Los Angeles Lakers guard Kobe Bryant, center/top, goes up for a shot against the New York Knicks during a game in New York on February 10, 2012. The Knicks defeated the Lakers 92-85.
A 9th U.S. Circuit Court of Appeals panel ruled Wednesday that an insurer for the Los Angeles Lakers was justified in denying coverage after the organization lost a lawsuit based on an exception in their insurance agreement.
The underlying case was filed in 2012 by a man who received an automated response after text messaging a number displayed on the team’s scoreboard. Plaintiff David M. Emanuel claimed the response violated the Telephone Consumer Protection Act, or TCPA, which restricts marketing phone calls made using automated equipment. Emanuel v. Los Angeles Lakers Inc., 12-CV09936 (C.D. Cal., filed April 18, 2013).
A judge dismissed Emanuel’s case in 2013 and the parties agreed to an undisclosed settlement before Emanuel could appeal the decision. But Federal Insurance Company, the Lakers’ insurer, declined to cover the costs of the suit because the claim was rooted in a breach of privacy claim, which are exempted from coverage under the team’s policy.
A district judge dismissed the Lakers’ suit against Federal Insurance, reasoning that TCPA claims are inherently based in breach of privacy even though Emanuel did not specifically claim breach of privacy.
In its opinion, the panel largely agreed, noting that protection of privacy is “the conceptual wellspring of the TCPA’s protections.” Los Angeles Lakers Inc. v. Federal Insurance Company, 2017 DJDAR 8130.
“[T]he TCPA twice explicitly states that it is intended to protect privacy rights. Equally as significant, the TCPA contains no other statement regarding its intended purpose,” Judge N. Randy Smith wrote for the majority of a divided panel. “Thus, we must presume from this unequivocal statement, and the lack of any other statements expressing an alternative intent, that the purpose of the TCPA is to protect privacy rights and privacy rights alone.”
Judge Richard C. Tallman dissented, arguing that the majority wrongly interpreted the intention of TCPA when it should have based its decision solely off the language of the statute.
“Because nothing within the words Congress chose suggest a TCPA plaintiff must prove invasion of privacy, a TCPA claim is not automatically a privacy claim,” Tallman wrote. “And because Emanuel expressly disavowed his privacy claims and instead sought recovery under the TCPA, his claims were not common law privacy claims.”
Sebastian Kaplan, Of Counsel at Gerard Fox PC and not involved in the case, said the panel’s ruling is contrary to the commonly held interpretation that any ambiguity in the language of an insurance contract should be held against the insurer. That, coupled with the panel’s divided ruling, could make the case a likely candidate for an en banc rehearing.
“I think this will get a lot of other judges’ attention,” Kaplan said. “I’m not sure it’s entirely been settled by what’s been decided in this opinion.”
Kaplan said TCPA litigation has been ramping up considerably recently, and suggested that companies concerned about potential claims should be quick to take another look at their insurance contracts.
Karin Aldama, a partner at Perkins Coie LLP, wrote in an email Wednesday that the decision “confirms the difficulties policyholders face in obtaining insurance coverage for third-party TCPA claims.”
Kirk Pasich of Pasich LLP, who represented the Lakers, did not respond to a request for comment. Federal’s counsel, Robert Traylor of Stratege Law LLP, declined comment.
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Steven Crighton
Daily Journal Staff Writer