Appeals court reverses insurer’s win in BIPA coverage fight

The 7th U.S. Circuit Court of Appeals Friday reversed a ruling that two exclusions in a condiment maker’s general liability policies relieved its insurer from providing a defense against an Illinois Biometric Information Privacy Act class action.

The three-judge panel in Citizens Insurance Co. of America v. Mullins Food Products Inc. said that according to its May 2024 ruling in Thermoflex Waukegan LLC v. Mitsui Sumitomo Insurance USA Inc. a statutory violations exclusion in Mullins’ policies did not relieve Citizens Insurance, a Hanover Insurance Group Inc. unit, from defending against the class action.

The appellate panel agreed with the federal trial judge in Chicago that an exclusion in Mullins’ 2016 and 2017 policies barring access to or disclosure of confidential or personal information precluded coverage for the class action filed by Mullins employee Ricardo Galan.

The trial judge must now determine if Mullins provided timely notice of the underlying class action to Citizens.

Mr. Galan filed the class action in February 2021, alleging Mullins, which scanned employees’ fingerprints to monitor and manage their time on the job, violated BIPA by failing to formally inform them that their biometric information was being collected and disseminated and failing to obtain their consent, court records show.

Newly Wed Foods Inc. purchased Broadview, Illinois-based Mullins in 2018.

Mullins informed Citizens about the class action in January 2022. Citizens refused to provide a defense based on the exclusions and sued Mullins in March 2022, seeking a determination from the court on its defense obligations. Mullins filed a counterclaim for breach of contract, court records show.

The trial judge awarded Citizens summary judgment, ruling that the exclusions relieved it of its defense obligations. Mullins appealed.

Representatives for the parties did not respond to requests for comment.