When is a catch-all provision too broad? When “a plain-text reading of that provision would swallow a substantial portion of the coverage that the policy otherwise explicitly purports to provide,” according to the Seventh Circuit Court of Appeals. Citizens Insurance Co. of America v. Wynndalco Enterprises LLC, Case No. 22-2313.
Wynndalco Enterprises, LLC faced lawsuits from Illinois residents accusing it of selling facial recognition data to the Chicago Police Department in violation of Illinois’ Biometric Information Privacy Act (BIPA). Wynndalco allegedly violated BIPA by “capturing, collecting, storing and using…bio-metric identifiers and/or biometric information” without the plaintiffs’ notice or permission.
Wynndalco’s insurer, Citizens Insurance Company of America, said there was no coverage for the suits because of its “Distribution of Material in Violation of Statutes” exclusion. The provision excluded coverage for violations of the Telephone Consumer Protection Act (TCPA), the CAN-SPAM Act of 2003, the Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transaction Act (FACTA), and:
Any other laws, statutes, ordinances, or regulations, that address, prohibit or limit the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.
Dubbed the “catch-all” provision, Citizen’s said the BIPA claims fell within its ambit.
The Seventh Circuit agreed, finding there was “no dispute that a literal, plain-text reading of the catch-all provision would include BIPA violations.” But the court didn’t stop there.
This plain-text reading, according to the court, gave “rise to an ambiguity with respect to what the policy does or does not cover.” Read literally, the exclusion would wipe out a whole swath of statutory causes of action for conduct the policy expressly did cover as “personal and advertising injuries”:
|Expressly Covered Conduct||Related Statutory Cause That Would Wipe-out Coverage|
|Oral or written publication of material that violates a person’s right of privacy||Illinois Slander and Libel Act (740 ILCS 145);|
|The 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||Illinois Uniform Deceptive Trade Practices Act provision defining deceptive trade practices to include commercial disparagement of another’s goods, services, or business (815 ILCS 510/2(a)(8))|
|The use of another’s advertising idea in one’s own “advertisement”; and Infringing upon another’s copyright, trade dress, or slogan in one’s own “advertisement”||Lanham Act provision for civil action seeking relief for false designation of origin, false or misleading description or representation of fact, and dilution of distinctive mark by blurring or tarnishment (15 U.S.C. § 1125(a) & (c)) |
Federal Copyright Act provision for civil action seeking relief for copyright infringement (17 U.S.C. § 501)
Illinois Trademark Registration and Protection Act provision for civil suit seeking relief for trademark infringement (765 ILCS 1036/60)
In other words, a plain-text reading would “swallow” a substantial portion of otherwise explicitly covered conduct, and maybe even all coverage for certain categories of wrongs—copyright infringement, for example—that are entirely statutory in nature. This, in the court’s estimation, was a bridge too far. True, non-statutory claims ducked the exclusion (meaning the policy wasn’t “wholly illusory”), but “this conflict between the competing policy provisions granting and excluding coverage gives rise to an ambiguity: the broad language of the catch-all exclusion purports to take away with one hand what the policy purports to give with the other in defining covered personal and advertising injuries.”
The court rejected Citizen’s ejusdem generis argument that the catch-all’s broad language could be given a more focused scope by reference to the four statutes cited before it: the TCPA that regulates telephone calls, the CAN-SPAM Act that regulates emails, the FCRA that regulates the reporting of credit information, and FACTA that deals with the accuracy of consumers’ credit-related records. BIPA, which protects the secrecy of one’s biometric information, might follow the “privacy protection” throughline of these other statutes, but not in a way that would be obvious to the average insured. And so, ejusdem generis fell short of clearing up the ambiguity.
The court found that Citizen’s owed Wynndalco a duty to defend against the BIPA claims.
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Catch-all provisions are meant to sweep up everything not covered by more specific terms, but sometimes they fall short. If an insurer cites a catch-all provision as a basis for denying coverage, it’s worth asking whether “all” really means all.