Insurance Law

In an insurance coverage matter arising out of claims against an insured for violations of the Illinois Biometric Information Privacy Act, the Seventh Circuit considered whether the district court correctly concluded that there was no duty to defend or indemnify under the policy exclusions for the access or disclosure of confidential or personal information and the recording and distribution of material or information in violation of the law. The Seventh Circuit vacated and remanded, finding that the access or disclosure exclusion, found in only two of the three applicable policies, barred coverage but that the statutory violation exclusion did not bar coverage. (BRENNAN and KOLAR, concurring)

In an insurance coverage dispute arising out of mass tort litigation relating to environmental pollution, the court considered whether an industrial pollutant discharged pursuant to a permit issued by an Illinois regulatory agency constituted traditional pollution subject to a pollution exclusion in a commercial general liability policy. The Seventh Circuit observed that Illinois law on the issue was “unsettled” and certified the question to the Illinois Supreme Court for a definitive answer on how Illinois law applies to the issue. (ST. EVE and KIRSCH, concurring)

In an insurance coverage case arising out of a civil rights lawsuit in which there was a significant jury verdict against the defendant, the Seventh Circuit considered both questions of coverage and of the federal court’s jurisdiction. With regard to jurisdiction, the Seventh Circuit considered whether it had subject-matter jurisdiction based on plaintiff’s assertion that the lawsuit involved citizens of a state and citizens of a foreign state. The appellate court noted that its resolution of the jurisdictional question hinged on whether the plaintiff was a “corporation.” The court ultimately concluded that the plaintiff was a corporation for the purposes of subject-matter jurisdiction because it met the essential elements of a corporation. The court then considered whether the plaintiff was obligated to pay the defendant’s legal fees in the underlying lawsuit. The district court had concluded that attorney fees were covered under the policy because it constituted an “ultimate net loss,” which was covered by the explicit language of the policy. The Seventh Circuit affirmed, explaining that while there was an absence of Illinois cases to provide guidance on this question, its independent reading of the language of the policy accorded with that of the district court. (KIRSCH and KOLAR, concurring)