Illinois Court Holds That The Right To Be Free From Nuisance Is Not A Claim For “Personal And Advertising Injury”

By Brian Bassett

In NuWave, LLC v. Cincinnati Specialty Underwriters Ins. Co., 2018 U.S. Dist. LEXIS 151218 (Sept. 5, 2018), the U.S. District Court for the Northern District of Illinois held that the “right to be free from nuisance” does not qualify as a claim for “personal and advertising injury” under a CGL policy.

NuWave, LLC (“NuWave”) obtained two successive CGL policies with Cincinnati Specialty Underwriters Insurance Company (“Cincinnati”). Under these policies, Cincinnati agreed to cover “personal and advertising injury,” which was defined to include oral or written publication of material that violates a person’s right to privacy. The policies did not define the “right to privacy.”

The West Virginia Attorney General (“WVAG”) filed suit against NuWave claiming that NuWave engaged in unauthorized telemarketing. NuWave was alleged to have falsely advertised “free” products and then charged exorbitant fees for shipping and handling, employed deceptive sales practices, coerced consumers to remain on the phone for extended periods to purchase additional products, charged unlawful restocking fees, misled consumers about the identity of the caller and purpose of the call, sold products with an illusory value, and failed to comply with the West Virginia Telemarketing Act, the West Virginia Prizes and Gifts Act, and the West Virginia Consumer Credit and Protection Act.

NuWave tendered the suit to Cincinnati and Cincinnati declined coverage. NuWave then filed a declaratory action seeking to recover defense and indemnity costs from Cincinnati.

NuWave argued a duty to defend was owed as the underlying complaint alleged that NuWave prolonged phone calls with consumers, which constituted a violation of the consumer’s right to privacy. NuWave contended that the right to privacy includes the right to be free from nuisance, thereby satisfying the insuring agreement of the policy’s “personal and advertising injury” coverage.

The district court rejected NuWave’s arguments and found Cincinnati did not owe a defense for the suit. According to the court, NuWave offered an inaccurate characterization of the right to privacy as announced by the Illinois Supreme Court in Valley Forge Ins. Co. v. Swiderski Elecs., Inc., 860 N.E.2d 307 (Ill. 2006). NuWave asserted that the court in Valley Forge recognized that the right to privacy includes the “right to be free from nuisance.” However, the Illinois Supreme Court in Valley Forge defined privacy based on Black’s Law Dictionary – which makes no reference to the “right to be free from nuisance.” NuWave provided no other support for its position.

Further, the underlying factual allegations did not support NuWave’s argument. NuWave employees did not invade consumer privacy because it was the consumers that initiated calls with NuWave. The complaint does not mention any unsolicited communication initiated by any NuWave employee. The court recognized that an intrusion upon seclusion in tort depends on the

highly offensive prying into the physical boundaries or private affairs of another person. Merely keeping a consumer on the phone after the consumer voluntarily called did not fit within the coverage of the policies.

The District Court therefore held that the facts alleged in the WVAG complaint did not fall within the coverage of NuWave’s insurance policies with Cincinnati, and Cincinnati owed no duty to defend or indemnify NuWave in the WVAG suit.