Court Opinion

ID: 4198316
Source: CourtListenerOpinion
Date Created: 2017-08-23 17:01:15.869827+00
Date Added: 2024-06-11T09:36:40.779366
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 LOS ANGELES LAKERS, INC., a                       No. 15-55777
 California corporation,
                   Plaintiff-Appellant,              D.C. No.
                                                  2:14-cv-07743-
                     v.                              DMG-SH

 FEDERAL INSURANCE COMPANY, an
 Indiana corporation,                                OPINION
                  Defendant-Appellee.

        Appeal from the United States District Court
           for the Central District of California
          Dolly M. Gee, District Judge, Presiding

          Argued and Submitted February 15, 2017
                   Pasadena, California

                      Filed August 23, 2017

 Before: Richard C. Tallman and N. Randy Smith, Circuit
 Judges, and Stephen Joseph Murphy, III,* District Judge.

                Opinion by Judge N.R. Smith;
              Concurrence by Judge Murphy, III;
                 Dissent by Judge Tallman

    *
      The Honorable Stephen Joseph Murphy, III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
2               L.A. LAKERS V. FEDERAL INS. CO.

                            SUMMARY**

             Telephone Consumer Protection Act

    The panel affirmed the district court’s Fed. R. Civ. P.
12(b)(6) dismissal of an action brought under diversity
jurisdiction by the Los Angeles Lakers against the Federal
Insurance Company after it denied coverage and declined to
defend the Lakers in a lawsuit alleging violations of the
Telephone Consumer Protection Act.

    The underlying action alleged that the Lakers violated the
Telephone Consumer Protection Act when, during a game,
they invited attendees to send a text to a specific number and
then sent a response text message using an “automatic
telephone dialing system,” in violation of the Act. Federal
Insurance Company denied coverage and declined to defend
the Lakers, concluding that the underlying lawsuit was an
invasion of privacy suit, which was specifically excluded
from coverage.

    The panel held that because a Telephone Consumer
Protection Act claim is inherently an invasion of privacy
claim, Federal Insurance Company correctly concluded that
the underlying Telephone Consumer Protection Act claims
fell under the Policy’s broad exclusionary clause.
Accordingly, Federal Insurance Company did not breach the
insurance policy, or the implied covenant of good faith and
fair dealing, under any cognizable legal theory, when it
declined to defend against or cover the underlying complaint.

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
             L.A. LAKERS V. FEDERAL INS. CO.                3

    District Judge Murphy concurred and wrote separately to
state that this court should have decided the case on narrower
grounds. Judge Murphy stated that the allegations in the
underlying action were sufficient to determine that the claims
arose from an invasion of privacy and the Court did not need
to hold more broadly that a Telephone Consumer Protection
Act claim is inherently an invasion of privacy claim.

    Dissenting, Judge Tallman stated that because the
underlying action sought recovery based on an alleged
violation of the Telephone Consumer Protection Act, and did
not seek recovery based on invasion of privacy, he would
reverse the district court’s order dismissing the Lakers’
claims.

                        COUNSEL

Kirk Pasich (argued), Pamela M. Woods, and Anamay M.
Carmel, Liner LLP, Los Angeles, California, for Plaintiff-
Appellant.

Robert M. Traylor (argued), Seltzer Caplan McMahon Vitek,
San Diego, California, for Defendant-Appellee.
4            L.A. LAKERS V. FEDERAL INS. CO.

                         OPINION

N.R. SMITH, Circuit Judge:

    When Congress passed the Telephone Consumer
Protection Act (“TCPA”) it sought to protect individuals
against invasions of privacy, in the form of unwanted calls
(and now text messages) using automatic telephone dialing
systems. Congress explicitly stated this purpose in the text of
the TCPA. In light of this plainly stated purpose, and the lack
of any other indicia of congressional intent in the statute, a
TCPA claim is, by its nature, an invasion of privacy claim.
Accordingly, a liability insurance policy that unequivocally
and broadly excludes coverage for invasion of privacy claims
also excludes coverage for TCPA claims.

                     BACKGROUND

    On October 13, 2012, David M. Emanuel attended a
basketball game at the Los Angeles Lakers’ home arena—the
Staples Center. While at the game, Emanuel observed a
message on the scoreboard, inviting attendees to send a text
a message to a specific number. Emanuel sent a text message
to the number, hoping the Lakers would display the message
on the scoreboard. In response, Emanuel received the
following text message:

       Thnx! Txt as many times as u like. Not all
       msgs go on screen. Txt ALERTS for Lakers
       News alerts. Msg&Data Rates May Apply.
       Txt STOP to quit. Txt INFO for info

   On November 20, 2012, Emanuel, on behalf of himself
and others similarly situated, brought a class action lawsuit
             L.A. LAKERS V. FEDERAL INS. CO.                5

against the Lakers. Emanuel filed a First Amended
Complaint in the case on February 8, 2013 (“Emanuel
complaint”). Emanuel alleged that the Lakers sent the
response text message using an “automatic telephone dialing
system,” in violation of the TCPA. He asserted, several
times, that this message was an invasion of his privacy, and
that the Lakers had invaded the privacy of other class
members.         Emanuel brought two claims for
relief—(1) negligent violation of the TCPA and (2) knowing
and/or willful violation of the TCPA—and sought statutory
damages and injunctive relief.

    The Lakers promptly asked their insurance provider, the
Federal Insurance Company (“Federal”), to defend them
against the lawsuit. The Lakers notified Federal of the
lawsuit on November 27, 2012, shortly after the first
complaint was filed. Federal insured the Lakers from January
1, 2012, to January 1, 2013, under a “ForeFront Portfolio”
insurance policy (“the Policy”). The Policy contained a
“Directors & Officers Liability Coverage Section.” This
section provided “Corporate Liability Coverage,” which
would require Federal to pay for losses (with some
restrictions) suffered by the Lakers “resulting from any
Insured Organization Claim . . . for Wrongful Acts.” An
“Insured Organization Claim” included “a civil proceeding
commenced by service of a complaint or similar pleading . . .
against [the Lakers] for a Wrongful Act.” The Policy defined
“Wrongful Acts” as “any error, misstatement, misleading
statement, act, omission, neglect, or breach of duty
committed, attempted, or allegedly committed or attempted
by” the Lakers. The Policy also contained a number of
exclusions from Corporate Liability Coverage. Specifically,
the Policy provided that “[n]o coverage will be available” for
a claim,
6            L.A. LAKERS V. FEDERAL INS. CO.

       based upon, arising from, or in consequence
       of libel, slander, oral or written publication of
       defamatory or disparaging material, invasion
       of privacy, wrongful entry, eviction, false
       arrest, false imprisonment, malicious
       prosecution, malicious use or abuse of
       process, assault, battery or loss of
       consortium[.]

