Hanover unit must defend IT firm in BIPA case

A federal appeals court Thursday affirmed that a Hanover Insurance Group unit must defend an information technology company in two putative class actions filed under the Illinois Biometric Information Privacy Act.

The 7th U.S. Circuit Court of Appeals in Chicago affirmed an April 2022 ruling by the U.S. District Court in Chicago in Citizens Insurance Co. of America v. Wynndalco Enterprises LLC, which held that a catch-all exclusion in the policy issued by Hanover unit Citizens was ambiguous and therefore the insurer had a duty to defend the policyholder.

Addison, Illinois-based Wynndalco was sued for allegedly selling information in violation of BIPA. The law requires businesses that store biometric information to inform the subject in writing that data is being collected or stored and the purpose and duration for which it is being collected. They also must obtain the subject’s written consent.

The case relates to the secret collection by New York-based Clearview AI Inc. of more than 3 billion facial scans, according to court papers.

In ruling against Hanover and affirming the lower court’s decision, a three-judge appeals court panel referred to a policy provision that bars coverage for injuries arising out of certain statutory provisions.

“A plain-text reading of that provision would swallow a substantial portion of the coverage that the policy otherwise explicitly purports to provide in defending a covered ‘personal or advertising injury,’ and arguably all the coverage for certain categories of wrongs … that are entirely statutory in nature,” the panel said.

Attorneys in the case had no comment or did not respond to a request for comment.