N.D. Ill. / Notice

Factual Issues Related to Ten Month Delay in Providing Notice Preclude Summary Judgment in BIPA Coverage Case 

The District Court for the Northern District of Illinois, in an opinion by Judge Alonso applying Illinois law, considered whether Citizens Insurance Company of America (“Citizens”) had a duty to defend Mullins Food Products, Inc. (“Mullins”) in an underlying lawsuit alleging violations of the Illinois Biometric Information Privacy Act (“BIPA”). Citizens issued three consecutive general liability insurance policies to Mullins from March 24, 2015, through March 24, 2017 (“Citizens Policies”) and argued that three policy exclusions precluded coverage.  

First, the District Court held that the underlying lawsuit fell or potentially fell within the scope of the “personal and advertising injury” coverage in the Citizens Policies. 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 improper dissemination of employee’s fingerprint data to at least one third-party in violation of BIPA, and it alleged that the plaintiffs suffered an injury based on the disclosure.  

Next, the District Court considered whether three policy exclusions precluded coverage. The Court determined that the recording and distribution of material or information in violation of law exclusion did not apply based on the Seventh Circuit’s binding Wynndalco Enterprises decision. The District Court considered the access or disclosure of confidential or personal information exclusion and concluded that the exclusion was ambiguous. The textual canons of ejusdem generis and noscitur a sociis did not resolve the ambiguity because the District Court did not find a readily identifiable common theme in the exclusion’s listed examples. Finally, the employment-related practices exclusion did not apply because the alleged BIPA violations were not “directed at” individual employees and did not relate to any particular employee’s performance. 

The District Court ultimately denied summary judgment because there were issues of material fact that remained as to whether Mullins failed to comply with the notice provision of the Citizens Policies that required Mullins to provide Citizens with notice of a suit “as soon as practicable.” Mullins became aware of the underlying lawsuit by at least March 5, 2021. Due to a series of events, Citizens was not notified of the underlying lawsuit until January 26, 2022. The parties disagreed as to whether the delay was reasonable. The District Court determined that questions of fact as to Mullins’ diligence precluded a finding that its delay in giving notice was unreasonable as a matter of law. Citizens Ins. Co. of Am. v. Mullins Food Prods., Inc., No. 22-cv-1334, 2023 WL 4865006 (N.D. Ill. July 31, 2023).