The fallout from the Illinois Supreme Court’s January 25, 2019, opinion in Rosenbach v. Six Flags Entertainment Corp., 19 IL 12316, continues. Rosenbach settled the dispute of who qualifies as an “aggrieved person” under the Illinois Biometric Information Privacy Act (“BIPA”), and in doing so opened the floodgates for this litigation to proliferate. The immediate result was a sharp increase in the filing of BIPA class actions as well as the lifting of stays of the numerous cases pending that were awaiting the Rosenbach ruling. 

A secondary consequence of Rosenbach is the quest for insurance coverage on which BIPA defendants will now embark. But the insurance industry already litigated the availability for these types of statutory violations (at least under general liability policies) in response to the wave of class actions filed under the Telephone Consumer Protection Act (“TCPA”). The patchwork of inconsistent decisions across the country relating to whether or not there was a duty to defend eventually gave way to the “Recording and Distribution of Material in Violation of Law” exclusion which specifically referenced the TCPA, the CAN-SPAM Act of 2003, the Fair Credit Reporting Act (“FCRA”), and the Fair and Accurate Credit Transaction Act (“FACTA”) as being exempted from liability coverage. The exclusion (first introduced in 2006) contains a catchall that states that the exclusion also applies to violations of any “federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.”

BIPA, enacted by the Illinois legislature in 2008, regulates the collection, storage and use of biometric information of Illinois citizens. 740 ILCS 14/1, et seq. The catchall to the above-referenced exclusion would appear on its face to encompass BIPA violations.

A BIPA class action was filed in Illinois in June 2018 against a California-based defendant. The defendant tendered its defense to its commercial general liability insurer which accepted subject to a reservation of rights citing, among other things, that catchall part of the above-referenced exclusion. The insurer filed a declaratory judgment complaint in August 2018 in the District Court for the Northern District of California. The insured moved to stay the coverage case. Invoking a court’s inherent power to stay, the District Court granted the motion in an order entered on February 12, 2019. See Zurich Am. Ins. Co. v. Omnicell, Inc., No. 18-CV-5345, 2019 U.S. Dist. LEXIS 22907 (N.D. Cal. Feb. 12, 2019). The declaratory judgment action is now stayed pending the outcome of the underlying class action which was recently resumed in Illinois following Rosenbach.

The stay means the insurer in Omnicell will be required to fund the defense through settlement or trial before the applicability of the catchall provision the insurance industry arguably intended to apply to this very type of claim is adjudicated. The proliferation of BIPA class actions, however, all but guarantees that other insurers will file declaratory judgment actions seeking construction of this catchall provision. A declaration relating to this provision may not be imminent, but it is just a matter of time.

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Photo of Rosa M. Tumialán Rosa M. Tumialán

Rosa M. Tumialán, a Member in the Firm’s Chicago office, is a litigator who complements her practice with extensive judicial experience gained from clerkships in both the Illinois Appellate Court and the Chancery Division of the Circuit Court of Cook County. Ms. Tumialán is a member of the Firm’s Diversity Committee and Financial Review Committee.

Ms. Tumialán focuses her practice on complex commercial disputes, including class action defense and insurance coverage litigation, in both state and federal courts. Ms. Tumialán’s experience in representing clients in what is often a “bet the company” TCPA litigation has made her a lead defense attorney in this area as well as in litigation arising under other consumer privacy statutes such as the Illinois Biometric Privacy Act (“BIPA”). Ms. Tumialán is lauded for her ability to develop and employ unique and aggressive strategies for her clients in these evolving areas. Ms. Tumialán is routinely sought out by companies seeking TCPA and BIPA compliance analysis or those who face TCPA and BIPA liability. She also advises insurers on TCPA exposure and presently serves as national coordinating counsel for insurance clients who rely on her to develop and implement strategies nationwide, which includes daily monitoring of case law developments. She is often asked to opine on BIPA matters and represent clients named in BIPA class actions. Ms. Tumialán has also spoken on this statute which is becoming the latest darling of the plaintiff class action bar.

Photo of Lewis K. Loss Lewis K. Loss

Lew Loss is a Member in Dykema’s Washington, D.C. office, and serves as Co-Director of the Firm’s Insurance Industry Practice Group. Lew has been actively engaged in the private practice of law for over thirty-five years. He serves as advisor and advocate for a diverse and growing group of valued clients. Chambers USA reports that “clients agree that Lew displays judgment and strategy of the very highest caliber.”

Lew devotes a very substantial portion of his practice to the representation of liability insurers. He frequently is called upon by insurers to provide advice and counseling with respect to complex coverage issues involving a broad array of insurance products.

Lew has represented insurers in disputes all across the country and has successfully litigated cases in both federal and state court in numerous jurisdictions on behalf of insurer clients. He also is regularly called upon to serve as monitoring counsel, assisting his clients to navigate difficult claims to desirable outcomes. Lew has very extensive experience in the use of ADR processes to resolve disputes. His writings on issues of interest to liability insurers have been published in national periodicals, and he has spoken on a variety of issues at professional symposia as well.

 

Photo of Thomas J. Judge Thomas J. Judge

Tom Judge has more than 20 years’ experience analyzing and litigating insurance coverage and bad faith claims. He represents numerous insurance companies on a national basis often handling their most sensitive, complex and large exposure/strategic matters. First and foremost, Tom is a litigator, obtaining exceptional results for clients in court (trial and appellate), arbitration, and mediation. As reported by Chambers USA, Tom is a “‘results-driven attorney who does an amazing job on settlement and litigation.’”

Tom specializes in professional liability matters, addressing claims against corporate managers, financial institutions, investment advisors, health care companies, technology companies, attorneys, accountants, insurance brokers, and real estate agents amongst others. As monitoring counsel, Tom assists defense counsel in developing strategies for the most efficient resolution of claims and in preparing the highest quality pleadings and motion papers. Defending high-exposure bad faith cases, Tom’s experience crosses all lines of insurance, including general liability, municipal liability, auto/trucking, and property. Tom also directly represents and defends professionals, including directors, officers, lawyers, accountants, and brokers.