Federal Court Follows Visual Pak Holding No Coverage for BIPA Claims

by Andrew J. Banathy

In Citizens Ins. Co. of Am. v. Mullins Food Prods. Inc., 2024 U.S. Dist. LEXIS 33273, Case No. 22-cv-1334 (N.D. Ill., Feb. 27, 2024), the United States District Court for the Northern District of Illinois granted summary judgment for an insurer in a BIPA-related coverage action. Judge Jorge Alonso agreed with the Illinois Appellate Court’s reasoning in National Fire Ins. Co., et al. v. Visual Pak Co., Inc., 2023 IL App (1st) 221160, which found that the insurers did not have a duty to defend their policyholder Visual Pak with respect to a Biometrics Information Privacy Act (“BIPA”) claim based upon a violation of law exclusion in their general liability policies.  

Facts

The coverage dispute in Mullins derives from a lawsuit filed by Mullins employees alleging BIPA violations based upon Mullins’ use of biometric scanners and time-tracking devices to monitor and manage workers without properly informing them. Mullins insurer, Citizens, subsequently sought a declaration that Citizens has no duty to defend or indemnify Mullins in the underlying lawsuit.

When the District Court first ruled on the parties’ cross motions for summary judgment, Visual Pak had not yet been decided. As such, the Court initially granted summary judgment in favor of the insured, relying on Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC, 70 F.4th 987 (7th Cir. 2023). However, Citizens argued in its motion to reconsider that the Court should follow Visual Pak because the exclusion in Wynndalco was materially different than the exclusion in Visual Pak and Mullins.

Analysis

Judge Alonso agreed with Citizens, finding that “the Recording and Distribution Exclusion at issue here is materially distinguishable from the exclusion at issue in Wynndalco and that Visual Pak best represents how the Illinois Supreme Court would decide whether the Recording and Distribution Exclusion includes violations of BIPA.” Specifically, the Court found that “under either the plain-reading of the catch-all provision or by applying the doctrine of ejusdem generis to limit the scope of the catch-all to the violation of statues or other laws that protect personal privacy, violations of BIPA are included with the catch all provision.”

However, the District Court noted that it did not base its conclusion on any disagreements with Wynndalco as raised by the First District in Visual Pak, but instead that “the Court’s interpretation of the Recording and Distribution Exclusion that is at issue here is consistent with the reasoning and holding of the Wynndalco opinion.”

Learning Point: On February 13, 2024, the plaintiffs in Visual Pak filed a petition for leave to appeal to the Illinois Supreme Court.  Mullins provides insurers with some reassurance that if the Illinois Supreme Court grants the Visual Pak petition, Illinois’ highest court will find that recording and distribution of material or information in violation of law exclusions contained in general liability policies include BIPA violations, thus precluding a duty to defend or indemnify policyholders with respect to BIPA claims.