Filed: May 12, 2011
Latest Update: Feb. 22, 2020
Summary: against liability for injury caused by advertising.policies, id.Terra Nova necessarily governed the result in a case like this.constitute advertising injury.3, Contrast the provision here with Terra Novas publication of, material that violates a persons right of privacy.
United States Court of Appeals
For the First Circuit
No. 10-1119
CYNOSURE, INC.
Plaintiff, Appellee,
v.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY
AND ST. PAUL GUARDIAN INSURANCE COMPANY,
Defendants, Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Lipez, Circuit Judge,
Souter, Associate Justice,*
and Selya, Circuit Judge.
Charles E. Spevacek, with whom William M. Hart, Damon L.
Highly, Meagher & Geer, P.L.L.P., Michael F. Aylward, and Morrison
Mahoney, LLP, were on brief, for the appellants.
James T. Hargrove, with whom Laura E. D’Amato and Goulston &
Storrs, P.C., were on brief, for the appellee.
*
The Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
SOUTER, Associate Justice. This is a declaratory judgment
action to determine coverage under a commercial policy insuring
against liability for injury caused by advertising. The plaintiff
Cynosure, Inc., is the defendant in an underlying civil action
charging it with responsibility for sending commercial fax messages
“without consent from the recipients” in violation of the Telephone
Consumer Protection Act, 47 U.S.C. § 227(b)(1)(C). Cynosure’s
insurers and the defendants here are St. Paul Fire and Marine
Insurance Company and St. Paul Guardian Insurance Company, which we
will speak of singularly as “St. Paul.” It denied that the
relevant policies’ coverage for “making known to any person or
organization covered material that violates a person’s right of
privacy” extends to liability under the Act. It explained that the
policy language applied “where an insured makes known to others
covered material that violates some other person’s right of
privacy,” but not in the circumstances of the underlying action
alleging that the recipient of a fax had thereby suffered injury to
privacy of his own.
This ensuing request for declaratory judgment joins a line of
cases addressing whether policies insuring against liability for
violating privacy by advertising activity mean privacy understood
as repose undisturbed by commercial intrusion (and thus liability
for violating the Act), or privacy as freedom from disclosure to a
third-party recipient of information that the subject of the
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disclosure claims an interest in not having divulged. Compare
Summit Loans, Inc. v. Pecola, 265 Md. 43,
288 A.2d 114 (1972)
(hundreds of harassing phone calls violate the recipient’s right to
privacy), with Alberts v. Devine,
395 Mass. 59,
479 N.E.2d 113
(1985) (physician’s disclosure of medical information gained
through the professional relationship violates the patient’s right
to privacy). We hold that on a fair reading of these policies,
they refer to disclosure, not intrusion, so that liability for
violating the Act is not covered.1
There is no question that Massachusetts law governs in this
diversity action, and the district court rested its decision in
favor of coverage on the opinion of the Supreme Judicial Court of
Massachusetts in Terra Nova Ins. Co. v. Fray-Witzer, 449 Mass. 406,
869 N.E.2d 565 (2007).2 The policy construed in Terra Nova covered
advertising liability for “publication of material that violates a
person’s right of privacy.”
Id. at 569. The Court applied the
common rule that ordinary, plain meaning governs the analysis of
insurance contract terms, along with the corollary that ambiguity
1
Summary judgment orders are reviewed de novo. Fithian v.
Reed, 204 F.3d 306, 308 (1st Cir. 2000).
2
The substantive law applied in Terra Nova was actually that
of New Jersey, which the parties stipulated was identical to the
law of the Massachusetts forum. Terra Nova Ins. Co. v. Fray-
Witzer, 449 Mass. 406,
869 N.E.2d 565, 570 (2007). While the Court
did not expressly approve that stipulation, the interpretive
principles applied leave no doubt that the analysis does represent
Massachusetts law.
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in the language as it would be understood by an ordinary insured is
construed in favor of coverage. Id. at 571-72. Because it found
“the term ‘right of privacy’ to be ambiguous [as to the
alternatives of intrusion and disclosure] in the insurers’
policies,”
id. at 573, it held that liability for violating the Act
was covered.
It is not that the district court thought that the particular
result reached in applying the Massachusetts interpretive rules in
Terra Nova necessarily governed the result in a case like this.