Finally, the “General Terms and Conditions Section” of the
Policy provided that Federal had “the right and duty to defend
any Claim covered by th[e] Policy.” This duty applied even
if the allegations in the claim were “groundless, false or
fraudulent.”

    Federal denied coverage and declined to defend the
Lakers, concluding that Emanuel had brought an invasion of
privacy suit, which was specifically excluded from coverage.
After asking Federal to reconsider its position, the Lakers
filed this suit in Los Angeles Superior Court on September 2,
2014. The Lakers asserted two claims for relief. First, the
Lakers brought a claim for breach of contract, asserting that
Federal had violated the Policy by denying coverage for the
Emanuel lawsuit. Second, the Lakers brought a claim for
tortious breach of the implied covenant of good faith and fair
dealing, based on Federal’s denial of coverage.

   After removing the suit to federal court, Federal filed a
motion to dismiss the suit for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6). The district court
granted the motion and dismissed the case without giving the
Lakers leave to amend. L.A. Lakers, Inc. v. Fed. Ins. Co., No.
CV 14-7743 DMG (SHx), 2015 WL 2088865, at *9 (C.D.
Cal. Apr. 17, 2015). The district court found that the Lakers
             L.A. LAKERS V. FEDERAL INS. CO.                 7

could not succeed in the suit under any cognizable legal
theory, because TCPA claims are “implicit invasion-of-
privacy claims” that fall squarely within the Policy’s “broad
exclusionary clause.” Id. at *8. The Lakers timely appealed.

                STANDARD OF REVIEW

    We review de novo a district court’s order granting a
motion to dismiss for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6). Shroyer v. New Cingular
Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010).
We will affirm a dismissal for failure to state a claim “where
there is no cognizable legal theory or an absence of sufficient
facts alleged to support a cognizable legal theory.” Id.
(quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir.
2001)). “In conducting this review, we accept the factual
allegations of the complaint as true and construe them in the
light most favorable to the plaintiff.” AE ex rel. Hernandez
v. Cty. of Tulare, 666 F.3d 631, 636 (9th Cir. 2012). We also
review de novo the district court’s interpretation of state
contract law, AmerisourceBergen Corp. v. Dialysist W., Inc.,
465 F.3d 946, 949 (9th Cir. 2006), and its interpretation of an
insurance policy, Stanford Ranch, Inc. v. Md. Cas. Co.,
89 F.3d 618, 624 (9th Cir. 1996).

                        ANALYSIS

   This case requires us to interpret both the Policy and the
TCPA. We start with the Policy and, accordingly, the
California rules for interpreting insurance contracts.
8             L.A. LAKERS V. FEDERAL INS. CO.

                         I. The Policy

    California courts interpret insurance contracts under the
“ordinary rules of contractual interpretation.” Palmer v.
Truck Ins. Exch., 988 P.2d 568, 652 (Cal. 1999) (citation
omitted). In interpreting a contract, courts must “‘give[]
effect to the mutual intention of the parties as it existed’ at the
time the contract was executed.” Wolf v. Walt Disney
Pictures & Television, 76 Cal. Rptr. 3d 585, 601 (Cal. Ct.
App. 2008) (quoting Cal. Civ. Code § 1636). Where possible,
the courts should determine the mutual intention of the parties
“solely from the written provisions of the insurance policy.”
Palmer, 988 P.2d at 652 (citation omitted). In addition,
courts must give a contract’s terms their “ordinary and
popular” meaning, “unless used by the parties in a technical
sense or a special meaning is given to them by usage.” Id.
(citation and internal quotation marks omitted). Courts are to
interpret coverage clauses in insurance contracts “broadly so
as to afford the greatest possible protection to the insured.”
Aroa Mktg., Inc. v. Hartford Ins. of the Midwest, 130 Cal.
Rptr. 3d 466, 470 (Cal. Ct. App. 2011) (citation omitted). In
contrast, courts are to interpret “exclusionary clauses . . .
narrowly against the insurer.” Id. (citation omitted).

     The Policy on its face clearly excludes from coverage
claims “based upon, arising from, or in consequence of . . .
invasion of privacy.” The Policy does not explicitly exclude
coverage of TCPA claims, so we must determine whether
Emanuel’s TCPA claims fall within this exclusion. However,
first we must acknowledge how broad this exclusionary
clause is. California courts and our court have consistently
given a broad interpretation to the clause “arising from” in an
insurance contract. See Cont’l Cas. Co. v. City of Richmond,
763 F.2d 1076, 1080 (9th Cir. 1985) (quoting Underwriters
                L.A. LAKERS V. FEDERAL INS. CO.                          9

at Lloyd’s of London v. Cordova Airlines, Inc., 283 F.2d 659,
664 (9th Cir. 1960)) (interpreting exclusionary clause in
insurance contract under California law); Crown Capital Sec.,
L.P. v. Endurance Am. Specialty Ins., 186 Cal. Rptr. 3d 1, 7
(Cal. Ct. App. 2015). “[A]rising out of” encompasses
“originating from, having its origin in, growing out of, . . .
flowing from, . . . incident to, or having connection with.”
Crown, 186 Cal. Rptr. 3d at 7 (quoting Davis v. Farmers Ins.
Grp., 35 Cal. Rptr. 3d 738, 744 (Cal. Ct. App. 2005)). Thus,
this clause broadly excludes from coverage claims with “a
minimal causal connection or incidental relationship” to
invasion of privacy. Id. (quoting Acceptance Ins. v. Syufy
Enters., 81 Cal. Rptr. 2d 557, 561 (Cal. Ct. App. 1999)); State
Farm Fire & Cas. Co. v. Salas, 271 Cal. Rptr. 642, 645 n.4
(Cal Ct. App. 1990) (holding that “arising out of” is also
broadly construed in exclusionary clauses). California courts
also give the clause “based on” the same broad reading as
“arising out of.” Century Transit Sys., Inc. v. Am. Empire
Surplus Lines Ins., 49 Cal. Rptr. 2d 567, 571 n.4 (Cal. Ct.
App. 1996).

