Beware Broader Insurance coverage Protection Exclusions for Biometric Data Privateness Regulation Claims
It has been practically twenty years since Illinois launched the primary biometric data privateness regulation within the nation in 2008, the Illinois Biometric Data Privateness Act (“BIPA”). Since then, litigation regarding biometric data privateness legal guidelines has mushroomed, and the insurance coverage trade has responded with more and more broad exclusions for claims stemming from the litigation. A current Illinois Appellate Courtroom choice in Ohio Safety Ins. Co. and the Ohio Cas. Ins. Co. v. Wexford House Corp., 2024 IL App (1st) 232311-U, demonstrates this ongoing evolution.
The plaintiff in a putative class motion lawsuit sued Wexford House Company (“Wexford”), alleging that Wexford violated BIPA by gathering, recording, storing, sharing and discussing its staff’ biometric data with out complying with BIPA’s statutory disclosure limitations. Wexford tendered the putative class motion lawsuit to its insurers, Ohio Safety Insurance coverage Firm and Ohio Casualty Insurance coverage Firm, each of which denied protection and filed a declaratory judgment motion in search of a ruling that the insurers had no responsibility to defend or indemnify Wexford.
The insurers argued that there was no responsibility to defend or indemnify based mostly on three exclusions: (1) the “Recording And Distribution Of Materials Or Data In Violation Of Regulation” exclusion (“Recording and Distribution Exclusion”), (2) the “Exclusion-Entry Or Disclosure Of Confidential And Information-Associated Legal responsibility-With Restricted Bodily Damage Exception,” and (3) the “Employment-Associated Practices Exclusion.”
The events cross-moved for judgment on the pleadings, and the trial courtroom granted judgment for Wexford, discovering that the insurers owed a protection. The trial courtroom reasoned that publication of fabric that violates an individual’s proper to privateness met the insurance policies’ definition of non-public and promoting damage, and subsequently no exclusions utilized to bar protection. The insurers appealed. Though the insurers didn’t problem the trial courtroom’s ruling that the alleged BIPA claims certified as private or promoting damage enough to set off protection, they maintained that the trial courtroom erred by not making use of the three exclusions.
On attraction, the courtroom targeted on the Recording and Distribution Exclusion, which purports to bar protection the place the private or promoting damage arises from the violation of any of three enumerated statutes (TCPA, CAN-SPAM Act, and FCRA) or some other statute that falls inside a broad “catch all” provision that expands the exclusion to incorporate violations of “[a]ny federal, state or native statute, ordinance or rules apart from the [three enumerated statutes] that addresses, prohibits, or limits the printing, dissemination, disposal, gathering, recording, sending, transmitting, speaking or distribution of fabric or data.”
The courtroom relied on its earlier choice, Nationwide Fireplace Ins. Co. of Hartford and Cont’l Ins. Co. v. Visible Park Co., Inc., 2023 IL App (1st) 221160, by which it discovered an an identical Recording and Distribution Exclusion to bar protection for BIPA claims. That call, nonetheless, represented a departure from earlier choices that discovered comparable catchall provisions didn’t embody BIPA claims. For instance, in W. Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., 2021 IL 125978, 183 N.E.3d 47 (Could 20, 2021), the identical appellate courtroom that determined Visible Park defined that the interpretive canon of ejusdem generis (which requires that normal phrases following an enumeration of particular individuals or issues are deemed to use solely to individuals or issues of the identical normal variety or class of the particularly enumerated individuals or issues) required a discovering {that a} comparable catchall exclusion can be afforded restricted attain and never lengthen to BIPA claims. Within the Visible Park case, however, the appellate courtroom concluded {that a} catchall provision just like the one in Wexford was materially totally different and broader than prior variations of the exclusion. In line with the Visible Park courtroom, the exclusion’s reference to “disposal,” “gathering,” or “recording” of fabric or data sufficiently encompassed BIPA violations, whereas prior variations apparently didn’t. The appellate courtroom once more utilized the interpretive canon of ejusdem generis to achieve conclusions concerning the exclusion’s supposed attain. The courtroom reasoned that as a result of the particularly enumerated statutes within the Recording and Distribution Exclusion protected private data and privateness, the final catchall should have been supposed to take action as effectively.
As Wexford, Visible Park, and the pre-Visible Park choices illustrate, insurers are broadening the scope of exclusions that doubtlessly apply to BIPA-related claims. Policyholders ought to fastidiously evaluation their insurance policies yearly to determine adjustments in wording which may have a cloth impression on the scope of protection. Skilled brokers and protection counsel may help to make sure that materials adjustments are recognized early and, the place applicable, modified or deleted by endorsement.
