N.D. IL / BIPA Duty to Defend

Exclusions Not Applicable to Bar Personal and Advertising Coverage 

The United States District Court for the Northern District of Illinois, in an opinion by Judge Alonso, applying Illinois law, denied an insurer’s motion for judgment on the pleadings, holding that Continental Western Insurance Company (“Continental”) had a duty to defend its insured, Tony’s Finer Foods Enterprises (“Tony’s”), in an underlying lawsuit that alleged Tony’s violated the Illinois Biometric Information Privacy Act (“BIPA”) by requiring employees to scan their fingerprints to track their time and unlawfully collecting and disclosing their fingerprint data. 

The District Court began by considering whether the underlying lawsuit alleged “personal and advertising injury” as provided by the multiperil commercial lines insurance policy at issue. Relying on the Illinois Supreme Court’s analysis of materially similar policy language in West Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., the District Court found that the underlying lawsuit similarly alleged the improper disclosure of employee’s fingerprint data to at least one third-party in violation of BIPA and it alleged that the plaintiff suffered an injury, including mental anguish. Accordingly, the District Court held that the underlying lawsuit falls within or potentially within the scope of the Continental policy.  

Continental argued that three exclusions precluded coverage: (i) the recording and distribution of material or information in violation of law exclusion; (ii) the access or disclosure of confidential or personal information exclusion; and (iii) the employment-related practices exclusion. The District Court concluded that none of the exclusions unambiguously preclude coverage. The first exclusion did not apply based on the Seventh Circuit’s June 15, 2023, reasoning from the controlling Wynndalco Enterprises case. A broad construction made the second exclusion ambiguous, which the District Court could not resolve with the applications of ejusdem generis and noscitur a sociis because the listed examples had no readily identifiable common theme. Finally, the policy of fingerprint scanning to track employees’ time and failing to obtain their informed consent was not targeted at specific employees and did not relate to any particular employee’s performance, and therefore did not fall within the employment-related practices exclusion. Continental Western Ins. Co. v. Tony’s Finder Foods Enterprises, Inc., No. 22-cv-3575, 2023 WL 4351469 (N. D. Ill. July 5, 2023).