Are TCPA Claims a Covered “Advertising Injury” Event?

In the case of Telecommunications Network Design and Paradise Distributing, Inc. v. The Brethren Mutual Insurance Company, Paradise was insured by Brethren. Between July 8, 2001 and July 8, 2003 (when Brethren was on risk), Paradise transmitted over 1,000,000 unsolicited advertising faxes – including one to Telecommunications Network Design. TND commenced a class action lawsuit under the Telephone Consumer Protection Act. TND argued that the unsolicited faxes imposed costs on TND and the other class members without authorization and thus demanded compensation. TND did not plead a violation of privacy claim and coverage was disclaimed as not constituting “advertising damages”.

A declaratory judgment action ensued. In the action, Paradise argued that directly pleading a violation of privacy claim was unnecessary (to guarantee coverage) because the TCPA was enacted, in part, to protect privacy. In opposition, Brethren argued that the coverage trigger was, indeed, the pleading of a violation of privacy claim. The trial court ruled for Brethren and an appeal resulted.

In the appeal, the PA Superior Court was confronted with the question of whether faxes, a written publication, “violated a person’s right of privacy” and thus triggered coverage. The Superior Court ruled — http://www.superior.court.state.pa.us/opin.htm — that sending of faxes in and of itself did not trigger coverage, but rather the “message in the materials” was central. It therefore upheld the trial court’s decision. Notably, in reaching its decision, the Superior Court specifically allowed the carrier to look outside the four corners of the complaint in making its coverage decision.

If you would like more information about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.