The Ninth Circuit Court of Appeals recently heard oral argument in Los Angeles Lakers, Inc. v. Federal Insurance Company, a case raising the issue of whether an exclusion for invasion of privacy claims in a directors and officers liability insurance policy bars coverage for a claim under the Telephone Consumer Protection Act (TCPA).

The case arises from an underlying TCPA lawsuit alleging that an NBA team improperly sent text message solicitations to a fan who sent a text to the team during a game for possible display on the scoreboard. The insurance carrier rejected the team's tender of the claim for defense and indemnity, citing the privacy exclusion. The team then settled the TCPA case and sued the carrier for breach of the policy. The carrier then successfully moved to dismiss, citing the policy's exclusion for claims "based upon, arising from, or in consequence of . . . invasion of privacy." In granting the motion, the trial court held that all TCPA claims are privacy claims because the statute's purpose is to protect privacy.

Many policies already specifically exclude coverage for TCPA claims. For companies with policies that exclude privacy claims generally, but not TCPA claims specifically, the outcome of the decision will be important.