Is There A Limit To Insurer Unwillingness To Cover Claims For Unsolicited Marketing Communications? Two Decisions By The Seventh Circuit Suggest The Question In A Unique Way

• Published date: 07 February 2022
• Subject Matter: Insurance, Insurance Laws and Products
• Law Firm: Jenner & Block
• Author: Ms Vivian Bickford and David M Kroeger

Among the many unusual aspects of 2021 is that the same insurance company was before a federal appellate court on two separate but contemporaneous cases - one in which the insurer was asserting a lack of insurance coverage based on TCPA and TCPA-inspired policy exclusions, and the other in which the same insurer was actually a defendant in a lawsuit asserting TCPA and certain other causes of action. The juxtaposition of the two raises the question of whether there are any limits to insurer unwillingness to provide insurance coverage for claims alleging unsolicited marketing communications.

Mesa Laboratories, Inc. v. Federal Insurance Company¹ lays out an all-too-familiar battle. The policyholder, Mesa Laboratories, Inc. (Mesa), was sued in a putative class action asserting claims based on unsolicited marketing communications. The policyholder sought insurance coverage from its commercial general liability insurer, Federal Insurance Company (Federal, part of the Chubb family of insurance companies). The insurance claim was denied, and litigation ensued. The central issue before the court was whether the insurer had drafted exclusions that were sufficiently broad and sufficiently clear to exclude coverage for all of the claims asserted against the policyholder.

The class action complaint in Mesa Laboratories asserted claims based on the Telephone Consumer Protection Act (TCPA), the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and common law.² The parties agreed that the insurance policy excluded the statutory claims, but disputed whether the common law claims were excluded. The issue was whether common law claims for conversion, nuisance and trespass to chattels were barred by an exclusion for "damages, loss, cost or expense arising out of any actual or alleged violation of ... the [TCPA] ... or any similar regulatory or statutory law in any other jurisdiction" (the "Information Laws Exclusion"). At the urging of Federal, the Seventh Circuit concluded that: "...common-law claims of conversion, nuisance, and trespass to chattels arise out of the same conduct as the statutory claims - the sending of unsolicited faxes.... None of [the underlying plaintiffs'] injuries would have occurred but for Mesa's sending unsolicited fax advertisements, so the Information Laws Exclusion applies to all of Mesa's claims."³

Viewed on its own, Mesa Laboratories provides fodder for vigorous debate between policyholders, insurers, and their respective...