Exclusion For Certain Communications Narrowly Construed Not To Apply To Alleged Improper Publishing of DNA Test Results

The Unites States District Court for the Southern District of Texas, applying Texas law, has held that an exclusion barring coverage for certain communications, including violations of the Telephone Consumer Protection Act and “any other statute . . . prohibit[ing] or limit[ing] the . . . communication or distribution of information or other material” does not apply to bar coverage for alleged improper publishing of DNA test results in violation of Alaska’s Genetic Privacy Act. Evanston Ins. Co. v. Gene by Gene, Ltd., 2016 WL 102294 (S.D. Tex. Jan. 6, 2016).

The insured, the owner and operator of genealogy website, was sued for allegedly improperly publishing DNA test results on its website without the claimant’s consent in violation of Alaska’s Genetic Privacy Act, which prohibits the disclosure of a person’s DNA analysis without written and informed consent. The insured sought coverage under the Personal Injury and Advertising Injury Liability coverage part of its professional liability policies. The insurer denied coverage pursuant to an Electronic Data and Distribution of Material in Violation of Statutes Exclusion. Sections A through C of the exclusion preclude coverage for claims based upon or arising out of any violation of the TCPA (Section A), the CAN–SPAM Act of 2003 (Section B) or “any other statute, law, rule, ordinance, or regulation that prohibits or limits the sending, transmitting, communication or distribution of information or other material” (Section C).

In the ensuing coverage litigation, the court granted the insured’s motion for summary judgment, finding that coverage was triggered under the policy and that the exclusion at issue did not apply. The court found that that the allegations contained in the complaint fell within the Personal Injury and Advertising Injury Liability coverage part because the allegations met the definition of personal injury, defined as “oral or written publication of material that violates a person’s right of privacy.”

The court then found that the Electronic Data and Distribution of Material in Violation of Statutes Exclusion did not apply to preclude coverage. The court held that “[i]t is reasonable to construe [the exclusion’s] language as meaning any similar or related statutes or laws that govern communication over the phone or fax machine (Section A) or email (Section B), while Section C covers other, similarly unsolicited forms of communication that may be regulated by statute, law, rule, ordinance, or regulation.” The court reasoned that because Clauses A and B of the exclusion preclude coverage for claims arising out of violations of two specific consumer protection statutes that regulate the use of unsolicited communication to consumers, Clause C should likewise be construed to refer to unsolicited forms of communication to consumers that may be regulated by statute, law, rule, ordinance, or regulation. Because the Genetic Privacy Act does not involve unsolicited communication to consumers, but rather regulates the disclosure of a person’s DNA analysis, and the allegations in the complaint solely concerned the improper disclosure of DNA test results on a public website and to third-parties, the court held that the underlying complaint did not fall within the exclusion and that the insurer had a duty to defend and indemnify the insured.