     It is also necessary for us to examine the clause “invasion
of privacy” in this exclusion. California courts have
recognized “four distinct forms of tortious invasion [of
privacy].” Johnson v. Harcourt, Brace, Jovanovich, Inc.,
118 Cal. Rptr. 370, 375 (Cal. Ct. App. 1974). Included in this
list is “intrusion upon the plaintiff’s seclusion or solitude.”1
Id. (citation omitted). This form of invasion of privacy has

    1
      The remaining three forms of invasion of privacy are: “(2) publicity
which places the plaintiff in false light in the public eye; (3) public
disclosure of true, embarrassing private facts about the plaintiff;
(4) appropriation of plaintiff’s name or likeness for commercial purposes.”
Johnson, 118 Cal. Rptr. at 375 (citations omitted).
10             L.A. LAKERS V. FEDERAL INS. CO.

been described as “the right to be let alone.” Miller v. Nat’l
Broad. Co., 232 Cal. Rptr. 668, 678 (Cal. Ct. App. 1986)
(quoting Gill v. Curtis Publ’g Co., 239 P.2d 630, 632 (Cal.
1952)). This right to be let alone is relative and is not
absolute. Sanders v. Am. Broad. Cos., 978 P.2d 67, 72 (Cal.
1999). However, unwanted calls, received at inconvenient
times, generally invade an individual’s privacy and right to be
let alone. See Restatement (Second) of Torts § 652B (1977)
(cited in Shulman v. Grp. W Prods. Inc., 955 P.2d 469,
481–90 (Cal. 1998)).

                           II. The TCPA

    With an understanding of the scope of the exclusionary
clause, we turn next to the TCPA. Federal argues a TCPA
claim is inherently an invasion of privacy claim. The district
court agreed, concluding that the protection of privacy
interests was “the conceptual wellspring of the TCPA’s
protections.” 2015 WL 2088865, at *5. The Lakers assert in
response that invasion of privacy is just one of the harms
which the TCPA sought to protect the public against. Thus,
we must determine whether the purpose of the TCPA was to
prevent invasions of privacy, or, in addition, some other
harm.

    In making this determination we start, as we must, with
the text of the statute.2 McDonald v. Sun Oil Co., 548 F.3d

     2
       We know of no canon of construction that instructs us first to
determine if the statutory elements of a cause of action are ambiguous.
Rather, we approach statutory construction as a “holistic endeavor,”
considering the whole text of a statute, including any portion expressing
the statute’s purpose. See United Sav. Ass’n of Tex. v. Timbers of Inwood
Forest Assocs., Ltd., 484 U.S. 365, 371 (1988).
              L.A. LAKERS V. FEDERAL INS. CO.                  11

774, 780 (9th Cir. 2008), abrogated on other grounds by CTS
Corp. v. Waldburger, 134 S. Ct. 2175 (2014); see also Lamie
v. U.S. Tr., 540 U.S. 526, 534 (2004) (“The starting point in
discerning congressional intent is the existing statutory
text.”). Our inquiry will “end[] there as well if the text [of the
statute] is unambiguous.” BedRoc Ltd. v. United States,
541 U.S. 176, 183 (2004). “The preeminent canon of
statutory interpretation requires us to ‘presume that [the]
legislature says in a statute what it means and means in a
statute what it says there.’” Id. (alteration in original)
(quoting Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–54
(1992). If “the statute’s language is plain, the sole function
of the courts . . . is to enforce it according to its terms.”
Lamie, 540 U.S. at 534 (quoting Hartford Underwriters Ins.
v. Union Planters Bank, 530 U.S. 1, 6 (2000)).

    We must also “assum[e] that the legislative purpose is
expressed by the ordinary meaning of the words used” by the
legislature. Richards v. United States, 369 U.S. 1, 9 (1962).
Like plain meaning, “[t]he ‘plain purpose’ of legislation . . .
is determined in the first instance with reference to the plain
language of the statute itself.” Bd. of Governors of Fed.
Reserve Sys. v. Dimension Fin. Corp., 474 U.S. 361, 373
(1986) (citing Richards, 369 U.S. at 9); Antonin Scalia &
Bryan A. Garner, Reading Law: The Interpretation of Legal
Texts 56 (2012) (“[T]he purpose [of a statute] must be derived
from the text, not from extrinsic sources such as legislative
history or an assumption about the legal drafter’s desires.”).
In debating and considering a statute, Congress often gives
numerous reasons why the statute would be advantageous.
But not all of these stated objectives potentially served by the
statute constitute the statute’s “purpose.” To find a statute’s
purpose we must look to see if Congress has clearly stated it
in the text of the statute itself. Thus, the language of the
12            L.A. LAKERS V. FEDERAL INS. CO.

statute is “the best guide to the purposes of a statute,” because
“statutes are records of legislative compromise.” Am. Ass’n
of Retired Pers. v. EEOC, 823 F.2d 600, 604 (D.C. Cir. 1987)
(citing Bd. of Governors, 474 U.S. at 374).

     The TCPA makes it unlawful for a person,

        to make any call (other than a call made for
        emergency purposes or made with the prior
        express consent of the called party) using any
        automatic telephone dialing system or an
        artificial or prerecorded voice . . .

            to any telephone number assigned to a . . .
            cellular telephone service . . . or any
            service for which the called party is
            charged for the call . . . .

47 U.S.C. § 227(b)(1)(A)(iii). In addition, one of the
individuals to the call (either the caller or the recipient) must
be “within the United States.” Id. § 227(b)(1). Unlike some
statutes, the TCPA does not dedicate a section of its text to
describing its purpose. However, that does not mean the
TCPA does not state its purpose. In fact, Congress explicitly
stated the purpose of the TCPA in two sections:
§ 227(b)(2)(B) and § 227(b)(2)(C). Subsection 227(b)(2)
requires the Federal Communications Commission to
“prescribe regulations to implement th[e] subsection” of the
TCPA that outlines the “[r]estrictions on use of automated
telephone equipment.” In addition, § 227(b)(2)(B) provides
that the Federal Communications Commission,

        may, by rule or order, exempt from the
        requirements of paragraph (1)(B) of this
              L.A. LAKERS V. FEDERAL INS. CO.            13

       subsection, subject to such conditions as the
       Commission may prescribe–

       ...

             (ii) such classes or categories of calls
             made for commercial purposes as the
             Commission determines–

                (I) will not adversely affect the
                privacy rights that this section is
                intended to protect; and

                (II) do no include the transmission of
                any unsolicited advertisement.

(emphasis added). Further, § 227(b)(2)(C) provides that,
“[i]n implementing the requirements of this subsection, the
Commission–”

       may, by rule or order, exempt from the
       requirements of paragraph (1)(A)(iii) of this
       subsection calls to a telephone number
       assigned to a cellular telephone service that
       are not charged to the called party, subject to
       such conditions as the Commission may
       prescribe as necessary in the interest of the
       privacy rights this section is intended to
       protect.

(emphasis added). Thus, the TCPA twice explicitly states
that it is intended to protect privacy rights. Equally as
significant, the TCPA contains no other statement regarding
its intended purpose. Thus, we must presume from this
14              L.A. LAKERS V. FEDERAL INS. CO.

unequivocal statement, and the lack of any other statements
expressing an alternative intent, that the purpose of the TCPA
is to protect privacy rights and privacy rights alone.3 See
Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881, 885 (9th
Cir. 2005) (explaining the doctrine of expressio unius est
exclusio alterius).

