Cont'l W. Ins. Co. v. Tony's Finer Foods Enters.

1

CONTINENTAL WESTERN INSURANCE COMPANY, Plaintiff, v. TONY'S FINER FOODS ENTERPRISES, INC., TONY'S FINER FOODS NO. 6, INC., TONY'S FINER FOODS NO. 9, INC. d/b/a TONY'S FRESH MARKET, and CHARLENE FIGUEROA, Defendants.

No. 22-cv-3575

United States District Court, N.D. Illinois, Eastern Division

July 5, 2023

MEMORANDUM OPINION AND ORDER

JORGE ALONSO, UNITED STATES DISTRICT JUDGE

Plaintiff Continental Western Insurance Company (“Continental”) brings a six-count complaint for declaratory judgment against Defendants Tony's Finer Foods Enterprises, Inc., Tony's Finer Foods No 6,^[1]Inc., Tony's Finer Foods No. 9, Inc. d/b/a Tony's Fresh Market (together “Tony's”), and Charlene Figueroa (“Figueroa”) seeking a declaration that Continental, which issued an insurance policy to Tony's has no duty to defend or indemnify Tony's in the underlying lawsuit filed by Figueroa, individually and on behalf of all others similarly situated, under the Illinois Biometric Information Privacy Act, 740 ILCS 14/1, et seq. (“BIPA”). The parties have filed cross motions for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). For the reasons set forth below, the Court denies Continental's motion and grants Tony's cross-motion.

I. Background

On December 19, 2018, Defendant Figueroa filed a putative class action complaint (“Figueroa Complaint”) against Tony's in the Circuit Court of Cook County, Illinois, Case No. 2018 CH 15728 (“Figueroa Lawsuit”). (Compl. ¶ 8, ECF No. 1; Figueroa Compl., ECF No. 11.) The Figueroa Complaint alleges that Figueroa was an hourly employee of Tony's between March 8, 2017 and September 17, 2018, and that as a condition of employment, she was required to scan her fingerprints as a method to track her time each time she clocked in and out. (Figueroa Compl. ¶¶ 56-60, ECF No. 1-1.) Tony's allegedly stored Figueroa's fingerprint data in their Kronos employee database, even though she was never informed of the specific limited purposes or length of time for which Tony's collected, stored, used, and/or disseminated her biometric data; informed of any biometric data retention policy developed by Tony's; informed whether Tony's will ever permanently delete her biometric data; or provided with a written release to sign allowing Tony's to collect, store, use or disseminate her biometric data. (Id. ¶¶ 60-63.) Tony's allegedly improperly disclosed their employee's fingerprint data to at least one third-party, Kronos, and possibly others. (Id. ¶ 15.)

The Figueroa Complaint asserts two causes of action against Tony's: one for violation of the BIPA and one for negligence. Illinois' BIPA, among other things, requires companies to obtain informed written consent from employees before acquiring their biometric data, 740 ILCS 14/15(b), prohibits private entities from disclosing a person's biometric information without first obtaining consent for that disclosure, 740 ILCS 14/15(d)(1), and mandates that companies in possession of biometric data establish and maintain and comply with a biometric data retention and deletion policy, 740 ILCS 14/15(a). Figueroa alleges that Tony's violated these requirements, and therefore her and the putative class members' right to privacy, as set forth in BIPA. (Figueroa Compl. ¶ 101, ECF No. 1-1.) She alleges that these violations have raised a material risk that her and the putative class members' biometric information will be unlawfully accessed by third parties. (Id. ¶ 103.) The same set of facts forms the basis for Figueroa's negligence claim. (Id. ¶¶ 105-118.)

Figueroa and others similarly situated allege that they have suffered an injury, including mental anguish, as a result of the BIPA violations. (Id. ¶¶ 19-20, 66, 69-71.) The class that Figueroa seeks to certify is defined as: “All individuals working for Tony's Finer Foods Enterprises, Inc., Tony's Finer Foods No. 6, Inc., and/or Tony's Finer Foods No. 9 Inc., in the State of Illinois who had their fingerprints collected, captured, received, or otherwise obtained or disclosed by any defendant during the applicable statutory period.” (Id. ¶ 76.)

Tony's seeks coverage of the Figueroa Lawsuit under a multi-peril commercial lines insurance policy, policy number CPA 3123453-20, issued to it by Continental for the policy period of March 15, 2016 to March 15, 2017 (“Continental Policy” or “Policy”). (Compl. ¶ 34, ECF No. 1.) The Continental Policy provides, among other things, commercial general liability (“CGL”) coverage subject to a $1,000,000 limit of liability per occurrence and a general aggregate limit of $2,000,000. (Id.)

The Continental Policy sets forth two coverage parts that are at issue in this declaratory judgment action. First, the Coverage A insuring agreement states as follows, in pertinent part:

SECTION I - COVERAGES

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” 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” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any “occurrence” and settle any claim or “suit” that may result....

No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments -Coverages A and B.

b. This insurance applies to “bodily injury” and “property damage” only if:

(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”; [and]

(2) The “bodily injury” or property damage” occurs during the policy period; ....

(Continental Policy ECF p. 135 of 333, ECF No. 1-2.)^[2]

The term “bodily injury” is defined as “bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.” (Id. at ECF p. 147 of 333.)

Second, the Coverage B insuring agreement states as follows, in pertinent part:

COVERAGE B PERSONAL AND ADVERTISING INJURY LIABILITY

1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “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 “personal and advertising injury” to which this insurance does not apply. We may, at our discretion, investigate any offense and settle any claim or “suit” that may result.... No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments -Coverages A and B.

b. This insurance applies to “personal and advertising injury” caused by an offense arising out of your business but only if the offense was committed in the “coverage territory” during the policy period.

(Id. at ECF p. 140 of 333.)

The term “personal and advertising injury” is defined in pertinent part as “injury, including consequential ‘bodily injury', arising out of one or more of the following offenses: . . . d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or 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'.” (Id. at ECF p. 148 of 333.)

Endorsements to the Continental Policy set forth the following exclusion to Coverage B:

This insurance does not apply to: . . .

p. Recording and Distribution Of Material or Information In Violation Of Law

“Personal and advertising injury” arising directly or indirectly out of any action or omission that violates or is alleged to violate:

(1) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law; or

(2) The CAN-SPAM Act of 2003, including any amendment of or addition to such law; or

(3) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transaction Act (FACTA); or

(4) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.

(Id. at ECF p. 157 of 333.) There is a substantially identical exclusion with respect to Coverage A. (Id.)

Next, Coverage B of the Continental Policy does not apply to:

Access Or Disclosure Of Confidential Or Personal Information

“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 expenses, public relations expenses, or any other loss, cost or expense incurred by you or others arising out of any access to or disclosure of any person's or organization's confidential or personal information.

(Id. at ECF p. 165 of 333.) There is a...