Insurance Indemnification-Biometric Information Privacy Act

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7^th Circuit Court of Appeals

Case Name: Thermoflex Waukegan, LLC v. Mitsui Sumitomo Insurance USA, Inc.

Case No.: 23-1521

Officials: Flaum, Easterbrook, and Pryor, Circuit Judges.

Focus: Insurance Indemnification-Biometric Information Privacy Act

Thermoflex Waukegan, a company that required its hourly employees to use handprints for clocking in and out, faced a lawsuit for allegedly violating the Biometric Information Privacy Act (BIPA). The company was accused of failing to obtain written consent from workers and using a third party to process biometric data. Thermoflex held multiple insurance policies, including three from Mitsui Sumitomo Insurance, which refused to defend or indemnify the company, prompting this legal action.

The district court ruled that an exclusion in the Basic policy made it inapplicable to any BIPA-related claims. This exclusion specified that the insurance did not cover claims arising from access to or disclosure of confidential or personal information. The court deemed this exclusion straightforward, noting that BIPA classifies biometric information as confidential.

The Excess and Umbrella policy consisted of two parts. Coverage E contained the same exclusions as the Basic policy, and the court concurred with the district court’s determination that it did not cover BIPA claims. However, Coverage U lacked an exclusion for nonpublic information. The district court found that none of the three potentially applicable exclusions to Coverage U clearly negated Mitsui’s duty to defend Thermoflex in the state-court suit.

The Seventh Circuit agreed with the interpretation of the Basic policy and Coverage E of the Excess and Umbrella policy. Additionally, it concurred that the three exclusions to Coverage U did not apply to BIPA. Consequently, the court held that Mitsui owed Thermoflex a defense under the Umbrella policy, provided that the limits of another applicable policy, along with deductibles, were exhausted.

Affirmed

Decided 05/17/24

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