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Chubb wins Lakers coverage dispute, but court splits 3 ways

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A Chubb Ltd. unit has prevailed in litigation with the Los Angeles Lakers Inc. in a Telephone Consumer Protection Act case, with a federal appeals court holding a TCPA claim is “inherently” a privacy claim, which is excluded under the team’s policy.

But the ruling is unusual in that the three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco issued three separate rulings in the case — a majority, concurring and dissenting opinion — and it is hard to say at this point which of the three may prove influential, says an expert.

On Oct. 13, 2012, David M. Emanuel attended a basketball game at the home arena of the Los Angeles Lakers and saw a message on the scoreboard inviting attendees to send a text message to a specific number, according to Wednesday’s ruling by the 9th Circuit in Los Angeles Lakers Inc. v. Federal Insurance Co.

Mr. Emanuel sent a text message to that number, hoping the Lakers would display it on the scoreboard, and received a test message that said in part, “Thnx! Txt as many times as you like. Not all msgs go on screen…Rates May Apply.”

The following month, he filed a putative class action suit, charging the Lakers sent the response text message using an “automatic telephone dialing system,” which was in violation of the TCPA, and asserting several times the Lakers message was an invasion of privacy.

The Lakers asked their insurer, Federal Insurance, a unit of Warren Township, New Jersey-based Chubb, to defend them against the suit under their ForeFront Portfolio insurance policy. Federal denied the claim on the basis the underlying lawsuit was an invasion of privacy suit, which was excluded under the policy.

The Lakers filed suit against the insurer, charging breach of contract and of implied covenant of good faith. The U.S. District Court in Pasadena, California, dismissed the case.

On appeal, the 9th Circuit issued three rulings in the case:

• The majority opinion held “a TCPA claim is inherently an invasion of privacy claim” and therefore “fell under the policy’s broad exclusionary clause.”

• The concurring opinion said the ruling should have been decided on narrower grounds and that the majority opinion “need not hold more broadly that a TCPA claim Is inherently an invasion of privacy claim.”

• The dissenting opinion said that because the underlying action sought recovery based on an alleged TCA violation and “did not seek recovery based on invasion of privacy, he would have reversed the district court’s order dismissing the Lakers’ claims.”

“At first blush (the majority ruling) certainly seems to favor the insurer,” said Karin Scherner Aldama, a policyholder attorney and partner with Perkins Coie L.L.P. in Phoenix, who was not involved in the case.

But it is unclear what the case’s influence will be, given there are three different opinions, which is unusual, she said

In July, a federal appeals court reinstated a TCPA claim against a fitness company that left a message on the plaintiff’s cellphone, stating she has established that she suffered a concrete injury.