Finding ambiguity in “publication of material that violates a
person’s right of privacy” does not imply the same conclusion about
“making known to any person or organization covered material that
violates a person’s right of privacy,” and the Massachusetts Court
was careful to say that it found “right of privacy” ambiguous in
the policies then before it, not categorically. But neither did
the district court think that state law left the scope of the
making-known term in limbo, for it saw a clue in Terra Nova’s
footnote 12: “Several courts have interpreted identical or similar
policy language to mean that unsolicited facsimile advertisements
constitute advertising injury.” Id. at 574 n.12 (citations to
eight cases omitted, as are citations to four further cases, placed
in a separate paragraph, that the Court noted as reaching “the
opposite conclusion.”) Although the footnote did not explain the
scope of “similar policy language,” the district court understood
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the phrase to extend to a “making known” provision like the one
here.
Counsel for St. Paul, however, calls our attention to several
other details of Terra Nova that point away from reading the
footnote as deciding this case. Seven out of the eight cases in
the string citation following the reference to “identical or
similar policy language” dealt with a “publication,” not a “making
known,” policy term. The remaining case involved a policy covering
“invasions of rights of privacy” with no further definition of the
term. See Universal Underwriters Ins. Co. v. Lou Fusz Auto.
Network, Inc., 401 F.3d 876, 879 n.2, 882-83 (8th Cir. 2005). And
although three “making known” cases were included in the subsequent
citation of cases that “reached the opposite conclusion” from Terra
Nova, the placement of those cases in a separate footnote paragraph
at least raises a question whether the Massachusetts Court
understood that “making known” was “similar” enough to
“publication” to call for the same result. In fact, if we go back
prior to footnote 12 of the opinion, the Massachusetts Court
probably answered that question when it distinguished Resource
Bankshares Corp. v. St. Paul Mercury Ins. Co.,
407 F.3d 631 (4th
Cir. 2005), as inapplicable because the policy at issue there “was
different from” the “publication” policies at issue in Terra Nova
“inasmuch as it defined an ‘advertising injury’ as ‘[m]aking known
to any person or organization written or spoken material that
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violates a person’s right of privacy.’” Terra Nova, 869 N.E.2d at
415 n.10. We therefore think that the Terra Nova Court did not
mean that the “making known” policies here would be treated as
similar to “publication” policies, with the consequence that
Massachusetts law is a clean slate on our issue, and we are
consigned to making our own best guess about the state-law issue
based on the familiar principles of insurance contract
interpretation that the Commonwealth follows.
The first of those principles is that we look to the
particulars of the very policy in issue, Allmerica Fin. Corp. v.
Certain Underwriters at Lloyd’s, London, 449 Mass. 621,
871 N.E.2d
418, 425 (2007) (“An insurance contract is to be interpreted
‘according to the fair and reasonable meaning of the words in which
the agreement of the parties is expressed.’”) (quoting Cody v.
Conn. Gen. Life Ins. Co.,
387 Mass. 142,
146 N.E.2d 234, 237
(1982)), which requires us to dispense for a moment with the
shorthand classifications of “publication” and “making known,” and
examine the whole provision at issue. When we do, its remarkable
differences from the clause at issue in Terra Nova include not only
its description of advertising injury as occurring by making
certain material known, but its identification of the recipient of
such material as “a person or organization.” By distinguishing
“person” and “organization” and thus providing that a covered
advertising injury occurs when an insured makes known to an
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“organization” some material that violates a “person’s” right of
privacy, the policy provision describes a communication to a
recipient (organization) that violates the right of a non-recipient
third party (person). Since a mere intrusion into the recipient’s
repose does not violate any right of a non-recipient, in practical
terms this means that the communication to the recipient violates
the non-recipient’s right of privacy only if it is a communication
about the non-recipient. In order to give rise to tort liability
for violating the third party’s right of privacy, the material
communicated must therefore reveal some fact the third party
reasonably wishes to keep others from being told. See Terra Nova,
869 N.E.2d at 573 n.11 (“Black’s Law Dictionary 1350 (8th ed. 2004)
defines ‘right of privacy’ as ‘[t]he right to personal autonomy,’
or ‘the right of a person and the person’s property to be free from
unwarranted public scrutiny or exposure.’”).
