Essentials: Telephone Consumer Protection Act and Violations of Seclusion

The Telephone Consumer Protection Act (TCPA), 472 U.S.C.A. § 227 (2000), restricts the use of automated telephone equipment as a means of advertising. The TCPA prohibits the “use [of] any telephone, facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine.”

The TCPA prohibits what has come to be known as “fax blasting.” Fax blasting is the mass sending of unsolicited advertisements via a fax machine. Are these type of claims covered as an advertising injury under a general liability policy?

TCPA claims are typically not included as an enumerated offense in the policy unless the parties agree to include the claim as an offense. Yet some jurisdictions have held that fax blasting is covered as an advertising injury because TCPA claims constitute an invasion of privacy. These courts focus on one variation of an invasion of privacy that involves the intrusion upon a person’s seclusion or solitude or into a person’s private affairs. Courts have found that privacy means both secrecy and seclusion, and therefore, a violation of the TCPA constitutes an invasion of privacy. See, e.g., Park University Enterprises Inc. v. American Casualty Co. of Reading, PA, (10th Cir. 2006).

Where courts conclude that a violation of the TCPA constitutes an advertising injury, courts have had to address whether faxing ads constitutes an “oral or written publication.” See, generally, Valley Forge Ins. Co. v. Swiderski Electronics Inc., (2006). “Publication” is generally considered to mean publishing offending material to the public at large, and not to a narrow or limited subset of society. Hameid v. National Fire Ins. of Hartford (2003). Courts that have found coverage for TCPA claims have concluded that the scope of publication required for an advertising injury is not limited to offending material sent to a third party. See, Western Rim Inv. Advisors, Inc. v. Gulf Ins. Co. (5th Cir. 2004). These courts conclude that a violation of the right of privacy under the policy is triggered because unsolicited advertising is an “offensive intrusion into the recipient’s solitude.” TIG Ins. Co. v. Dallas Basketball Ltd. (Tex. Ct. App.–Dallas 2004).

Jurisdictions that have held that fax blasting is not covered as an advertising injury focus either on the specific policy language or what constitutes an invasion of privacy. The definition varies depending on the policy form used by the insurance company. Where the policy form defines advertising injury as “making known to any person or organization covered material that violates a person’s right to privacy,” the courts have found that the phrase “making known” implies a disclosure to a third-party or the divulging of a secret. See, e.g., ACS Systems, Inc. v. St. Paul Fire and Marine Ins. Co. (2nd Dist. 2007); Resource Bankshares v. St. Paul Mercury Ins. Co. (4th Cir. 2005).

Faced with this language, courts have found that TCPA claims do not constitute an offense within the scope of “advertising injury” coverage because a TCPA violation does not typically involve violations of secrecy rights. A disclosure to a third-party due to a fax receipt does not typically occur in a fax blast situation. The recipient of the fax receives the ad, not a third-party. Additionally, the fax blast typically does not include private information about the recipient, and therefore there has been no secrets divulged in the process. The information that is faxed typically involves the advertiser’s goods/services.

Where a court focuses upon the definition of privacy, those courts often conclude that a TCPA violation does not constitute an advertising injury due to a narrow construction of the definition of invasion of privacy. These courts generally acknowledge that the “right of privacy” encompasses the right to secrecy and seclusion. However, the courts conclude that when the phrase “right of privacy” is read with the “making known” language and the other enumerated offenses contained within the advertising injury clause, that the policy only covers offenses where the content of material violated secrecy rights. See, State Farm Fire & Casualty Co. v. Compupa, Inc., (Fla. Dist. Ct. App., 3rd Dist., 1995).

Other jurisdictions have concluded that a TCPA violation does not constitute advertising injury when viewed in the context of the other enumerated offenses contained in the definition of advertising injury like slander and libel. These courts concluded that the disparaging of those offenses involve a secrecy interest and not a seclusion interest. See, e.g., St. Paul Fire & Marine Ins. Co. v. Brother Int’l Corp., (D. N.J. Aug. 31, 2007), judgment aff’d 319 Fed.Appx. 121 (3rd Cir. 2009). These courts reasoned that a violation of the TCPA does not constitute advertising injury because a TCPA claim involves a seclusion interest and not a secrecy interest.