270_C277

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COMMERCIAL LIABILITY POLICY OBLIGATED TO RESPOND
TO TCPA VIOLATION ALLEGATION

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Florida ’s Supreme Court was asked to review a question certified to it by the U.S. Court of Appeals for the 11th Circuit. The question arose from a class action lawsuit with Michael Penzer as lead plaintiff (Penzer) filed against Transportation Insurance Company (Transportation).

Penzer originally sued Nextel South Corporation. The suit alleged that Penzer’s rights of privacy and seclusion were violated when he, unsolicited, received a fax from (or on the behalf of) Nextel. Penzer’s complaint alleged that the unsolicited fax delivery violated federal law, specifically the Telephone Consumer Protection Act (TCPA). The lower court, while reviewing the suit, requested that the following, unprecedented question be answered:

Does A Commercial Liability Policy Which Provides Coverage For “Advertising Injury,” Defined As “Injury Arising Out Of...Oral Or Written Publication Of Material That Violates A Person’s Right Of Privacy,” Such As The Policy Described Here, Provide Coverage For Damages For Violation Of A Law Prohibiting Using Any Telephone Facsimile Machine To Send Unsolicited Advertisement To A Telephone Facsimile Machine When No Private Information Is Revealed In The Facsimile?

Nextel filed a separate complaint against one of its affiliate firms which had hired a specialty fax firm to create the advertising content that was used in the fax. Nextel also filed a complaint against the fax company. Nextel denied authorizing the fax firm to distribute any faxes. The Nextel affiliate was the firm that requested that its insurer, Transportation, defend it against the class action suit. Transportation denied coverage on several grounds, placing particular emphasis on its belief that its policy language did not apply to the allegations made in the class action suit.

Penzer entered into an agreement with the Nextel affiliate where the affiliate accepted a consent judgment and then assigned its rights to pursuing recovery from Transportation. Penzer filed a declaratory action under a district court to pursue coverage. Transportation did not dispute that a violation of TCPA occurred; however, it did argue that its policy language did not provide coverage. Therefore, it had no duty to provide a legal defense or to respond to the damages claimed by Penzer. The district court agreed with Transportation and Penzer appealed to the 11th Circuit Court.

Before examining the matter in detail, the appeals court realized it faced an unsettled matter with regard to the applicability of Florida law to the situation. It then formulated, certified and sent the question to the Supreme Court. The high court then took up the question.

The high court reviewed the matter from several aspects, including a study of relevant cases, the liability policy’s section on advertising injury, and the policy’s exclusions. It spent a significant amount of time on Transportation’s assertion on how its advertising injury coverage should be interpreted. In the high court’s view, Transportation’s argument was unpersuasive. The insurer insisted that, according to its policy language, coverage would only apply to situations where an unsolicited fax’s content contained private information that violated an individual’s rights. In the high court’s opinion, Transportation could only support its position by unreasonably parsing the policy language. In its view, no Florida law prevented a commercial liability policy which included standard advertising injury language from responding to allegations of TCPA violations. The question presented by the 11th Circuit Court was answered in the affirmative.

Note: Having the certified question addressed, the case is left to proceed with the 11th Circuit Court.

Michael Penzer, etc., Appellant, vs. Transportation Insurance Company, Appellee. SUPCTFLA, No. SC08-2068. Filed January 28, 2010. Certified Question answered in the affirmative. Downloaded 2/11/10 http://www.floridasupremecourt.org/decisions/2010/sc08-2068.pdf