The California Supreme Court issued a ruling in favor of Yahoo Inc. on Thursday in a case in which it was asked by the 9th U.S. Circuit Court of Appeals in San Francisco to consider whether a unit of American International Group Inc. might have to defend it in telephone consumer. protection law disputes.
AIG unit National Union Fire Insurance Co. in Pittsburgh, Pennsylvania, Sunnyvale, Calif.-based Yahoo sold five consecutive one-year policies, according to court papers in Yahoo Inc. v. National Union Fire Insurance Co . in Pittsburgh, Pennsylvania.
A recommendation negotiated by the two parties deleted an express exclusion arising from TCPA violations but limited coverage to “personal injury.”
;Yahoo became a defendant in five putative class-action lawsuits, including two in California, alleging the company violated the TCPA by sending unsolicited text message advertisements to putative class members, according to the ruling.
National Union declined to defend the lawsuits, and Yahoo filed suit in US District Court in San Jose for breach of contract. The district court granted National Union’s motion to dismiss, concluding that the policy’s coverage of personal injuries arising from the “publication…of material that violates a person’s right to privacy” does not apply to Yahoo’s TCPA liability.
Two California appeals courts have ruled differently on this issue, prompting the 9th Circuit to ask the state Supreme Court to consider the issue in 2019.
Privacy law recognizes a right to privacy and a right to privacy, which is defined as “the right to be free in a particular place, from the disturbance of others,” said the California Supreme Court’s unanimous ruling.
A commercial general liability policy “may cover liability for privacy violations if such coverage is consistent with the insured’s objectively reasonable expectations,” it said.
“Such a policy may also trigger the insurer’s duty to defend the insured against an allegation that the insured violated the TCPA by sending unsolicited text messages that did not disclose any private or confidential information, provided that the alleged TCPA violation involves a right to—crime against seclusion under California law.”
Attorneys in the case did not respond to requests for comment.
Timothy P. Law, a partner with Reed Smith LLP in Philadelphia, who filed an amicus brief in the case on behalf of United Policyholders, said the ruling is a “clear victory” for Yahoo.
He said the ruling follows comparable decisions by the Supreme Courts of Illinois, Florida and Missouri in holding that such coverage is available. The California case “brings uniformity to jurisprudence” in litigation decided by state supreme courts, he said.
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