SAN FRANCISCO — The Los Angeles Lakers have lost again.
That may not sound like news given the team’s recent on-court performance. But in a divided panel decision Wednesday, the U.S. Court of Appeals for the Ninth Circuit handed the team an in-court loss after it sued to force its insurer, Indiana-based Federal Insurance Co., to defend a Telephone Consumer Protection Act lawsuit.
The Ninth Circuit ruling upholds a 2015 decision from a federal judge in Los Angeles who found the TCPA lawsuit fell squarely within an exception in the Lakers’ insurance policy for “invasion of privacy” claims.
“A TCPA claim falls within the category of intrusion on the ‘right to be let alone’ recognized under California law as an invasion of privacy,” wrote Judge N. Randy Smith. “[The plaintiff's] claim is unquestionably, at the very least, connected to an alleged invasion of privacy.”
The Lakers were sued under the TCPA by fan David Emanuel after he attended a Lakers home game in 2012. Emanuel claimed he received an unsolicited text message from the Lakers that violated the TCPA after he sent a message to a number listed on the Staples Arena scoreboard, hoping to get his message shared on the jumbotron.
The Lakers promptly asked Federal to defend the team against the lawsuit, but the insurer refused after finding Emanuel’s suit was specifically excluded from coverage under a carve-out for invasion of privacy claims.
Writing for the Ninth Circuit majority upholding the lower court decision to toss the team’s insurance coverage suit, Smith found Congress passed the TCPA “to protect individuals against invasions of privacy.”
“In light of this plainly stated purpose, and the lack of any other indicia of congressional intent in the statute, a TCPA claim is, by its nature, an invasion of privacy claim,” Smith wrote.
U.S. District Judge Stephen Murphy III of the Eastern District of Michigan, sitting on the Ninth Circuit panel by designation, voted to affirm the lower court’s decision on the grounds that Emanuel’s lawsuit alleged the message the team sent invaded his privacy.
“Those allegations are sufficient to determine that Emanuel’s claim arose from an invasion of privacy,” Murphy wrote. “The court need not hold more broadly that a TCPA claim is inherently an invasion of privacy claim.”
In a dissent, Circuit Judge Richard Tallman wrote TCPA claims aren’t automatically privacy claims since in the text of the statute, “nothing within the words Congress chose suggests that a TCPA plaintiff must prove invasion of privacy.”
Tallman also found that though Emanuel alleged the Lakers invaded his privacy, he only sought recovery based on the technical violation of the TCPA, which prohibits the use of an automatic telephone dialing to make unsolicited contact with consumers.
The Lakers counsel, Kirk Pasich at Pasich LLP, didn’t immediately respond to questions. Federal’s lawyer, Robert “Robin” Traylor of Stratege Law, declined to comment.
A spokeswoman for Chubb, Federal’s parent company, declined to comment.
S. Abbas Kazerounian of the Kazerouni Law Group, who represented Emanuel in the underlying lawsuit, which settled while on appeal, said privacy carve-outs are routine in corporate insurance policies. Companies such as the Lakers, who don’t routinely solicit consumers directly, often don’t get specific policies to cover privacy suits.
Kazerounian said the Ninth Circuit’s decision falls in line with others from appellate courts in hotbed TCPA venues, including the Supreme Court of Illinois and the Seventh Circuit, which have found that the law is a privacy statute.
“You’d be hard-pressed to argue that the TCPA is not a privacy statute,” he said.
Karin Aldama, an insurance recovery partner at Perkins Coie, said the lead opinion “certainly provides ammunition for insurers to deny coverage” in TCPA suits.
But she added “it will be interesting to see how this is applied because it is such a divided decision.”
Ross Todd is bureau chief of The Recorder in San Francisco. He writes about litigation in the Bay Area and around California. Contact Ross at firstname.lastname@example.org. On Twitter: @Ross_Todd.