Third Circuit Finds Jurisdiction Despite Anti-Aggregation Rule, Holds TCPA Class Settlement Is Not Covered by Insurance Agreement
By Andrew C. Glass, Gregory N. Blase, Roger L. Smerage, and Eric W. Lee
In a precedential but split ruling, the Third Circuit recently held that diversity jurisdiction existed over a declaratory judgment action seeking insurance coverage for a classwide settlement of Telephone Consumer Protection Act (“TCPA”) claims even though no individual member of the underlying class had a claim in excess of the required $75,000 amount in controversy. See Auto-Owners Insurance Company v. Stevens & Ricci Inc., No. 15-2080, — F.3d — (3rd. Cir. 2016). The court also affirmed that the TCPA class settlement did not constitute covered “property damage” or “advertising injury” under the terms of the subject insurance policy.
The case arose when an insurance company sought a declaratory judgment that it had no obligation to defend or indemnify an insured law firm in connection with a class action lawsuit alleging TCPA violations. The named plaintiff in the underlying the class action lawsuit had alleged that the law firm violated the TCPA by sending unsolicited fax advertisements. The insurance company sought a declaratory judgment in the Eastern District of Pennsylvania against both the law firm and the named plaintiff in the underlying class action. At summary judgment, the district court concluded that the sending of unsolicited fax advertisements in violation of the TCPA did not fall within the terms of the applicable insurance policy.