Although the policyholder bar has previously had success obtaining coverage for Biometric Information Privacy Act (BIPA) litigation under an employment practices liability (EPL) policy, insurers recently notched a win by convincing a court to deny EPL coverage for an employee-based BIPA class action. In Church Mutual Insurance Company v. Prairie Village Supportive Living, LLC, the insured’s former employee brought a class action alleging the insured unlawfully collected, used, and disseminated employee biometric identifiers (fingerprints) in violation of BIPA, and the insured sought coverage from its insurer under its general liability (GL) and EPL policies. No. 21 C 3752, 2022 U.S. Dist. LEXIS 143495 (N.D. Ill. Aug. 11, 2022). Based on a unique combination of policy provisions not previously addressed in BIPA coverage litigation, the court declined to find coverage under either policy. Rather than be discouraged from pursuing coverage for BIPA class actions involving employee biometrics, however, there are some important lessons policyholders can glean from this opinion.
The unique terms of the insured’s EPL policy precluded coverage under all policies
The combination of policy terms at issue in Church Mutual was quite unique and does not appear to be typical of those found in most insureds’ policies. As an initial matter, although the insured had purchased both GL and EPL coverage, the EPL coverage form stated: “Except for the insurance provided by this coverage form, the policy to which this coverage form is attached does not apply to any claim or ‘suit’ seeking damages arising out of any ‘wrongful employment practice.’” Right off the bat, therefore, the insured was limited to seeking EPL coverage because it did not dispute that it was seeking coverage for a “wrongful employment practice” as defined in its EPL policy. Any coverage that may have existed under the insured’s GL policy was irrelevant.
After limiting its analysis to whether EPL coverage existed, the court then focused on an exclusion in the EPL policy entitled “Violation of Laws Applicable to Employers.” Pursuant to that exclusion, the policy precluded coverage for, in relevant part:
“Any claim based on, attributable to, or arising out of any violation of any insured’s responsibilities or duties required by any other federal, state, or local statutes, rules, or regulations, and any rules or regulations promulgated therefor or amendments thereto. However this exclusion does not apply to: Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Equal Pay Act, the Pregnancy Discrimination Act of 1978, the Immigration Reform and Control Act of 1986, the Family and Medical Leave Act of 1993, and the Genetic Information Nondiscrimination Act of 2008 or to any rules or regulations promulgated under any of the foregoing and amendments thereto or any similar provisions of any federal, state, or local law.”