Insurer Need not Defend L.A. Lakers

LOS ANGELES (CN) - Federal Insurance Co. had no a duty to defend the Los Angeles Lakers against a class action accusing it of sending fans unwanted text messages, a federal judge ruled.

David Emmanuel filed a putative class action in 2012, claiming the Lakers violated the Telephone Consumer Protection Act by spamming him and others with unwanted text messages.

Emmanuel said that while attending a Lakers game he responded to a solicitation to send a text message to be posted on the arena scoreboard during the game. The Lakers then used his cell phone number to send him an unsolicited text message, he said.

The court found that Emmanuel had given consent to receive the text message in question and dismissed with prejudice. While the case was on appeal to the 9th Circuit, the parties reached a settlement.

After the settlement, the Lakers made repeated requests for Federal Insurance to cover the costs of defending the litigation, but Federal refused, citing the policy's invasion-of-privacy exclusion.

The Lakers argued that Emmanuel's suit alleged economic injury and not damages for invasion of privacy, and noted that Federal's policy did not contain an express exclusion for claims made under the TCPA.

U.S. District Judge Dolly Gee found that violations of the TCPA are rooted in a violation of an individual's privacy interests, so the policy's privacy exclusion applied to Emmanuel's claims.

"By protecting consumers against the nuisance and annoyance of unsolicited calls, the TCPA protects consumers against invasions of privacy. The nuisance and annoyance violate consumers' seclusion-based privacy interest," Gee wrote in the April 17 ruling.

The fact that Emmanuel sought only economic and not personal damages did not strip the allegations of their privacy-based character, since the economic injury stemmed from the Lakers' alleged invasion of Emmanuel's and putative class members' privacy rights through the unsolicited text messages, Gee said.

Furthermore, the dismissal based on Emmanuel's consent to receive the text did not rule out invasion of privacy as the basis for the action. Rather, the ruling was "tantamount to a determination that there was no invasion of privacy because Emmanuel consented to receiving the text," Gee said.

Given courts' universal interpretation of TCPA claims as implicit invasion-of-privacy claims, Federal's invasion of privacy exclusion encompasses TCPA claims and the Emmanuel complaint fit within the exclusionary clause.

Gee dismissed the Lakers' complaint with prejudice.

A spokesman for Federal Insurance declined to comment.

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