081649.0335(207) RMC:lab #397

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

AMERICAN FAMILY MUTUAL )

INSURANCE COMPANY, S.I., )

)

Plaintiff, )

)

v. )

)

CARNAGIO ENTERPRISES, INC., )

an Illinois corporation, and ANGELA )

KARIKARI, Individually and on behalf )

of all others similarly situated, )

)

Defendants. )

COMPLAINT FOR DECLARATORY JUDGMENT

Now comes the Plaintiff, American Family Mutual Insurance Company, S.I., by

its attorney, Robert Marc Chemers of Pretzel & Stouffer, Chartered, and for its Complaint

for Declaratory Judgment against the Defendants, Carnagio Enterprises, Inc., an Illinois

corporation, and Angela Karikari, Individually and on behalf of all others similarly

situated, alleges the following:

JURISDICTION

1. The jurisdiction of this Court is premised upon 28 U.S.C. § 1332 because

there is complete diversity of citizenship between the parties and the amount in

controversy exceeds the sum of $75,000, exclusive of interest and costs, in this action

seeking a declaration of no insurance coverage.

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VENUE

2. Venue is premised upon 28 U.S.C. § 1391(b)(1) as the Defendants reside in

this District.

THE PARTIES

3. American Family Mutual Insurance Company, S.I. (“AmFam”) is a

Wisconsin insurance corporation, which maintains its principal place of business in

Madison, Wisconsin, and which at all times herein relevant was licensed to and which did

transact insurance business in the State of Illinois and elsewhere.

4. Carnagio Enterprises, Inc. (“Carnagio”) is an Illinois corporation with its

principal place of business in Channahon, Illinois.

5. Angela Karikari (“the Claimant”) is an individual who is a citizen and

resident of the State of Illinois. The Claimant has been joined herein as a defendant to the

extent that she is interested.

THE AMFAM POLICIES

6. AmFam issued its policy of insurance numbered 12XH289501 to Carnagio

as named insured which policy includes the locations owned and operated by Carnagio.

The policy provided for Businessowners Liability Insurance for the effective period of

March 1, 2018 to March 1, 2019, and renewed for the period of March 1, 2019 to

March 1, 2020. A certified true and correct copy of each AmFam policy is attached

hereto, made a part hereof and is marked as Pleading Exhibit A and B, respectively.

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THE UNDERLYING LITIGATION

7. The Claimant initiated her action on February 11, 2019, and thereafter filed

an Amended Class Action Complaint against Carnagio in the Circuit Court of the 18th

Judicial Circuit, DuPage County, Illinois, under Cause No. 19 L 168. A true and correct

copy of the aforesaid Amended Complaint is attached hereto, made a part hereof and is

marked as Pleading Exhibit C.

8. The Claimant seeks damages from Carnagio for alleged violations of the

Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq. (“BIPA”). The

Claimant alleges that as an employee of Carnagio her fingerprints were scanned, and that

Carnagio violated BIPA’s provisions relating to the collection of biometric data when it,

among other things, scanned her fingerprints and failed to disclose the specific purpose

for collecting, storing and using her biometric information and the length of time the

biometric indentifiers or biometric information would be stored. The Amended

Complaint contains three counts, which allege that Carnagio violated BIPA for which

statutory damages and attorneys’ fees are sought for the following, all of which more

fully appears in Pleading Exhibit C attached hereto:

(a) Capturing, collecting, storing and using biometric information

without first informing the employee in writing of the purpose

for which Carnagio was doing so and the length of time it

would store and use the biometric information;

(b) Failure to obtain a written release from the employee that

biometric information was being collected and/or stored;

(c) Failure to have a written policy, made available to the public,

establishing a retention schedule and destruction guidelines

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for Carnagio’s possession, storage and use of biometric

information.

PROVISIONS OF THE AMFAM POLICIES

9. Each AmFam policy provides in its Insuring Agreement for “bodily

injury,” “property damage,” and “personal and advertising injury” as follows:

A. Coverages

1. Business Liability

a. We will pay those sums that the insured becomes

legally obligated to pay as damages because of “bodily

injury,” “property damage” or “personal and

advertising injury” to which this insurance applies. We

will have the right and duty to defend the insured

against any “suit” seeking those damages. However,

we will have no duty to defend the insured against any

“suit” seeking damages for “bodily injury,” “property

damage” or “personal and advertising injury,” to

which this insurance does not apply. We may at our

discretion, investigate any “occurrence” and settle any

claim or “suit” that may result. But:

(1) The amount we will pay for damages is limited

as described in Paragraph D. – Liability And

Medical Expenses Limits Of Insurance in

Section II – Liability; and

(2) Our right and duty to defend end when we have

used up the applicable Limit of Insurance in the

payment of judgments or settlements or medical

expenses.