    We have before outlined the three elements of a TCPA
claim: “(1) the defendant called a cellular telephone number;
(2) using an automatic telephone dialing system; (3) without
the recipient’s prior express consent.” Meyer v. Portfolio
Recovery Assocs., LLC, 707 F.3d 1036, 1043 (9th Cir. 2012).
Absent from this list is proof that the call invaded the
recipient’s privacy. This omission is no mistake. As
demonstrated by the explicitly stated purpose of the TCPA,
Congress concluded that the calls it prohibited in passing the
TCPA were an implicit invasion of privacy. In practice, there
may be other interests that the TCPA protects. But these
alternative interests do not transform Congress’s express
intent to craft the TCPA to serve privacy interests.
Accordingly, in pleading the elements of a TCPA claim, a
plaintiff pleads an invasion of privacy claim.4

     3
      We have previously cited legislative history when considering the
purpose of the TCPA. See Satterfield v. Simon & Schuster, Inc., 569 F.3d
946, 954 (9th Cir. 2009). In Satterfield we also determined that the
purpose of the TCPA was to protect privacy interests. Id. However, while
this purpose is clear from the statute, some history was required in that
case to assist us in determining the ambiguous question of whether “call,”
a term not defined in the TCPA, included text messages. Id. at 953–54.
Thus, the issues in Satterfield are distinguishable from the question we
face now.
     4
      One issue raised at oral argument was whether a holding that a
TCPA claim is inherently an invasion of privacy claim would prevent
corporations, which do not have the same privacy interests as individuals
                 L.A. LAKERS V. FEDERAL INS. CO.                            15

    Moreover, once a TCPA plaintiff has established these
three elements, and has thus proven an invasion of privacy,
the plaintiff may obtain either actual or statutory damages.
47 U.S.C. § 227(b)(3)(B). Such damages are available only
because the plaintiff has suffered a cognizable, personal
injury.5 As the district court explained, the “fact that [a
plaintiff] seeks only economic damages does not strip [TCPA
claims] of their privacy-based character.” 2015 WL 2088865,
at *7. Instead, “[t]he economic injury stems from” and is a
result of a defendant’s invasion of a plaintiff’s privacy. Id.
The availability of statutory damages only eases the burden
on plaintiffs of establishing the actual value of the harm they

in many states, from obtaining relief under the TCPA. The parties did not
brief this issue, so we do not address it.

     However, if we were to address this issue, it would not affect our
decision here. Although the statute clearly indicates that Congress
intended the TCPA to protect privacy interests, the statute does not clearly
indicate that the TCPA was intended to protect corporations, and we have
yet to answer that question. The statute’s provision of a private right of
action supplies the closest indication of an answer. The statute provides
that “[a] person or entity may, if otherwise permitted by the laws or rules
of court of a State, bring in an appropriate court of that State . . . an action
based on a violation of this subsection or the regulations prescribed under
this subsection.” 47 U.S.C. § 227(b)(3)(A). The statute does not define
“entity.” But the statute does indicate that the states are to determine
which “entities” can bring TCPA claims. Thus, the states determine
whether a corporation can seek or obtain relief under the TCPA.
    5
       Citing Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), the
dissent asserts that the three statutory elements, which do not recite a
harm, alone demonstrate a legally cognizable injury. Not only is
Emanuel’s standing to sue not before us, but “[i]t is settled that Congress
cannot erase Article III’s standing requirements by statutorily granting the
right to sue to a plaintiff who would not otherwise have standing.” Raines
v. Byrd, 521 U.S. 811, 820 n.3 (1997).
16              L.A. LAKERS V. FEDERAL INS. CO.

suffered when a defendant invaded their privacy. Of course,
if the invasion of privacy resulted in a loss greater than the
fixed statutory award, actual damages are available.

                  III. The Emanuel Complaint

    Emanuel asserted two claims for relief: negligent
violation of the TCPA and knowing/willful violation of the
TCPA. Because, as explained above, a plaintiff asserts an
invasion of privacy claim when he or she asserts a TCPA
claim, Emanuel asserted two invasion of privacy claims and
nothing else in his complaint.6

    When Federal received a request from the Lakers to
defend them against the Emanuel complaint, Federal correctly
identified the two TCPA claims as claims for invasion of
privacy. It is evident from the plain language of the insurance
contract that the parties intended to exclude all invasion of
privacy claims. We recognize that exclusionary clauses are
to be construed against the insurer; but here we must

     6
      Emanuel also plainly stated multiple times that the Lakers’ alleged
violation of the TCPA invaded his privacy. See, e.g., First Amended
Complaint for Damages and Injunctive Relief Pursuant to the Telephone
Consumer Protection Act, 47 U.S.C. § 227, et seq., Emanuel v. L.A.
Lakers, Inc., No. 2:12-cv-9936 GW (SHx) (C.D. Cal. Feb. 8, 2013), ECF
No. 15, at ¶ 1 (“[T]he illegal actions of THE LOS ANGELES LAKERS,
INC. . . . , in negligently contacting [Emanuel] on [his] cellular telephone,
in violation of the Telephone Consumer Protection Act, . . . thereby
invad[ed Emanuel’s] privacy.”); id., at ¶ 2 (“The TCPA was designed to
prevent calls and messages like the ones described within this complaint,
and to protect the privacy of citizens like [Emanuel].”); id., at ¶ 31 (“[The
Lakers], either directly or through its agents, illegally contacted [Emanuel]
and the Class members via their cellular telephones by using marketing
and text messages, thereby . . . invading the privacy of [Emanuel] and the
Class members.”).
              L.A. LAKERS V. FEDERAL INS. CO.                 17

reconcile this rule with our canon of giving effect to the intent
of the parties in light of a clause that broadly excludes
coverage for any claim originating from, incident to, or
having any connection with, invasion of privacy. A TCPA
claim falls within the category of intrusion on the “right to be
let alone” recognized under California law as an invasion of
privacy. Emanuel’s claim is unquestionably, at the very least,
connected to an alleged invasion of privacy. Therefore,
Federal properly concluded that the claims asserted in the
Emanuel complaint were excluded from coverage under the
Policy. The dissent’s narrow construction of the exclusionary
clause conflicts with the clear intent of the contracting
parties.

                  IV. The Duty to Defend

     Finally, the Lakers assert that, even if the Policy did not
require Federal to indemnify cost incurred from the Emanuel
action, Federal still had a duty to defend the suit from the
beginning. In California, an insurer’s duty to defend is broad.
“An insurer must defend its insured against claims that create
a potential for indemnity under the policy.” Scottsdale Ins.
v. MV Transp., 115 P.3d 460, 466 (Cal. 2005). An insurer
first must compare the allegation in the complaint with the
terms of the policy to determine whether it must defend an
action. Id. However, the duty does not stop there. The
insurer might also have a duty to defend an action “where
extrinsic facts known to the insurer suggest that the claim
may be covered.” Id. In addition, the insurer has a “duty to
defend where, under the facts alleged, reasonably inferable,
or otherwise known, the complaint could fairly be amended
to state a covered liability.” Id.
18            L.A. LAKERS V. FEDERAL INS. CO.

