Source: https://litigation.consusgroup.com/2017/06/05/yahoo-inc-yhoo-v-national-union-fire-insurance-company-of-pittsburgh-pa/
Timestamp: 2019-04-23 06:53:56+00:00

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06-03-2017 – Yahoo!’s insurance coverage claims for alleged unsolicited text message violations of the TCPA have been denied. The court has given Yahoo! leave to amend its complaint, but it’s not clear Yahoo! will be able to file a an availing complaint.
22 GRANTED WITH LEAVE TO AMEND.
23 I. BACKGROUND 24 A.
oral or written publication, in any manner, of material that violates a person’s right of 5 privacy.” Dkt. No. 1 at 85. The CGL policies provide that National Union will pay the 6 sums that Yahoo becomes legally obligated to pay as damages due to personal injury. Dkt.
Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA). Id. The Text Message 12 Litigations allege that through the unsolicited transmission of the text messages, Yahoo 13 invaded the privacy of the plaintiffs. Id. at 3, 4.
14 Once the Text Message Litigations began, Yahoo notified National Union to obtain 15 coverage under the policy. Id. at 7. National Union denied coverage. Id.
17 On January 27, 2017, Yahoo filed its complaint, which alleges a breach of contract 18 claim due to National Union’s denial of coverage and consequent failure to defend. Dkt.
Rule of Civil Procedure 12(b)(6). See Dkt. No. 15. This Court has jurisdiction under 28 21 U.S.C. § 636(c) as both parties consented to proceeding before a magistrate judge. See 22 Dkt. Nos. 6, 17.
550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw 6 the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft 7 v. Iqbal, 556 U.S. 662, 678 (2009).
8 If a court grants a motion to dismiss, leave to amend should be granted unless the 9 pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 10 F.3d 1122, 1127 (9th Cir. 2000).
12 National Union moves to dismiss Yahoo’s complaint because the insurance policy 13 does not cover the Text Message Litigations. Dkt. No. 15 at 2.
Insurance policies are contracts and therefore must be interpreted as such. AIU Ins.
the time of contract formation governs the contract’s interpretation. Id. at 821. The 18 parties’ intentions are inferred from the “clear and explicit” meaning of these provisions.
prematurely assumes that California law applies with no basis for this conclusion.” Dkt. No. 24 at 11. Yahoo does not provide support for the Court applying non-California law.
coverage occurred within this district.” Dkt. No. 1 at 2. As National Union pointed out, a federal court sitting in diversity must apply the forum state’s substantive law. Welles v.
Turner Entm’t Co., 503 F.3d 728, 738 (9th Cir. 2007) (citing Klaxon Co. v. Stentor Elec.
Mfg. Co., 313 U.S. 487, 496 (1941)). Yahoo’s language in the complaint mirrors California Civil Code § 1646, which requires that a contract be interpreted “according to the law and usage of the place where it is to be performed; or . . . where it was made.” Yahoo’s unsupported assertion that non-California law may apply to this case is not well taken.
in policy language or term arises, courts must resolve that ambiguity in favor of the 5 insured. United Nat. Ins. Co. v. Spectrum Worldwide Inc., 555 F.3d 772, 777 (9th Cir. 6 2009). The language of a contract must be interpreted as a whole, which means 7 ambiguities cannot be found in the abstract. Waller, 11 Cal. 4th at 18.
The disputed provision is contained in the definition of personal injury coverage.
argues that this disputed provision means that the Text Message Litigations are covered 13 under the policy and therefore National Union owes Yahoo a duty to defend it in the 14 underlying lawsuits.
privacy right of seclusion involves the right to be let alone. Id. at 148. Invasion of the 20 privacy right of secrecy involves the “content of communication,” whereas invasion of the 21 privacy right of seclusion involves “means, manner, and method of communication.” Id.
conviction from an employer asserts a claim for secrecy privacy. Id. at 148. A person who 24 wishes to prevent solicitors from calling on the telephone asserts a claim to the privacy 25 right of seclusion. Id.
privacy involves material being made known to third parties, but violation of seclusion 8 privacy does not. Id. at 150. The court ruled that the policy provided coverage for 9 violations of secrecy privacy, but not seclusion. Id.
violations are protected under insurance policies. Dkt. No. 24 at 10. In Los Angeles 13 Lakers, the court analyzed a policy exclusion clause, which excludes coverage for certain 14 actions, to determine if there was a duty to defend in an underlying TCPA violation action.
privacy because exclusion clauses are to be interpreted narrowly in order to protect the 23 insured. 2015 WL 2088865, *3 (citing MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 24 647-48 (2003)). This case does not implicate any exclusion clause.
3 provisions with such language have not been construed to also cover alleged violations of 4 seclusion privacy. See e.g., ACS Sys., Inc., 147 Cal. App. 4th 137; State Farm Gen. Ins. 5 Co. v. JT’s Frames, Inc., 181 Cal. App. 4th 429 (2010). Yahoo has not presented the 6 Court with California cases stating to the contrary.
is “oral or written publication, in any manner, of material that violates a person’s right of 10 privacy.” Dkt. No. 1 at 85. “Publication” is defined as “making known.” Reimel v.
