Thursday, August 24, 2017
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Ninth Circuit Holds:
Insurance Doesn’t Cover Lakers in Lawsuit Over Their Automatic Dialing at Games
Majority Says Action Under Telephone Consumer Protection Act Is Inherently One For Invasion of Privacy Rendering Applicable a Policy Exclusion
By a MetNews Staff Writer
The Los Angeles Lakers yesterday lost its appeal yesterday of a district court decision that insurance does not cover the team’s use of automatic dialing in violation of the Telephone Consumer Protection Act.
Ninth Circuit Court of Appeals Judge N. Randy Smith wrote the lead opinion; United States District Court Judge Joseph Murphy III of the Eastern District of Michigan, sitting by designation, wrote a brief concurring opinion; and Ninth Circuit Judge Richard C. Tallman dissented.
The case arose from umbrage taken by David M. Emanuel to an automatic message he received.
Emanuel on Oct. 13, 2012, attended a Lakers game at the Staples Center. Those present were invited to send a text message to number that was given, with the prospect that it might be flashed on the screen.
Emanuel sent a message saying, “I love you Facey. Happy Date Night.” He received the following automatic response:
“Thnx! Txt as many times as u like. Not all msgs go on screen. Txt ALERTS for Lakers News alerts. Msg&Data Rates May Apply. Txt STOP to quit. Txt INFO for info.”
He brought a class action for violations of the Telephone Consumer Protection Act (“TCPA”)
Smith noted that the policy in issue excludes claims “based upon, arising from, or in consequence of. . . invasion of privacy.”
He said that the TCPA “twice explicitly states that it is intended to protect privacy rights”; that “in pleading the elements of a TCPA claim, a plaintiff pleads an invasion of privacy claim”; and that “a TCPA claim is inherently an invasion of privacy claim.”
The insurer, he declared, was reasonable in denying coverage.
It was also reasonable in denying a defense, he said, because nothing other than a TCPA claim was alleged.
Murphy wrote:
“I concur with the Court’s order affirming the decision below. I write separately because the Court can-and should-decide the question of whether Emanuel’s claim arose from an invasion of privacy on narrower grounds. Emanuel alleged several times in his complaint that the message he received was an invasion of his privacy. Those allegations are sufficient to determine that Emanuel’s claim arose from an invasion of privacy. The Court need not hold more broadly that a TCPA claim is inherently an invasion of privacy claim.”
Tallman’s Dissent
In his dissent, Tallman insisted that “a TCPA claim is not automatically a privacy claim.” A violation, he said, occurs where a cell phone number is called, using automatic dialing, without consent of the recipient of the call.
“A TCPA claim is already defined by its unambiguous statutory elements—and none of those elements say anything about ‘privacy,’ ” he wrote.
Smith, the dissenter asserted, “errs by redefining a TCPA claim as a privacy claim and then invoking the contractual exclusion to deny insurance coverage.”
Proper Inquiry
Tallman added:
“The proper inquiry here is not whether a TCPA claim is automatically based on invasion of privacy, but whether the underlying claims in this particular case are based on invasion of privacy. Because I conclude that Emanuel’s claims are not privacy claims. I would reinstate the Lakers’ claims for breach of the insurance contract and for bad faith.”
Emanuel simply seeks damages based on a violation of the TCPA, the judge insisted, not for invasion of privacy, rendering the exclusion in the policy inoperative.
In his lead opinion, Smith responds:
“The dissent’s narrow construction of the exclusionary clause conflicts with the clear intent of the contracting parties.”
The case is Los Angeles Lakers, Inc. V. Federal Insurance Co., 15-55777.
Emanuel’s action was dismissed in 2013 by U.S. District Court Judge George H. Wu, who held:
“Though the Lakers allegedly failed to warn plaintiff that he might receive a response, a ‘common-sense’ reading of the TCPA indicates that, by sending his original message, plaintiff expressly consented to receiving a confirmatory text from the Lakers.”
Emanuel appealed to the Ninth Circuit, but dismissed his appeal upon reaching a settlement with the Lakers.
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