    While this duty is broad, it is not limitless, and California
courts have warned against “misconstru[ing] the principle of
‘potential liability’ under an insurance policy.” Gunderson
v. Fire Ins. Exch., 44 Cal. Rptr. 2d 272, 277 (Cal. Ct. App.
1995). More specifically, “[a]n insured may not trigger the
duty to defend by speculating about extraneous ‘facts’
regarding potential liability or ways in which the third party
claimant might amend its complaint at some future date.” Id.
Thus, an insured may not “manufacture coverage” by
guessing what other unknown facts or unsupported claims a
claimant could possibly assert. Id. at 277–78.

    The Lakers assert that the Policy potentially entitled them
to indemnity, because Emanuel asserted that he suffered
multiple harms, not just an invasion of privacy. In addition,
the Lakers argue that, because Emanuel only sought
“recovery of economic injury” and explicitly swore off “any
recovery for personal injury” in his complaint, he did not
actually seek relief for invasion of his privacy, which is
generally a form of “personal injury.”

    These statements from Emanuel’s complaint regarding
economic injury and personal injury cannot overcome the
reality that Emanuel asserted two claims for relief, both under
the TCPA. As explained above, a TCPA claim is an invasion
of privacy claim, regardless of the type of relief sought.
Moreover, we will not allow Emanuel to redefine the TCPA
by disclaiming any recovery for personal injury. Therefore,
Federal would only have had a duty to defend if the facts
alleged or known could support a claim other than a TCPA
claim. The facts Emanuel asserted are straightforward. He
received an unwanted text message from the Lakers and he
thought it was sent using an automatic telephone dialing
system. The Lakers have not identified what other claim this
             L.A. LAKERS V. FEDERAL INS. CO.                19

set of facts could support. The Lakers have also failed to
identify any other relevant facts that were known at the time
the Emanuel complaint was filed.

    Finally, in the motion to dismiss the Emanuel complaint,
the Lakers argued that the text message at issue was not the
type of “privacy violation or . . . abusive telemarketing
practice that Congress aimed to curb by enacting the TCPA,”
and that the “[p]olicy at the heart of the TCPA therefore . . .
warrants dismissal of [Emanuel’s] TCPA claims with
prejudice.” Defendant’s Memorandum in Support of Its
Motion to Dismiss Plaintiff’s First Amended Complaint or in
the Alternative, Motion for Summary Judgment at 10, 13,
Emanuel v. L.A. Lakers, Inc., No. 2:12-cv-9936-GW-SH
(C.D. Cal. Feb. 25, 2013), ECF No. 17-1. Thus, even the
Lakers acknowledged that “[b]y enacting the TCPA,
Congress intended to ‘protect the privacy interests of . . .
telephone subscribers by placing restrictions on unsolicited,
automated telephone calls . . . .’” Id. at 3 (emphasis added in
brief) (quoting Satterfield, 569 F.3d at 954). The Lakers also
acknowledged that “[c]ourts have consistently held the TCPA
protects a species of privacy interest in the sense of
seclusion.” Defendant’s Reply in Support of Its Motion to
Dismiss Plaintiff’s First Amended Complaint or in the
Alternative, motion for Summary Judgment, No. 2:12-cv-
9936-GW-SH (C.D. Cal. Apr. 4, 2013) ECF No. 19 (quoting
Park Univ. Enters., Inc. v. Am. Cas. Co. of Reading, PA,
442 F.3d 1239, 1249 (10th Cir. 2006)). Our decision should
not now allow the Lakers to “manufacture coverage” by
changing their argument to suggest that the Emanuel
complaint could have been amended to divorce itself
completely from the “policy at the heart of the TCPA”:
protecting individuals from abusive privacy invasions.
20           L.A. LAKERS V. FEDERAL INS. CO.

    For all of these reasons, we must conclude that there was
no potential that Emanuel could amend his complaint to
assert a claim for relief that would be supported by any of the
facts alleged or otherwise known. Federal, therefore, did not
have a duty to defend the Lakers against the Emanuel
complaint.

                      CONCLUSION

    Because a TCPA claim is inherently an invasion of
privacy claim, Federal correctly concluded that Emanuel’s
TCPA claims fell under the Policy’s broad exclusionary
clause. Accordingly, Federal did not breach the Policy, or the
implied covenant of good faith and fair dealing, under any
cognizable legal theory, when it declined to defend against or
cover the Emanuel complaint. As there was no cognizable
legal theory under which the Lakers could establish that
Federal breached the Policy, and there were no known facts
to support any other claim for relief, the district court
properly dismissed the Lakers’ complaint.

     AFFIRMED.

MURPHY, III, District Judge, concurring:

    I concur with the Court’s order affirming the decision
below. I write separately because the Court can-and
should-decide the question of whether Emanuel’s claim arose
from an invasion of privacy on narrower grounds. Emanuel
alleged several times in his complaint that the message he
received was an invasion of his privacy. Those allegations are
sufficient to determine that Emanuel’s claim arose from an
             L.A. LAKERS V. FEDERAL INS. CO.                 21

invasion of privacy. The Court need not hold more broadly
that a TCPA claim is inherently an invasion of privacy claim.

TALLMAN, Circuit Judge, dissenting:

    I thought we were interpreting a statute based on the
elements of the cause of action it creates. But Judge Smith,
writing for a divided court, insists that we must determine
whether Congress enacted the Telephone Consumer
Protection Act (the “TCPA”) only to prevent invasions of
privacy, or whether it also meant to address other concerns.
Maj. Op. at 10. I respectfully disagree. When Congress
defines a cause of action based on specific and unambiguous
statutory elements, what matters is what the statute says—not
what motivated enactment of the statute.

    Because nothing within the words Congress chose
suggests that a TCPA plaintiff must prove invasion of
privacy, a TCPA claim is not automatically a privacy claim.
And because Emanuel expressly disavowed his privacy
claims and instead sought recovery under the TCPA, his
claims were not common law privacy claims. They were
statutory TCPA claims.

    I conclude that Emanuel’s claims did not fall under the
privacy exclusion of the insurance policy, that Federal
Insurance Co. (“Federal”) had a duty to defend the Los
Angeles Lakers, Inc. (the “Lakers”), and that the district court
erred when it dismissed the Lakers’ claims.
22           L.A. LAKERS V. FEDERAL INS. CO.