No other obligation or liability to pay sums or perform

acts or services is covered unless explicitly provided

for under Paragraph f. Coverage Extension --

Supplementary Payments.

10. Each AmFam policy defines certain terms used in the Insuring Agreement

as set forth in ¶ 9 hereof as follows:

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1. “Advertisement” means a notice that is broadcast or

published to the general public or specific market segments

about your goods, products or services for the purpose of

attracting customers or supporters. For the purposes of this

definition:

a. Notices that are published include material placed on

the Internet or on similar electronic means of

communication; and

b. Regarding web-sites, only that part of a web-site that is

about your goods, products or services for the purposes

of attracting customers or supporters is considered an

advertisement;

* * * * *

3. “Bodily injury” means bodily injury, sickness or disease

sustained by a person, including death resulting from any of

these at any time.

* * * * *

13. “Occurrence” means an accident, including continuous or

repeated exposure to substantially the same general harmful

conditions.

14. “Personal and advertising injury” means injury, including

consequential “bodily injury”, arising out of one or more of

the following offenses:

a. False arrest, detention or imprisonment;

b. Malicious prosecution;

c. The wrongful eviction from, wrongful entry into, or

invasion of the right of private occupancy of a room,

dwelling or premises that a person occupies,

committed by or on behalf of its owner, landlord or

lessor;

d. Oral or written publication, in any manner, of material

that slanders or libels a person or organization or

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disparages a person’s or organization’s goods,

products or services;

e. Oral or written publication, in any manner, of material

that violates a person’s right of privacy;

f. The use of another’s advertising idea in your

“advertisement”; or

g. Infringing upon another’s copyright, trade dress or

slogan in your “advertisement”.

* * * * *

17. “Property damage” means:

a. Physical injury to tangible property, including all

resulting loss of use of that property. All such loss of

use shall be deemed to occur at the time of the physical

injury that caused it; or

b. Loss of use of tangible property that is not physically

injured. All such loss of use shall be deemed to occur

at the time of the “occurrence” that caused it.

For the purposes of this insurance, electronic data is not

tangible property.

As used in this definition, electronic data means information,

facts or programs stored as or on, created or used on, or

transmitted to or from computer software, including systems

and applications software, hard or floppy disks, CD-ROMS,

tapes, drives, cells, data processing devices or any other

media which are used with electronically controlled

equipment.

11. Each AmFam policy in its Exclusion s. provides as follows:

This insurance does not apply to:

* * * * *

s. Distribution Of Material in Violation Of Statutes

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“Bodily injury,” “property damage, or “personal and

advertising injury” arising directly or indirectly out of any

action or omission that violates or is alleged to violate:

* * * * *

(3) Any statute, ordinance or regulation, other than the

TCPA or CAN-SPAM Act of 2003, that prohibits or

limits the sending, transmitting, communicating or

distribution of material or information.

12. Each AmFam policy includes an Employment-Related Practices Exclusion

endorsement which provides, in part, as follows:

The following exclusion is added to Paragraph B. Exclusions in

Section II – Liability:

This insurance does not apply to:

1. “Bodily injury” or “personal and advertising injury” to:

a. A person arising out of any:

(1) Refusal to employ that person;

(2) Termination of that person’s employment; or

(3) Employment-related practices, policies, acts or

omissions, such as coercion, demotion,

evaluation, reassignment, discipline,

defamation, harassment, humiliation or

discrimination directed at that person; or

b. The spouse, child, parent, brother or sister of that

person as a consequence of “bodily injury” or

“personal and advertising injury” to that person at

whom any of the employment-related practices

described in Paragraphs (1), (2) or (3) above is

directed.

2. This exclusion applies:

a. Whether the insured may be liable as an employer or

in any other capacity; and

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b. To any obligation to share damages with or repay

someone else who must pay damages because of the

injury.

13. Each AmFam policy includes an endorsement exclusion for access to or

disclosure of confidential or personal information and data-related liability which

provides as follows:

EXCLUSION – ACCESS OR DISCLOSURE OF CONFIDENTIAL

OR PERSONAL INFORMATION AND DATA-RELATED LIABILITY–

WITH LIMITED BODILY INJURY EXCEPTION

This endorsement modifies insurance provided under the following:

BUSINESSOWNERS COVERAGE FORM

A. Exclusion B.1.q. of Section II – Liability is replaced by the

following:

This insurance does not apply to:

q. Access Or Disclosure Of Confidential Or Personal

Information And Data-related Liability

(1) Damages, other than damages because of

“personal and advertising injury,” arising out of

any access to or disclosure of any person’s or

organization’s confidential or personal

information, including patents, trade secrets,

processing methods, customer lists, financial

information, credit card information, health

information or any other type of nonpublic

information, or

(2) Damages arising out of the loss of, loss of use

of, damage to, corruption of, inability to access,

or inability to manipulate electronic data.

