"This case began with the improper use of what now seems an old-fashioned method of communication: fax machines." Auto-Owners Ins. Co. v. Stevens & Ricci Inc., ___ F.3d ___, No. 15–2080, 2016 WL 4547641, at *1 (3d Cir. September 1, 2016). It developed into a class action settlement that was not covered, unfortunately for the policyholder.
The policyholder, Stevens & Ricci, received a solicitation from a faxer. The fax solicitation was fake, or at least people who sued over it argued that this was not true, for the fax advertising solicitor represented that blast faxes under its program complied with the Federal Telephone Consumer Protection Act. The policyholder bought the advertising program and 18,879 unsolicited faxes were sent to advertise the policyholder's goods and services in a one-month period.
Many recipients of the unsolicited faxes were unhappy with this. They banded together and filed a class action against the policyholder. The faxees sued under the TCPA. Basically, the Act makes unsolicited faxes an actionable offense.
Unfortunately for the policyholder, it did not make the act of sending unwanted faxes either a covered occurrence or a covered offense. The policyholder settled in essence for Two Million Dollars ($2,000,000.00).
The policyholder's liability carrier sued for declaratory relief of no coverage. The District Court entered summary judgment for the liability carrier that there was simply no coverage under the policyholder's Businessowners Liability Policy. There was no covered "property damage" because there was no covered "occurrence" and there was no covered "advertising injury" because there was no covered "offense," the District Court held. The Third Circuit Court of Appeals affirmed.
What seemed like a good business idea at the time turned out to be not so good in reality. On the other hand, a little doubt is a good thing when it leads to checking your policy before pursuing what seems like a good idea.
Unsolicited postscript: On the face of the TCPA provisions quoted in the Third Circuit's opinion, and without researching the questions involved including coverage questions, it is at least arguable that the TCPA prohibits unsolicited advertising Emails as well as unsolicited faxes. To say again, a little doubt is a good thing when it leads to checking insurance policies before pursuing what seems like a good idea at the time.
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