                               I

    Judge Smith asserts that Congress enacted the TCPA “to
protect privacy rights and privacy rights alone,” and
concludes that a TCPA claim is thus automatically a privacy
claim. Maj. Op. at 13–14. In doing so, he refuses to define
a TCPA claim by its unambiguous statutory elements, and
instead redefines and limits a TCPA claim based on the Act’s
underlying purpose. This is error.

                              A

    As explained repeatedly by the Supreme Court, “it is
ultimately the provisions of our laws rather than the principal
concerns of our legislators by which we are governed.”
Cooper Indus. v. Aviall Servs., 543 U.S. 157, 167–68 (2004)
(alteration omitted) (quoting Oncale v. Sundowner Offshore
Servs., 523 U.S. 75, 79 (1998)). When a statute is
unambiguous, it is “unnecessary for [us] to look to [its]
purpose to aid interpretation.” McDonald v. Sun Oil Co.,
548 F.3d 774, 781 n.5 (9th Cir. 2008) (citing Cooper Indus.,
543 U.S. at 157), abrogated on other grounds by CTS Corp.
v. Waldburger, 134 S. Ct. 2175 (2014). For this reason, we
need not examine the underlying purpose of the TCPA unless
we first make a threshold determination that the statute is
ambiguous. See BedRoc Ltd. v. United States, 541 U.S. 176,
183 (2004) (“[O]ur inquiry begins with the statutory text, and
ends there as well if the text is unambiguous.”).

   This case involves two provisions of the TCPA. First,
47 U.S.C. § 227(b)(1), in relevant part, makes it unlawful:

       [F]or any person within the United States . . .
       to make any call . . . using any automatic
               L.A. LAKERS V. FEDERAL INS. CO.                       23

         telephone dialing system [an “ATDS”] or an
         artificial or prerecorded voice . . . to any
         telephone number assigned to a . . . cellular
         telephone service . . . for which the called
         party is charged for the call.

Second, § 227(b)(3) creates a statutory right to recover for the
violation, allowing:

         A person or entity . . . [to] bring . . . an action
         based on a violation of [the TCPA] or the
         regulations prescribed under this subsection to
         . . . recover for actual monetary loss from such
         a violation, or to receive $500 in damages for
         each such violation, whichever is greater.

     There is no ambiguity here. These provisions create a
cause of action and define the damages recoverable from a
statutory violation when a plaintiff can prove: “(1) the
defendant called a cellular telephone number; (2) using an
[ATDS]; (3) without the recipient’s prior express consent.”
Meyer v. Portfolio Recovery Assocs., LLC, 707 F.3d 1036,
1043 (9th Cir. 2012) (citing 47 U.S.C. § 227(b)(1)). Our
interpretation of the TCPA should therefore “begin[] with the
statutory text, and end[] there as well.” BedRoc, 541 U.S. at
183. There is no need to determine whether Congress only
enacted the TCPA to prevent invasions of privacy, or whether
it also enacted the TCPA to address other concerns.1

    1
      We have examined the underlying purpose of the TCPA on other
occasions, but only after first identifying a textual ambiguity. For
example, in Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir.
2009), we considered whether the Federal Communications Commission
(the “FCC”) reasonably interpreted “call” as encompassing “both voice
24              L.A. LAKERS V. FEDERAL INS. CO.

    And yet, without first finding ambiguity, Judge Smith
proceeds to examine the underlying purpose of the TCPA.
He asserts that Congress only enacted the TCPA to prevent
invasions of privacy, and relies on this asserted purpose to
conclude that a plaintiff automatically “pleads an invasion of
privacy claim” by “pleading the elements of a TCPA claim.”
Maj. Op. at 14. In so reasoning, he redefines a TCPA claim.
But that can’t be right. A TCPA claim is already defined by
its unambiguous statutory elements—and none of those
elements say anything about “privacy.”2

    Even if it were true that Congress only enacted the TCPA
to prevent invasions of privacy, see infra Part I.B, “statutory
prohibitions often go beyond the principal evil” that they
were enacted to remedy. Oncale, 523 U.S. at 79. For
example, although the Racketeer Influenced and Corrupt
Organizations Act (“RICO”) was enacted “to seek the
eradication of organized crime in the United States,” Sedima,

calls and text messages.” Id. at 949. Only after making the threshold
determination that the TCPA was ambiguous because it did not define
“call,” id. at 952, did we examine the underlying purpose of the TCPA, id.
at 954.
     2
      The TCPA does use the word “privacy” in other provisions, but only
in the context of further rulemaking by the FCC. See 47 U.S.C.
§ 227(b)(2), (c)(1)–(2), (c)(3)(K); see also Mims v. Arrow Fin. Servs.,
LLC, 565 U.S. 368, 373–74 (2012) (explaining that the TCPA “principally
outlaws four practices” but “also directs the FCC to prescribe regulations
to protect the privacy of residential telephone subscribers”). If anything,
the fact that Congress limited further rulemaking to practices invasive of
privacy, but chose not to include that limitation in the statutory cause of
action, proves that a TCPA claim is not inherently a privacy claim. Hardt
v. Reliance Standard Life Ins., 560 U.S. 242, 252 (2010) (“The contrast
between these two [provisions] makes clear that Congress knows how to
impose express [privacy] limits . . . .”).
             L.A. LAKERS V. FEDERAL INS. CO.               25

S.P.R.L. v. Imrex Co., 473 U.S. 479, 524 (1985) (Powell, J.,
dissenting) (citation omitted), a RICO claim is not limited by
this underlying purpose. Instead, a RICO claim is defined by
its statutory elements. So long as a RICO plaintiff can prove
“(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity,” id. at 496, he does not need to prove
that the defendant was involved in organized crime, see id. at
525 (Powell, J., dissenting) (noting that a RICO claim may
involve only “garden-variety fraud and breach of contract”).
In the same way, so long as a TCPA plaintiff can prove (1) a
call (2) using an ATDS (3) without prior express consent,
Meyer, 707 F.3d at 1043, he does not need to prove that the
defendant invaded his privacy.

    In sum, Judge Smith errs by redefining a TCPA claim as
a privacy claim and then invoking the contractual exclusion
to deny insurance coverage. We should instead faithfully
adhere to the words of the Act, which defines a TCPA claim
by unambiguous statutory elements saying nothing about
privacy.

                              B

    Moreover, although there is no need to examine the
underlying purpose of the TCPA, it is simply not true that
Congress only enacted the TCPA to prevent invasions of
privacy. The TCPA specifically addresses public safety
concerns, provides redress for economic injury, and protects
businesses from ATDS calls.