Taking this interpretation to define the limits of the
coverage clauses is consistent with the straightforward meaning of
related provisions in the St. Paul policies covering liability for
other advertising offenses, those that involve libel or slander,
making known material that disparages the products or work of
others, and unauthorized use of the advertising materials of
others; for each offense, the injury turns on the content of the
material communicated to a third party. More significantly,
treating this analysis as definitive is, of course, congruent with
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the accepted definition of the verb phrase “make known,” which
other courts have read as commonly meaning “telling, sharing or
otherwise divulging,” Resource Bankshares, 407 F.3d at 641. See
also Melrose Hotel Co. v. St. Paul Fire and Marine Ins. Co., 432 F.
Supp. 2d 488, 503 (E.D. Penn. 2006), aff’d,
503 F.3d 339 (3d Cir.
2007) (“disclosure to a third party or divulging of a secret”).
The relative specificity of “making known” thus distinguishes it
from the more general verb “publishing,” which can be used in
either of two normal senses, to refer to revealing information or
merely to the act itself of conveying material considered apart
from its content. See Terra
Nova, 869 N.E.2d at 572, 574. The
upshot is that in contrast to a “publication” provision, there is
no apparent ambiguity in the provision considered here, describing
coverage of liability for making known to one person or
organization something about a third person.
What logic and definition require, syntax confirms. On our
reading, the content of the material communicated (revealing
something about a third party) is necessary for a covered violation
of a right of privacy. Under Cynosure’s argument, on the contrary,
making known alone (to the recipient) would violate privacy without
regard to content. That is, the modifying phrase “that violates a
person’s right of privacy” would refer to “making known,” not to
“material.” But to do that, the modifier would have to jump back
over the words “to any person or organization covered material,”
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and that would be not only a broad jump, but an unlikely one at
all, since the phrase “that violates . . .” has an obvious
antecedent in its contiguous neighbor, “covered material.” While
not every commercial contract term may intend to respect this
convention of looking to the most direct antecedent as the subject
of a modifier, the more complex a sentence is, the more likely it
is that the most direct antecedent is the one that commercial
contracting parties understood.3
Aside from that, reading the modifier “that violates. . .” to
refer to “making known” would involve usage so awkward and so
unusual as to make it too unlikely to be reasonable. On Cynosure’s
view, it would have to make sense to read the policy provision
without the reference to covered material, that is, as covering
liability for a “making known . . . that violates a person’s right
of privacy.” But that is not how we speak, and it would be
barbarous to talk or write that way. Cynosure, in other words,
asks us to read the provision as if it were written some other way,
and that is just what the Terra Nova Court has told us the law of
Massachusetts will not tolerate. 869 N.E.2d at 574.
In sum, we believe that the Supreme Judicial Court of
3
Contrast the provision here with Terra Nova’s “publication of
material that violates a person’s right of privacy.” “[M]aterial”
is again the closest probable antecedent, but “publication,”
another noun, is only two words back. It is not so clear that
“publication” would not be fairly read as modified, even with
“material” in between.
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Massachusetts would conclude that St. Paul’s language in these
“making known” policies is not ambiguous, and that the person who
wrote the coverage disclaimer got it right in a nutshell, by
explaining that the policies’ advertising liability coverage
applies only “where an insured makes known to others covered
material that violates some other person’s right of privacy.” Such
is not the basis for liability incurred by sending faxes in
violation of § 227(b)(1)(C), as indeed we understand every case to
have held when dealing with making-known policy language like the
provisions here.4 St. Paul is entitled to judgment.
Reversed.
4
Resource Bankshares Corp. v. St. Paul Mercury Ins. Co.,407
F.3d 631 (4th Cir. 2005); Melrose Hotel Co. v. St. Paul Fire and
Marine Ins. Co.,432 F. Supp. 2d 488 (E.D. Penn. 2006), aff’d,
503
F.3d 339 (3d Cir. 2007); St. Paul Fire & Marine Ins. Co. v. Onvia,
Inc., No. C06-1056RSL,
2007 WL 564075 (W.D. Wash. Feb. 16, 2007),
aff’d,
2008 WL 5077281 (9th Cir. Nov. 25, 2008); ACS Sys., Inc. v.
St. Paul Fire & Marine Ins. Co.,
53 Cal. Rptr. 3d 786 (Cal. Ct.
App.2d Dist. 2007).
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