Horn v. Liberty Insurance Underwriters: An "Invasion of Privacy" Exclusion Bars Coverage for a $60 Million Text Message Judgment

Background

A class sued iCan Benefit Group, LLC, alleging it sent unsolicited text messages without consent, with one class covering texts sent after recipients asked iCan to stop. The complaint alleged that iCan "invaded the personal privacy" of class members and caused "actual harm in the form of annoyance, nuisance, and invasion of privacy."

iCan's insurance carrier, Liberty, denied coverage. iCan admitted liability for $60,413,112, agreed the judgment would be satisfied only from Liberty, and assigned its rights against Liberty to the class. The class sued Liberty for the $2,000,000 policy limit. The district court granted Liberty summary judgment.

The policy excluded coverage for any "Claim" "based upon, arising out of, or attributable to any actual or alleged defamation, invasion of privacy, wrongful entry or eviction, false arrest or imprisonment, malicious prosecution, abuse of process, assault, battery or loss of consortium."

The Majority: Three Terms, Read Together

Applying Florida law, the majority focused on three terms.

• "Claim." The policy defined it as "a civil proceeding" commenced by a complaint. So if any part of the proceeding is excluded, the entire lawsuit is excluded.
• "Arising out of." The Florida Supreme Court reads this phrase broadly to mean "having a connection with," which is broader than "caused by."
• "Invasion of privacy." The class complaint repeatedly alleged and sought damages for invasions of privacy. This gave the proceeding a connection to invasion of privacy.

The court did not decide whether every TCPA claim is inherently an invasion of privacy claim, as the Ninth Circuit held in Los Angeles Lakers v. Federal Insurance (2017). It rested on the policy language and the complaint. It rejected the argument that the exclusion reaches only the listed common law torts, holding that reading ignores "arising out of." A separate exclusion listing antitrust statutes, which does not mention the TCPA, did not make this one ambiguous. And because no coverage existed, there was no duty to defend. The court did not reach the professional services exclusion or the settlement allocation issue.

The Dissent

Judge Newsom would have found the exclusion at least ambiguous. "Invasion of privacy" names a century-old common law tort, and every other item in the list is a common law tort. Under Florida law, ambiguities must be read in favor of coverage. The complaint did not plead that tort or facts meeting its elements. He also questioned making coverage turn on "colloquial and conclusory" words in a complaint, noting that the majority's reasoning suggests striking those words would have changed the outcome.

Practical Points

• Read the exclusions. Standard privacy exclusions in management liability policies can eliminate TCPA coverage, at least in the Eleventh Circuit.
• Complaint wording matters. The majority relied on the class complaint's privacy allegations.
• Assignment strategies carry risk. A consent judgment collectible only from the insurer is only as good as the coverage.
• Look for circuit differences. The Ninth Circuit's Lakers rule and Florida's Penzer decision, construing a "right of privacy" coverage grant, frame the landscape.

Read the Eleventh Circuit opinion.