Recent Court Rulings Strengthen Coverage for BIPA Claims Under General Liability Policies | Neal, Gerber & Eisenberg LLP

Illinois Biometric Information Privacy Act, 740 ILCS 14/1 and following. (“BIPA”), has been a fertile source of litigation against Illinois companies for several years now. The targets of these lawsuits have turned to their insurers for help in defending and resolving the cases. General liability insurers, for the most part, have refused coverage and sued their insureds to obtain court approval for such denials. In 2021, the Illinois Supreme Court ruled that commercial general liability insurance for “personal and publicity damages” potentially covered BIPA lawsuits.[1] The Supreme Court also held that an exclusion for “distribution of material in violation of laws” did not exclude coverage for such lawsuits.

Insurance companies have not given up the fight, however. Instead, they continued to deny coverage based on three other exclusions often found in CGL policies: (1) “Access to or disclosure of confidential or personal information”; (2) “Recording and distribution of material in violation of law”; and (3) “Employment-Related Practices”. The “Recording and Distribution” exclusion is very similar to the exclusion at issue in west elbowbut insurers have argued that it is wider than the west elbow exclusion. The other two exclusions were not at issue in west elbow – the policy in this case apparently did not include an “Access or Disclosure” exclusion and the insured had not been sued by employees. Thus, cases involving cover for BIPA lawsuits continued to make their way through the court system.

Three recent federal court rulings in Illinois have significantly strengthened policyholders’ case for CGL coverage for BIPA lawsuits. In the first decision, Judge Leinenweber found that the “Recording and Distribution” and “Access or Disclosure” exclusions did not exclude BIPA lawsuit coverage.[2] The judge found, however, that the employment practice exclusion excluded the insured employer’s coverage for its employees’ BIPA claims. In the second and third decisions, Justice Kness and Justice Seeger concluded that not only did the “Recording and Distribution” and “Access or Disclosure” exclusions not exclude BIPA claims against insured employers: the exclusion of related practices neither in employment.[3]

As for the first two exclusions, the scorecard in federal court is currently 3-0 in favor of the insured. Even for the exclusion of employment-related practices, federal decisions favor policyholders two to one. While we can expect one or more of these decisions to be appealed, policyholders now have new ammunition to seek coverage for BIPA lawsuits. And, hopefully, insurers might become more reluctant to deny coverage outright and instead commit to defending their policyholders as they have agreed to do.

[1] See W. Bend Mut. Ins. Co. v. Krishna Tan Schaumburg, Inc.2021 IT 125978.

[2] See Am. Family Mut. Ins. Co. v. Caremel, Inc.Case No. 20 C 637, 2022 WL 79868 (ND Ill. 7 Jan. 2022).

[3] See Citizens Ins. Co. of Am. against Thermoflex Waukegan, LLCCase No. 20-cv-05980, 2022 WL 602534 (ND Ill. March 1, 2022); Automatic state. Mut. Ins. Co. v. Tony’s Finer Foods Enters., Inc.Case No. 20-cv-6199, 2022 WL 683688 (ND Ill. March 8, 2022).