This exclusion applies even if damages are

claimed for notification costs, credit monitoring

expenses, forensic expenses, public relations

expenses or any other loss, cost or expense

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incurred by you or others arising out of that

which is described in Paragraph (1) or (2)

above.

However, unless Paragraph (1) above applies,

this exclusion does not apply to damages

because of “bodily injury.”

As used in this exclusion, electronic data means

information, facts or computer programs stored

as or on, created or used on, or transmitted to or

from computer software (including systems and

applications software), on hard or floppy disks,

CD-ROMs, tapes, drives, cells, data processing

devices or any other repositories of computer

software which are used with electronically

controlled equipment. The term computer

programs, referred to in the foregoing

description of electronic data, means a set of

related electronic instructions which direct the

operations and functions of a computer or

device connected to it, which enable the

computer or device to receive, process, store,

retrieve or send data.

B. The following is added to Paragraph B.1.p. Personal And

Advertising Injury Exclusion of Section II – Liability:

This insurance does not apply to:

p. Personal And Advertising Injury

“Personal and advertising injury.”

Arising out of any access to or disclosure of any person’s or

organization’s confidential or personal information, including

patents, trade secrets, processing methods, customer lists,

financial information, credit card information, health

information or any other type of nonpublic information.

This exclusion applies even if damages are claimed for

notification costs, credit monitoring expenses, forensic

expenses, public relations expenses or any other loss, cost or

expense incurred by you or others arising out of any access to

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or disclosure of any person’s or organization’s confidential or

personal information.

TENDER OF DEFENSE

14. Carnagio tendered its defense to AmFam, and AmFam accepted that tender

subject to reservation for the reasons stated herein.

COUNT I

(DECLARATORY JUDGMENT RE: NO DUTY TO DEFEND)

15. AmFam adopts and repeats the allegations of ¶¶ 1 through 14 as and for

¶ 15 hereof as though the same were fully set forth herein.

16. While each AmFam policy, Pleading Exhibit A and B, extend coverage to

an insured for “bodily injury,” “property damage,” and “personal and advertising injury,”

as defined therein, the claims in the underlying action by the Claimant are not covered by

the policies of insurance.

17. AmFam contends that it has no duty or obligation to defend Carnagio in

connection with the claims made against it by the Claimant for one or more or all of the

following reasons:

(a) That the Amended Class Action Complaint does not allege

“bodily injury” as defined by the policies of insurance.

(b) That the Amended Class Action Complaint does not allege

“property damage” as defined by the policies of insurance.

(c) That the Amended Class Action Complaint does not allege

“personal and advertising injury” as defined by the policies of

insurance.

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(d) That the Amended Class Action Complaint does not allege an

“occurrence” as defined by the policies of insurance.

(e) That the policies issued to Carnagio do not cover claims for

alleged violation of the Illinois Biometric Information Privacy

Act pursuant to Exclusion s. which excludes coverage for

violations of a State statute that prohibits or limits the

sending, transmitting, communicating, or distribution of

material or information.1

(f) That the policies issued to Carnagio do not cover claims for

“bodily injury” or “personal and advertising injury” arising

out of employment-related practices and scanning fingerprints

to use the time tracking system maintained by Carnagio was

an employment requirement and policy.

(g) That the alleged violations of the Illinois Biometric

Information Privacy Act are excluded by the access to or

disclosure of personal information exclusion endorsement to

the AmFam policies.

18. The above contentions of AmFam are, on information and belief, denied by

Carnagio which, in turn, contends that it is entitled to coverage under the AmFam

1 AmFam raises this defense as a good faith challenge to existing law. West Bend

Mutual Ins. Co. v. Krishna Schaumburg Tan, Inc., 2020 Il App (1st) 191834.

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policies of insurance. AmFam, in turn, denies, the contrary contentions of Carnagio and

each of them.

19. By reason of the foregoing, an actual and justiciable controversy exists

between the parties and each of them, which may be determined by a judgment or order

of this Court. Pursuant to the terms and provisions of 28 U.S.C. §§ 2201 and 2202, this

Court has the power to declare and adjudicate the rights and liabilities of the parties

hereto under the terms and provisions of the policies of insurance referred to herein, and

to adjudicate the final rights of all parties and to give such other and further relief as may

be necessary to enforce the same.

COUNT II

(DECLARATORY JUDGMENT RE: NO DUTY TO DEFEND)

20. AmFam in the alternative adopts and repeats the allegations of ¶¶ 1 through

18 as and for ¶ 20 hereof as though the same were fully set forth herein.

