The Ninth Circuit Court of Appeals recently heard oral argument in Los Angeles Lakers, Inc. v. Federal Insurance Company, a case raising the issue of whether an exclusion for invasion of privacy claims in a directors and officers liability insurance policy bars coverage for a claim under the Telephone Consumer Protection Act (TCPA).

The case arises from an underlying TCPA lawsuit alleging that an NBA team improperly sent text message solicitations to a fan who sent a text to the team during a game for possible display on the scoreboard. The insurance carrier rejected the team's tender of the claim for defense and indemnity, citing the privacy exclusion. The team then settled the TCPA case and sued the carrier for breach of the policy. The carrier then successfully moved to dismiss, citing the policy's exclusion for claims "based upon, arising from, or in consequence of . . . invasion of privacy." In granting the motion, the trial court held that all TCPA claims are privacy claims because the statute's purpose is to protect privacy.

Many policies already specifically exclude coverage for TCPA claims. For companies with policies that exclude privacy claims generally, but not TCPA claims specifically, the outcome of the decision will be important.

Ballard Spahr's TCPA Task Force assists clients in navigating the complex and challenging issues that arise under the TCPA. The Task Force, which comprises regulatory attorneys and litigators, provides counsel on TCPA compliance and avoiding TCPA liability, including reviewing policies and practices and helping to design mobile text message and prerecorded and autodialed call campaigns. It also assists clients in commenting on regulatory proposals and handling scrutiny from regulators, including preparing for examinations, responding to investigations, and defending against enforcement actions. Task Force members also defend clients against TCPA class or individual actions.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

Ballard Spahr’s Privacy and Data Security Group provides a full range of counseling, transactional, regulatory, investigative and litigation services across industry sectors. Our cross-disciplinary team of attorneys helps clients around the world mitigate cyber risk, investigate and respond to cyber incidents, and navigate post-incident enforcement, compliance and litigation risk.

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