Yesterday, the U.S. Court of Appeals for the Eighth Circuit held that an insurer had provided adequate notice of the Distribution of Material exclusion in a renewal policy to make the exclusion enforceable in the context of an underlying Telephone Consumer Protection Act (TCPA) lawsuit. American Family Mutual Insurance Company v. Vein Centers for Excellence, Inc., 2019 U.S. App. LEXIS 98 (8th Cir. Jan. 3, 2019). What makes this decision interesting is that the insurer had to rely on deposition testimony to establish a standard business practice. As more and more plaintiffs’ attorneys are using lack of notice to argue that the Distribution of Material exclusion is ineffective, American Family illustrates an effective way to establish adequate notice where actual documentation may be lacking.
In American Family, the insured was sued in a putative class action for violation of the TCPA arising from the dissemination of unsolicited facsimiles. Id. at *2. The insured, Vein Centers, tendered the lawsuit to its insurer, which undertook the defense subject to a full reservation of rights. Id. The insurer thereafter commenced coverage litigation seeking a declaration that it had no duty to defend or indemnify, later adding the underlying named plaintiff to the lawsuit. Id. The parties cross-moved for summary judgment, with the insurer arguing that coverage was prohibited by the Distribution of Material exclusion (sometimes referred to as the TCPA exclusion). Id at *3-4. The claimant argued that the exclusion was unenforceable because the insurer had failed to properly notify its insured of the exclusion’s addition when the policy had been renewed. Id. at *4. The trial court rejected the argument and granted the insurer summary judgment. Id.