LA Lakers v. Federal Insurance Co., No. 15-55777 (9th Cir. 2017)
Annotate this CaseA liability insurance policy that unequivocally and broadly excludes coverage for invasion of privacy claims also excludes coverage for Telephone Consumer Protection Act (TCPA) claims. After Federal denied insurance coverage and declined to defend the Lakers in an underlying suit for invasion of privacy, the Lakers filed suit against Federal for breach of contract and tortious breach of the implied covenant of good faith and fair dealing. The Ninth Circuit affirmed the district court's dismissal of the suit under Federal Rule of Civil Procedure 12(b)(6). The panel held that a TCPA claim was inherently an invasion of privacy claim and thus Federal correctly concluded that the underlying TCPA claim fell under the insurance policy's broad exclusionary clause. In this case, Federal did not breach the policy, or the implied covenant of good faith and fair dealing, under any cognizable legal theory, when it declined to defend against or cover the underlying complaint.
Court Description: Telephone Consumer Protection Act. The panel affirmed the district court’s Fed. R. Civ. P. 12(b)(6) dismissal of an action brought under diversity jurisdiction by the Los Angeles Lakers against the Federal Insurance Company after it denied coverage and declined to defend the Lakers in a lawsuit alleging violations of the Telephone Consumer Protection Act. The underlying action alleged that the Lakers violated the Telephone Consumer Protection Act when, during a game, they invited attendees to send a text to a specific number and then sent a response text message using an “automatic telephone dialing system,” in violation of the Act. Federal Insurance Company denied coverage and declined to defend the Lakers, concluding that the underlying lawsuit was an invasion of privacy suit, which was specifically excluded from coverage. The panel held that because a Telephone Consumer Protection Act claim is inherently an invasion of privacy claim, Federal Insurance Company correctly concluded that the underlying Telephone Consumer Protection Act claims fell under the Policy’s broad exclusionary clause. Accordingly, Federal Insurance Company did not breach the insurance policy, or the implied covenant of good faith and fair dealing, under any cognizable legal theory, when it declined to defend against or cover the underlying complaint. L.A. LAKERS V. FEDERAL INS. CO. 3 District Judge Murphy concurred and wrote separately to state that this court should have decided the case on narrower grounds. Judge Murphy stated that the allegations in the underlying action were sufficient to determine that the claims arose from an invasion of privacy and the Court did not need to hold more broadly that a Telephone Consumer Protection Act claim is inherently an invasion of privacy claim. Dissenting, Judge Tallman stated that because the underlying action sought recovery based on an alleged violation of the Telephone Consumer Protection Act, and did not seek recovery based on invasion of privacy, he would reverse the district court’s order dismissing the Lakers’ claims.
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