   First, regarding public safety, § 227(b)(1)(A)(i)
specifically prohibits the use of an ATDS to call an
emergency telephone line. Congress did not include this
provision to protect law enforcement personnel and health
26           L.A. LAKERS V. FEDERAL INS. CO.

care providers from invasions of privacy. Instead, Congress
included this provision to protect the public, recognizing that
the use of an ATDS poses “a risk to public safety” if “an
emergency or medical assistance telephone line is seized.”
H.R. Rep. No. 102-317, at 2 (1991). Imagine calling 911 for
help and getting a busy signal.

    Second, the TCPA provides redress for economic injury.
Section 227(b)(3) allows a plaintiff to recover “actual
monetary loss” when that loss is higher than the fixed
statutory award of $500 per negligent violation and $1,500
per intentional violation. If Congress only enacted the TCPA
to protect against invasions of privacy, the fixed statutory
award would be sufficient. See Universal Underwriters Ins.
v. Lou Fusz Auto. Network, Inc., 401 F.3d 876, 881 (8th Cir.
2005) (explaining that the statutory award accounts for “hard-
to-quantify” damages). But because the TCPA specifically
allows recovery for “actual monetary loss,” it is clear that
Congress was also concerned about the economic injury
caused by ATDS calls. See Soppet v. Enhanced Recovery
Co., 679 F.3d 637, 638 (7th Cir. 2012) (recognizing that “an
automated call to a cell phone adds expense to annoyance”);
see also In re Rules & Regulations Implementing the Tel.
Consumer Prot. Act of 1991, Report and Order, 18 FCC Rcd.
14014, 14115 (July 3, 2003) (noting that ATDS calls “can be
costly”).

    Judge Smith asserts that “actual monetary loss” is only
available because the plaintiff suffered an invasion of
privacy. Maj. Op. at 15–16. Not so. The TCPA creates a
legal right and elevates a “previously inadequate” injury—the
receipt of an ATDS call without prior express consent—to a
“legally cognizable injur[y].” Lujan v. Defs. of Wildlife,
504 U.S. 555, 578 (1992). Significantly, a plaintiff may be
                L.A. LAKERS V. FEDERAL INS. CO.                       27

able to prove violation of the TCPA—that he received an
ATDS call without prior express consent—even if he is
unable to prove invasion of privacy by showing that he had “a
reasonable expectation of privacy” and the alleged conduct
was “highly offensive to a reasonable person.” Taus v.
Loftus, 151 P.3d 1185, 1212 (Cal. 2007) (citation omitted).3
The TCPA provides redress for economic injury regardless of
whether a plaintiff suffered an invasion of privacy because
Congress chose not to include a privacy element.

    Third and finally, Congress enacted the TCPA to protect
businesses from ATDS calls. The TCPA specifically allows
any “person or entity” that receives a call, text, or fax in
violation of the TCPA to bring a claim for damages or
injunctive relief. 47 U.S.C. § 227(b)(3) (emphasis added).
Congress used this language because it recognized that
businesses may be harmed by ATDS calls. And because
“[m]ost states hold that business entities lack privacy
interests,” Am. States Ins. v. Capital Assocs. of Jackson Cty.,
Inc., 392 F.3d 939, 942 (7th Cir. 2004) (citation omitted),4 it
is not surprising that Congress cited harms unrelated to
invasion of privacy. For example, Congress recognized that
ATDS calls tie “up all the lines of a business and prevent[]

    3
      For example, in Drew v. Lexington Consumer Advocacy, LLC, No.
16-cv-00200-LB, 2016 WL 1559717 (N.D. Cal. Apr. 18, 2016), the court
concluded that a plaintiff “adequately plead[ed]” a TCPA violation, id. at
*5, but did not adequately plead “the harassment that constitutes an
invasion of privacy,” id. at *8.
    4
      California is one of these states. See Fibreboard Corp. v. Hartford
Accident & Indem. Co., 20 Cal. Rptr. 2d 376, 391 (Ct. App. 1993).
28             L.A. LAKERS V. FEDERAL INS. CO.

any outgoing calls” and generally pose “an impediment to
interstate commerce.” S. Rep. No. 102-178, at 2 (1991).5

    Although we do not need to examine the underlying
purpose of the TCPA, these examples demonstrate beyond
cavil that Congress did not enact the TCPA only to prevent
invasions of privacy. Not all TCPA claims are privacy
claims.

                                   II

    The proper inquiry here is not whether a TCPA claim is
automatically based on invasion of privacy, but whether the
underlying claims in this particular case are based on invasion
of privacy. Because I conclude that Emanuel’s claims are not
privacy claims, I would reinstate the Lakers’ claims for
breach of the insurance contract and for bad faith.

                                  A

    The Lakers argue that Federal had a duty to defend
against the Emanuel action because the policy imposed a duty
to defend against claims alleging “wrongful acts.” We
interpret the “wrongful acts” coverage clause “broadly so as
to afford the greatest possible protection” to the Lakers.
MacKinnon v. Truck Ins. Exch., 73 P.3d 1205, 1213 (Cal.

     5
      Other courts have allowed corporations to bring claims under the
TCPA, which would be impermissible if all TCPA claims were limited to
invasion of privacy. See, e.g., Imhoff Inv., L.L.C. v. Alfoccino, Inc.,
792 F.3d 627, 631 (6th Cir. 2015) (allowing a corporation to bring suit
alleging violation of the TCPA’s “junk fax” provision); Eclipse Mfg. Co.
v. M & M Rental Ctr., Inc., 521 F. Supp. 2d 739, 743–44 (N.D. Ill. 2007)
(“[C]orporations bringing claims under the TCPA may only assert the
property interests [that] the TCPA was designed to protect.”).
                L.A. LAKERS V. FEDERAL INS. CO.                        29

2003) (citation omitted). The Lakers argue that Emanuel
alleged they committed a wrongful act by sending a text
message in violation of the TCPA.

    Federal, on the other hand, argues that it had no duty to
defend the Lakers because the policy excluded claims “based
upon, arising from, or in consequence of . . . invasion of
privacy.” We interpret this exclusionary clause narrowly
against Federal, see id., but we give it due effect when a
claim is in fact based on invasion of privacy.6 Federal
primarily argues that Emanuel’s claims are based on invasion
of privacy because all TCPA claims are based on invasion of
privacy. Although Judge Smith would decide the case on this
ground, I do not accept this theory. See supra Part I. Federal
also argues that Emanuel’s claims are based on invasion of
privacy because Emanuel alleged that the Lakers invaded his
privacy. Although Judge Murphy would decide the case on
this alternative ground, I do not accept that theory either.