11 Alcoholic Bev. Appeals Bd., 256 Cal. App. 2d 158, 166-67 (1967). In situations where 12 secrecy privacy is violated, publication plays a key role. JT’s Frames, Inc., 181 Cal. App. 13 4th at 447. However, in situations where seclusion privacy is violated, publication is 14 irrelevant. Id.
known, not 7 the one to whom the material is made known.” Id. (citing Res. Bankshares Corp. v. St.
at 150. Thus, the 13 disputed provision does not cover Yahoo’s alleged legal violations because Yahoo did not 14 disclose the content of the material to third parties, but only to the underlying plaintiffs.
Another tool for interpreting the contract provision’s text is the last antecedent rule.
material must violate a person’s right of privacy. Id. As the policy is drafted, “material” 24 can only violate a person’s right of privacy if it is “confidential information and violated 25 the victim’s right to secrecy.” Id.
interpretation of the disputed provision as a whole. Yahoo’s desired interpretation of “right of privacy” looks to the term in the abstract, but the correct method of interpretation 3 under California law is examining the provision as a whole. ACS Sys., Inc., 147 Cal. App.
person’s privacy right of secrecy, and thus these injuries are not covered under the 8 disputed policy provision. Thus, according to the text of the disputed provision, National 9 Union does not owe a duty to defend Yahoo for violations of seclusion privacy.
a person or organization or disparages a person’s or organization’s goods, products, or 22 services.” Dkt. No. 1 at 84. Libel or slander involves “a publication of defamatory content 23 about someone to a third person.” Cal. Civ. Code §§ 45, 46; Live Oak Publ’g Co. v.
Cohagan, 234 Cal. App. 3d 1277, 1284 (1991); ACS Sys., Inc., 147 Cal. App. 4th at 151.
covering slander and libel, it is reasonable to infer that the disputed provision also provides coverage only when material is disclosed to third parties. This type of disclosure violates 3 the privacy right of secrecy, not seclusion.
of the disputed provision as a whole. The provision involving slander and libel requires 7 disclosure to third parties. Id. Therefore, it follows that the disputed provision would also 8 involve disclosure to third parties.
parties. Because the disputed provision directly follows a provision that involves 23 disclosure to third parties, the Court concludes that the disputed provision also involves 24 disclosure to third parties. Yahoo’s argument is unpersuasive.
may be made known in any way in order for coverage to apply. AIU Ins. Co., 51 Cal. 3d at 6 821. Any manner of publication involves any medium by which material is published.
7 Here, the information was never published because the content was never made known to 8 third parties. ACS Sys., Inc., 147 Cal. App. 4th at 149. Therefore, the manner of 9 publication is not at issue because there was no publication in the first place.
11 In opposition to National Union’s motion to dismiss, Yahoo cites several cases that 12 are irrelevant here. See Dkt. No. 24 at 9-10, 12.
13 These cases cite out of state law, which do not interpret insurance policies in the same 14 manner as California courts. For example, Yahoo cites Park University Enterprises, Inc. v.
method of interpreting ambiguous terms in favor of the insured, that court did not consider 20 the context of the contract as a whole. Waller, 11 Cal. 4th at 11.
It is important to view 21 the contract as a whole and not in the abstract. ACS Sys., Inc., 147 Cal. App 4th at 146.
22 The court in Park University looks at the language in the abstract to determine if it is 23 ambiguous. Park University Enter, Inc., 442 F.3d at 1249. California courts also look to 24 context. Waller, 11 Cal. 4th at 11.
Inc. v. Gulf Ins. Co., 269 F. Supp. 2d 836, 846 (N.D. Tex. 2003) aff’d 96 Fed. App’x 960 8 (5th Cir. 2004) (applying Texas law to interpret the meaning of “publication”). Therefore, 9 this Court will not consider those cases in ruling on this case’s merits.
10 However, because Yahoo’s claim for coverage could possibly be amended by the 11 allegation of additional facts, or by other reasons why the court should not dismiss this 12 case with prejudice,3 the Court GRANTS leave to amend.
14 For the foregoing reasons, National Union’s motion to dismiss is GRANTED WITH 15 LEAVE TO AMEND. The amended complaint must be filed with the Court by June 23, 16 2017.
18 IT IS SO ORDERED.
v. Yoon, No. 10-cv-02915 MEJ, 2011 WL 839421, at *3 (N.D. Cal. Mar. 7, 2011) (quoting United States ex rel. Giles v. Sardie, 191 F. Supp. 2d 1117, 1127 (C.D. Cal. 2000) (“It is improper for a moving party to introduce new facts or different legal arguments in the reply brief than those presented in the moving papers.”). The Court declines to consider National Union’s argument, the merits of which may be taken up again on a subsequent motion to dismiss.

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