21. While the AmFam policies, Pleading Exhibits A and B, extend coverage to

Carnagio for “bodily injury,” “property damage,” and “personal and advertising injury”

as defined therein, the claims in the underlying action by the Claimant are set forth in a

suit which was filed by the Claimant on February 11, 2019, served on Carnagio’s

registered agent by the Grundy County (Illinois) sheriff on March 6, 2019, and in which

Carnagio through counsel filed an appearance of record on April 2, 2019, all of which

was known to Carnagio, but not reported by Carnagio to AmFam until May 6, 2020,

almost 14 months later, after suit was filed and served on March 6, 2019.

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22. AmFam contends in the alternative that Carnagio is not entitled to any

coverage under the AmFam policies because it breached the policy’s notice of suit

condition as first notice 14 months after the suit was filed and served is not prompt, not

reasonable under the circumstances, and may have prejudiced AmFam. Each policy’s

notice condition provides, as follows:

2. Duties In The Event Of Occurrence, Offense, Claim Or

Suit

a. You must see to it that we are notified as soon as

practicable of an “occurrence” or an offense which

may result in a claim. To the extent possible, notice

should include:

(1) How, when and where the “occurrence” or

offense took place;

(2) The names and addresses of any injured person

and witnesses; and

(3) The nature and location of any injury or damage

arising out of the “occurrence” or offense.

b. If a claim is made or “suit” is brought against any

insured, you must:

(1) Immediately record the specifics of the claim or

“suit” and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the

claim or “suit” as soon as practicable.

c. You and any other involved insured must:

(1) Immediately send us copies of any demands,

notices, summonses or legal papers received in

connection with the claim or “suit”;

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(2) Authorize us to obtain records and other

information;

(3) Cooperate with us in the investigation or

settlement of the claim or defense against the

“suit”; and

(4) Assist us, upon our request, in the enforcement

of any right against any person or organization

which may be liable to the insured because of

injury or damage to which this insurance may

also apply.

d. No insured will, except at that insured’s own cost,

voluntarily make a payment, assume any obligation, or

incur any expense, other than for first aid, without our

consent

23. The above contentions of AmFam are, on information and belief, denied by

Carnagio which, in turn, contends that it is entitled to coverage under the AmFam

policies of insurance. AmFam in turn, denies the contrary contentions of Carnagio and

each of them.

24. By reason of the foregoing, an actual and justiciable controversy exists

between the parties and each of them, which may be determined by a judgment or order

of this Court. Pursuant to the terms and provisions of 28 U.S.C. §§ 2201 and 2202, this

Court has the power to declare and adjudicate the rights and liabilities of the parties

hereto under the terms and provisions of the policies of insurance referred to herein, and

to adjudicate the final rights of all parties and to give such other and further relief as may

be necessary to enforce the same.

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PRAYERS FOR RELIEF

WHEREFORE, the Plaintiff, American Family Mutual Insurance Company, S.I.,

prays that this Court enters judgment finding and declaring the rights of the parties as

follows:

AS TO COUNT I:

A. That American Family Mutual Insurance Company, S.I. has no duty

or obligation to provide a defense to Carnagio Enterprises, Inc. for

the action pending in the Circuit Court of the 18th Judicial Circuit,

DuPage County, Illinois, under Cause No. 19 L 168, under its

Businessowners Liability policies of insurance numbered

12XH289501.

B. That the Court grant American Family Mutual Insurance Company,

S.I. such other and further relief as the Court deems fit and just

under the circumstances.

C. That American Family Mutual Insurance Company, S.I. be awarded

and have and recover its just and reasonable costs incurred herein

and have execution issue therefor.

AS TO COUNT II:

A. That American Family Mutual Insurance Company, S.I. has no duty

or obligation to provide a defense to Carnagio Enterprises, Inc. for

the action pending in the Circuit Court of the 18th Judicial Circuit,

DuPage County, Illinois, under Cause No. 19 L 168, under its

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Businessowners Liability policies of insurance numbered

12XH289501.

B. That the Court grant American Family Mutual Insurance Company,

S.I. such other and further relief as the Court deems fit and just

under the circumstances.

C. That American Family Mutual Insurance Company, S.I. be awarded

and have and recover its just and reasonable costs incurred herein

and have execution issue therefor.

Respectfully submitted:

/s/ Robert Marc Chemers

Robert Marc Chemers (Bar Number: 0431508

Edward B. Ruff, III (Bar Number: 9181332)

PRETZEL & STOUFFER, CHARTERED

One South Wacker Drive

Suite 2500

Chicago, Illinois 60606

Telephone: (312) 578-7548

Fax: (312) 346-8242

E-Mail: rchemers@pretzelstouffer.com

E-Mail: eruff@pretzelstouffer.com

Attorneys for Plaintiff

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