The Knowing Violation of Rights of Another exclusion, found in Coverage B of most CGL policies, can be difficult to apply in the context of determining the duty to defend. A recent decision issued by the United States Court of Appeals for the Eleventh Circuit, in Travelers Pro. Cas. Co. of America v. Kansas City Landsmen, — Fed. App’x –, 2015 WL 137816 (11th Cir. Jan. 12, 2015), provides a good example of why.
The case involved whether the insurer owed a duty to defend its insureds, car rental companies, against an underlying lawsuit alleging that the insureds willfully violated 15 U.S.C. §1681c(g)(1), a provision of the Fair and Accurate Credit Transaction Act (“FACTA”) that prohibits the printing of more than the last five digits of a credit card number or the expiration date on a receipt provided to the cardholder. The underlying litigation, a putative class action, alleged that insured car rental companies had printed credit-card receipts that included more than the last five digits of the card number as well as the card’s expiration date, and accordingly, had “failed to protect” plaintiff and class members “against identity theft and credit card and debit card fraud.” Id. at *2. The action sought statutory and punitive damages under 15 U.S.C. §1681n(a), which imposes liability on “[a]ny person who willfully fails to comply with any requirement” of FACTA.