Junk faxes have now been overtaken by spam email, but a number of statutes were passed to protect the public from harassment by fax, including the Telephone Consumer Protection Act. A recent federal court case dealt with whether insurance coverage was owed for claims brought under the TCPA.
In Auto Owners Ins. Co. v. Stevens & Ricci, Inc., Stevens & Ricci was a debt collection firm accused of sending junk faxes in violation of the TCPA. While the underlying litigation was pending, the insurer Auto-Owners Ins. Co. commenced a declaratory judgment action against the firm and the class representative. Auto-Owners moved for summary judgment, arguing that the terms of the insurance policy did not obligate it to indemnify or defend Stevens & Ricci in the class action. The class representative cross-moved, claiming that Auto-Owners was obligated to satisfy the judgment entered against Stevens & Ricci, which was for $2 million dollars.
The District Court found that the sending of unsolicited faxes in violation of the TCPA did not fall within the terms of the policy, and granted the insurer’s motion for summary judgment. The class members appealed. The Third Circuit affirmed the denial of coverage, and found that the alleged injuries resulting from the receipt of junk faxes (loss of ink, toner and time) did not qualify as property damage because they were not the result of an “accident.”
The Third Circuit also found that the alleged harm did not qualify as an advertising injury, as the policy’s definition of advertising injury covered only violations of the privacy interests of secrecy, not a violation of privacy if a message is received without permission.
Thanks to Jorgelina Foglietta for her contribution to this post and please write to Mike Bono for more information.