Lakers with respect to the underlying class action (the Class Action) under the Lakers’ Directors and Officers policy (the Policy). The district court ruled that there was no coverage because TCPA claims are by definition claims for invasion of privacy, and such claims fall under the Policy’s exclusion for claims against the Lakers “based on, arising from, or in consequence of . . . invasion of privacy.” Los Angeles Lakers, Inc. v. Fed. Ins. Co., No. CV 15-7743 DMG (SHx), 2015 WL 2088865 (C.D. Cal. Apr. 17, 2015). On appeal, the parties’ central positions are laid out below. …
The U.S. Court of Appeals for the Ninth Circuit ruled in the negative last month on whether the Los Angeles Lakers were entitled to coverage under their Directors and Officers (D&O) policy (Policy) for costs relating to an underlying suit brought against them alleging violations of the Telephone Consumer Protection Act (TCPA). Los Angeles Lakers, Inc. v. Federal Ins. Co., No. 15-55777 (9th Cir. Aug. 23, 2017). On its face, the ruling is favorable to insurers. But given the disparities between the opinions, its ultimate effect is unclear and will be revealed only in its future application.
The Lakers lead opinion adopted the Federal Insurance Company’s (Federal’s) broad argument that a TCPA claim is by definition a claim for invasion of privacy and therefore excluded from coverage under the Policy’s broad exclusion from coverage of claims “based upon, arising from, or in consequence of . . . invasions of privacy” (Privacy Exclusion). Id. at 8-9. To reach its conclusion regarding the nature of TCPA claims, the lead opinion determined that the U.S. Congress enacted the TCPA with the express intent to protect privacy interests so that, “in pleading the elements of a TCPA claim, a plaintiff pleads an invasion of privacy claim.” Id. at 14. That, combined with the very broad meaning the lead opinion gave to the Privacy Exclusion, meant that the Lakers were not entitled to coverage under the Policy.…