Florida High Court Ponders Whether Unsolicited Fax Might Be a Covered "Advertising Injury"

Penzer v. Transportation Insurance Company, # 07-13827 (11th Cir. October 23, 2008), see Penzer Certified Question

Does an alleged violation of the Telephone Consumer Protection Act (TCPA) trigger a commercial general liability insurer's duty to defend an alleged "advertising injury" offense, defined in the policy as "publication of material that violates a person's right of privacy"?  In other words, does an unsolicited faxed advertisement violate a right of privacy, covered in the insurance policy, when the content of the fax is not itself offensive, but the mere transmission violates TCPA and entitles the recipient to a $500 per-fax penalty?

The federal Eleventh Circuit Court of Appeals, applying Florida law, could not answer this question and certified the issue to the Florida Supreme Court, which will probably agree to resolve the dispute.

The TCPA is a federal consumer protection statute designed to discourage faxing unsolicited advertisements by permitting the recipient to sue and recover actual damages or the $500 penalty.  I know attorneys who have set up phone banks in otherwise empty offices to milk unsolicited faxes and sue for $500 a pop.  One unfortunate company, American Blast Fax (ABF), offered to send thousands of single page advertisements for business customers believing that this would not violate the TCPA as long as the transmissions did not cross state lines.  Wrong.  Hundreds of thousands of faxes were blasted, and my lawyer friends' milking machines lit up.

Most of the companies who were sued after believing ABF's assurances that the advertising was legal maintain CGL insurance policies that cover, in addition to bodily injury and property damage, certain specific offenses, including the advertising injury offense stated above.  The CGL insurers often deny coverage for TCPA claims arguing that the policy covers alleged violations of privacy only when the "material" or content of the fax was offensive.  The mere nuisance of receiving the fax is not a covered offense, say insurers, in the absence of offensive content.  The counterargument is that, as long as the "material" is "advertising," it falls within the terms of the policy and should trigger the insurer's duty to defend.

While Florida ponders this question, it is worth noting that Texas and a number of other states have sided with the policyholder on this issue.  In W. Rim Inv. Advisors, Inc. v. Gulf Ins. Co., 269 F. Supp.2d 386 (N.D. Tex. 2003), a Texas federal district court noted that most jurisdictions recognize four types of invasions of privacy: (1) intrusion upon seclusion; (2) public disclosure of embarrassing private facts; (3) publicity placing a person in a false light; and (4) misappropriation of one's name or likeness.  An unsolicited fax advertisement, without otherwise offensive conduct, might constitute an intrusion upon seclusion.

The insurer in Rim Inv. Advisors raised the same objection asserted by Transportation in the Penzer case, plus a few more.  Gulf argued that the a TCPA violation is not an advertising injury under the policy, which covers only common law invasion of privacy, not statutory consumer protection laws.  Second, without offensive content, a fax cannot be an invasion of privacy.  Third, the $500 per-fax penalty is not "damages" and so not covered.  And four, to be covered, an advertising injury requires "publication," meaning dissemination to one or more third parties.

Not so, said the court.  A TCPA violation can constitute an intrusion upon seclusion, which does not require publication to third parties.  The fax itself is adequate publication.  Also, mere receipt of the fax, regardless of content, may violate a person's seclusion right.  Finally, the TCPA allows the plaintiff to recover actual damages or the $500 penalty, which is not criminal and so may be characterized as "damages."

This is in accord with the view of most other jurisdictions.  So Florida waits.

Go Gators