Cynosure, Inc. v. St. Paul Fire and Marine Insurance Company

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Before Lipez, Circuit Judge, Souter, Associate Justice, *fn1 and Selya, Circuit Judge.

This is a declaratory judgment action to determine coverage under a commercial policy insuring against liability for injury caused by advertising. The plaintiff Cynosure, Inc., is the defendant in an underlying civil action charging it with responsibility for sending commercial fax messages “without consent from the recipients” in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(1)(C). Cynosure’s insurers and the defendants here are St. Paul Fire and Marine Insurance Company and St. Paul Guardian Insurance Company, which we will speak of singularly as “St. Paul.” It denied that the relevant policies’ coverage for “making known to any person or organization covered material that violates a person’s right of privacy” extends to liability under the Act. It explained that the policy language applied “where an insured makes known to others covered material that violates some other person’s right of privacy,” but not in the circumstances of the underlying action alleging that the recipient of a fax had thereby suffered injury to privacy of his own.

This ensuing request for declaratory judgment joins a line of cases addressing whether policies insuring against liability for violating privacy by advertising activity mean privacy understood as repose undisturbed by commercial intrusion (and thus liability for violating the Act), or privacy as freedom from disclosure to a third-party recipient of information that the subject of the disclosure claims an interest in not having divulged. Compare Summit Loans, Inc. v. Pecola, 265 Md. 43, 288 A.2d 114 (1972) (hundreds of harassing phone calls violate the recipient’s right to privacy), with Alberts v. Devine, 395 Mass. 59, 479 N.E.2d 113 (1985) (physician’s disclosure of medical information gained through the professional relationship violates the patient’s right to privacy). We hold that on a fair reading of these policies, they refer to disclosure, not intrusion, so that liability for violating the Act is not covered.*fn2

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