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Insurer must defend Illinois nail salon in biometrics suit


An Illinois appeals court has upheld a lower court ruling that an insurer must defend a nail salon charged in a putative class action with sending a customer’s fingerprints to a third-party vendor in an alleged violation of the Illinois Biometric Information Privacy Act.

In April 2016 Klaudia Sekura filed a proposed class action complaint against Schaumburg, Illinois-based Krishna Schaumburg Tan Inc., a franchisee of Lincolnwood, Illinois-based L.A. Tan Enterprises Inc. She said in the complaint that when customers first purchase a service at Krishna they are enrolled in a national membership database that allows them to use their membership at any L.A. Tan location, according to the March 20 ruling by the Illinois appellate court in Chicago in West Bend Insurance Co. v. Krishna Schaumburg Tan Inc. and Klaudia Sekura.

Ms. Sekura alleged that to sign up, Krishna required her to provide a scan of her fingerprint, but she was never provided with a written release allowing the salon to disclose her biometric data to a third party, in violation of the Illinois Biometric Information Privacy Act. She said Krishna sent her fingerprint data to a third-party vendor, Buffalo, New York-based SunLync Software Inc.

Krishna’s insurer, West Bend, Wisconsin-based West Bend Mutual Insurance Co., which had provided the salon with coverage including for personal injury, agreed to defend the company subject to a reservation for rights. It then sought a declaration in state circuit court that it had no duty to defend the company.

The circuit court found Ms. Sekura’ s claims fell under coverage for personal injury because of a “publication which violates a person’s right to privacy.”

A three-judge appeals court panel agreed with the lower court’s ruling. Citing an earlier case, West Bend contended that the term “publication” in the policy “requires communication of information to the public at large, not simply a single third party, and that Ms. Sekura’ s allegation therefore does not charge Krishna with a ‘publication,’” according to the ruling.

The panel disagreed. “Common understandings and dictionary definitions of ‘publication’ clearly include both the broad sharing of information to multiple recipients … and a more limited sharing of information with a single third party,” the ruling said.

If West Bend “wished the term ‘publication’ to be limited to communication of information to a large number of people, it could have explicitly defined it as such in its policy,” it said.

“The parties do not dispute that Ms. Sekura alleges facts that fit within the rest of the ‘personal injury’ definition  -  that there was a provision of material in violation of her right to privacy,” the ruling said.

“Because a common understanding of ‘publication’ encompasses Krishna’s act of providing Ms. Sekura’s fingerprint data to a third party, there also exits potential that Ms. Sekura’s claim against Krishna is covered by the policies.

“As such West Bend has a duty to defend Krishan against the underlying complaint pursuant to the ‘personal injury’ coverage provision.”

Attorneys in the case had no comment or could not be reached.

In a related case, on Sept. 28, 2018, the state appeals court in Chicago ruled in Klaudia Sekura v. Krishna Schaumburg Tan that the Illinois Biometric Information Privacy Act “does not require a harm in addition to a violation of the Act in order to file suit.”