Insurer not defending insured in illegal phone recordings lawsuit

California court ruled in favor of insurer, whose policy would defend against a lawsuit stemming from “publication” of private material; but in this instance, recordings were not made public

Insurance News

By

by Elise Linscott
 
Last month, the United States Court of Appeals for the Seventh Circuit ruled that First Mercury Insurance Company did not have a duty to defend its insured, Defender Security Company, in a class action lawsuit in which the suit alleges the home security company illegally recorded customer phone calls without their knowledge.
 
Defender Security had purchased a commercial general liability policy from First Mercury, which protected Defender from personal or advertising injuries resulting from “publication.” The class action lawsuit was first filed in 2012 when Kami Brown alleged that she had called the security company to inquire about a home security system. She provided the company with her personal information multiple times.
 
Defender didn’t notify Brown that it would be recording the calls, and court documents said the company “’systematically recorded all inbound and/or outbound telephone conversations’ without warning the parties that their conversations were being recorded,” in violation of California state law.
 
But First Mercury argued this lawsuit wasn’t covered under the policy and that it did not have a duty to defend Defender, and the court agreed. According to court documents, “In a separate definitions section, the policy defined both ‘advertising injuries’ and ‘personal injuries’ as those ‘arising out of ... oral or written publication of material that violates a person’s right of privacy,” and that “Defender offered no information to suggest that any individual ever accessed the recordings.”

Keep up with the latest news and events

Join our mailing list, it’s free!