    It is true that Emanuel twice alleged that the Lakers
invaded his privacy,7 see Maj. Op. at 16 n.6, but he did not
seek recovery on this basis. Instead, he sought recovery for

    6
        This distinction between a coverage clause and an exclusionary
clause distinguishes our case from other cases comparing a TCPA claim
to a claim based on invasion of privacy. For example, in Universal
Underwriters, the policy provided coverage for claims based on invasion
of privacy. 401 F.3d at 882. The court read this coverage clause broadly
and concluded that “unsolicited fax advertisements” qualified as
“‘invasions of privacy’ under ordinary, lay meanings of these phrases.”
Id. at 881. Here, by contrast, the policy excludes claims based on invasion
of privacy. The privacy clause should therefore be read narrowly against
Federal.
     7
       The complaint also discussed invasion of privacy when it discussed
the underlying purpose of the TCPA.
30           L.A. LAKERS V. FEDERAL INS. CO.

an alleged violation of the TCPA, and expressly disavowed
his privacy claims. I therefore conclude that Federal had a
duty to defend the Lakers against the Emanuel action, and the
district court erred by dismissing the Lakers’ claim for breach
of contract.

     First, Emanuel did not seek recovery based on invasion of
privacy. Cf. ACS Sys., Inc. v. St. Paul Fire & Marine Ins.,
53 Cal. Rptr. 3d 786, 794–95 (Ct. App. 2007) (dismissing a
complaint that included both a TCPA claim and a common
law privacy claim). Although Emanuel alleged that the
Lakers invaded his privacy, he did not seek recovery on the
theory that the Lakers portrayed him in a false light in the
public eye, disclosed “true, embarrassing private facts” about
him, or appropriated his “name or likeness for commercial
purposes.” Johnson v. Harcourt, Brace, Jovanovich, Inc.,
118 Cal. Rptr. 370, 375 (Ct. App. 1974) (describing types of
privacy claims). Nor did he seek recovery on the theory that
he had “a reasonable expectation of privacy” in his cellular
telephone number and the Lakers’ confirmation text was
“highly offensive to a reasonable person.” Taus, 151 P.3d at
1212; cf. Maj. Op. at 19 (equating a TCPA claim with a claim
for invasion of privacy by intrusion upon seclusion). Instead,
Emanuel drafted an 11-page complaint that alleged facts
mirroring the statutory elements of a TCPA claim and sought
recovery for violation of the Act.

    Second, Emanuel expressly disavowed all claims based
on invasion of privacy. His complaint specifically sought
“only damages and injunctive relief for recovery of economic
injury,” including certain cellular telephone charges and
reduced cellular time. First Am. Compl. ¶ 32, Emanuel v.
L.A. Lakers, Inc., No. 2:12-cv-9936 GW (SHx) (C.D. Cal.
Feb. 8, 2013), ECF No. 15. His complaint also stated that it
             L.A. LAKERS V. FEDERAL INS. CO.                31

was “expressly . . . not intended to request any recovery for
personal injury and claims related thereto.” Id. The parties
agree that a claim for invasion of privacy is a personal injury
claim. See Hon. H. Walter Croskey et al., California Practice
Guide: Insurance Litigation § 7:128 (The Rutter Group 2015)
(explaining that personal injury includes “certain enumerated
‘offenses,’ including . . . invasion of privacy”). Thus, the
complaint expressly disavowed claims based on common law
invasion of privacy.

    Because Emanuel only sought recovery based on an
alleged violation of the TCPA, see Lujan, 504 U.S. at 578,
and expressly disavowed claims based on invasion of privacy,
Federal had a duty to defend the Lakers against the Emanuel
action.

                              B

    After the district court dismissed the Lakers’ claim for
breach of contract, it also dismissed the Lakers’ claim for
breach of the implied covenant of good faith and fair dealing.
See Manzarek v. St. Paul Fire & Marine Ins., 519 F.3d 1025,
1034 (9th Cir. 2008) (“[W]ithout a breach of the insurance
contract, there can be no breach of the implied covenant of
good faith and fair dealing.” (quoting Waller v. Truck Ins.
Exch., Inc., 900 P.2d 619, 638–39 (Cal. 1995))). Because I
conclude that Federal had a duty to defend the Lakers, I next
consider whether the district court erred by dismissing the
Lakers’ claim for bad faith.

    To establish a claim for bad faith “a plaintiff must show:
(1) benefits due under the policy were withheld; and (2) the
reason for withholding benefits was unreasonable or without
proper cause.” Guebara v. Allstate Ins., 237 F.3d 987, 992
32              L.A. LAKERS V. FEDERAL INS. CO.

(9th Cir. 2001) (citing Love v. Fire Ins. Exch., 271 Cal. Rptr.
246, 255 (Ct. App. 1990)).

    The Lakers properly allege that Federal withheld benefits
due under the policy. See supra Part II.A. The Lakers also
allege that Federal withheld benefits without proper cause.
Specifically, the Lakers allege that Federal refused to defend
simply because Emanuel used the term “invasion of privacy”
in his complaint.

    It would be unreasonable for Federal to deny coverage
based on a passing reference to the term “invasion of
privacy.” An insurer may not rely on “the labels given to the
causes of action” in a complaint, and must instead determine
whether “the alleged facts or known extrinsic facts . . . reveal
a possibility that the claim may be covered by the policy.”
Atl. Mut. Ins. v. J. Lamb, Inc., 123 Cal. Rptr. 2d 256, 268 (Ct.
App. 2002) (emphasis omitted). Therefore, because we must
accept as true the Lakers’ allegation that Federal denied
coverage based on a passing reference to the term “invasion
of privacy,” see Clegg v. Cult Awareness Network, 18 F.3d
752, 754 (9th Cir. 1994), I would also reinstate the Lakers’
claim for bad faith.8

     8
       However, if Federal demonstrates that it actually denied coverage
because it concluded that all TCPA claims are privacy claims, the district
court would likely be required to grant summary judgment on the Lakers’
bad faith claim. See Feldman v. Allstate Ins., 322 F.3d 660, 669 (9th Cir.
2003) (“Because the key to a bad faith claim is whether denial of a claim
was reasonable, a bad faith claim should be dismissed on summary
judgment if the defendant demonstrates that there was a ‘genuine dispute
as to coverage.’” (quoting Guebara, 237 F.3d at 992)). Given the fact that
reasonable judicial minds are in disagreement as to the nature of a TCPA
claim, Federal may well have had a valid, good faith basis for denial of
coverage.
            L.A. LAKERS V. FEDERAL INS. CO.              33

                             III

    When a cause of action is defined by specific and
unambiguous statutory elements, there is no need to redefine
or restrict that cause of action based on the underlying
purpose that motivated its enactment. In its decision today,
the court errs by rejecting the statutory elements chosen by
Congress and redefining a TCPA claim as a narrowly
restricted privacy claim. Because Emanuel sought recovery
based on an alleged violation of the TCPA, and did not seek
recovery based on invasion of privacy, I would reverse the
district court’s order dismissing the Lakers’ claims.

   I respectfully dissent.