In April 2016, Klaudia Sekura (Sekura) filed a class action complaint against Krishna Schaumburg Tan, Inc (Krishna). Sekura alleged that Krishna violated her rights under the Biometric Information Privacy Act. When becoming a member of Krishna's, customers are required to scan their fingerprints for identification. In April 2015, when Sekura signed up for a membership, she provided her fingerprint scan. However, she was not provided with written content that allowed Krishna to disclose her biometric data to any other party. Sekura alleged that the violation occurred when her fingerprint data was supplied to an out of state third party vendor without her consent.

West Bend Mutual Insurance Company (West Bend) was the insurer at the time of the suit. It agreed to defend Krishna under a reservation of rights, but then sought a declaration that it has no duties to defend the Sekura lawsuit for three reasons: 1) the alleged action was not covered by the policy since it did not involve advertising or personal injury, 2) it did not qualify for coverage under data compromise, 3) coverage was barred by the policies violation of statutes exclusion. Krishna filed a counterclaim stating that West Bend had a duty to defend the lawsuit and attorney fees. Sekura argued that West Bend was obligated to defend it, was not acting in good faith, and the refusal to defend it was vexatious and unreasonable.

The circuit court denied West Bends's motion in part and granted Krishna's motion in part. It found that West Bend had a duty to defend Krishna's claims and that the claims fell within the policy coverage for personal injury as a "publication," which violates a person's right to privacy as well that the exclusion did not preclude coverage. The court declined to reach the issue if the endorsement applied. The court denied Krishna's motion for summary judgment concerning its request for damages and granted West Bends motion for summary judgment on the counterclaim.

West Bend appealed, and Krishna cross-appealed. According to West Bend, the circuit court erred when it found that it had a duty to defend Krishna's. West Bend stated that the allegations did not meet the definition of personal injury, and even if allegations contain personal injury, the actions of Krishna violated the statutes exclusion, which bars coverage. Lastly, the data compromise endorsement was inapplicable.

Since the policy did not define publication, the court looked to the common understandings and definitions within the Oxford English Dictionary and Black's Law Dictionary to determine its meaning. Because a common understanding of "publication" encompasses Krishna's act of providing Sekura's fingerprint data to a third party, there also exists potential that the policies cover Sekura's claim against Krishna. As such, West Bend had a duty to defend Krishna against the underlying complaint about the personal injury coverage provision. As well, the violation of Statutes Exclusion did not apply to bar coverage. The need to reach the data compromise endorsement issue was not needed since the allegations against Krishna fell within the policy.

The appellate court affirmed the circuit court's judgment and granted summary judgment in favor of Krishna on the duty to defend issue and in favor of West Bend on the on data compromise endorsement.

West Bend Mutual Insurance Co. v. Krishna Schaumburg Tan, Inc., 2020 IL App (1st) 191834

https://www.btlaw.com/-/media/files/blog/west-bend-v-krishna.ashx.