In the

United States Court of Appeals
               For the Seventh Circuit

No. 07-3286

A UTO-O WNERS INSURANCE C OMPANY,

                                                  Plaintiff-Appellant,
                                  v.


W EBSOLV C OMPUTING, INCORPORATED ,
doing business as EC FIRST.COM ,
U DAY O M A LI P ABRAI, and G ORTHO, L IMITED,

                                               Defendants-Appellees.


             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
            No. 06 C 2092—Charles R. Norgle, Sr., Judge.



   A RGUED S EPTEMBER 3, 2008—D ECIDED S EPTEMBER 1, 2009




   Before E ASTERBROOK, Chief Judge, and C UDAHY and
S YKES, Circuit Judges.
  S YKES, Circuit Judge. This insurance-coverage dispute
involves the interpretation of an “advertising injury”
clause in a commercial general liability policy. Websolv
Computing, Inc., was sued in Illinois state court for
2                                                 No. 07-3286

sending an unsolicited fax advertisement to a dental
office. Websolv tendered the defense of this suit to its
insurer, Auto-Owners Insurance Company, which
accepted it under a reservation of rights. Auto-Owners
then filed this action in federal court seeking a declara-
tory judgment that it had no duty to defend Websolv in
the underlying Illinois suit. The district court applied
Illinois law and held that Websolv’s policy with Auto-
Owners covered the claim. We reverse. Iowa law—not
Illinois law—applies here. Under Iowa law the insur-
ance policy does not require Auto-Owners to defend
Websolv in the underlying suit.


                       I. Background
   In September 2003 Guy Bibbs sued Websolv in Illinois
state court for sending an unsolicited one-page fax adver-
tisement to his dental office. Bibbs claimed, among other
things, that Websolv violated the Telephone Consumer
Protection Act (“TCPA”), 47 U.S.C. § 227.1 The fax at issue
was an advertisement for seminars to train health-care
professionals how to comply with the terms of the
Health Insurance Portability and Accountability Act. The
parties later agreed to substitute Gortho, Ltd., Bibbs’s
dental practice, as the plaintiff, and the state court dis-



1
  Bibbs also sued Uday Om Ali Pabrai and John Does 1 through
10. Bibbs alleged violations of the TCPA and the Illinois Con-
sumer Fraud Act, 815 I LL . C OMP . S TAT . § 505/2, as well as
claims for common-law conversion and “property damage.”
No. 07-3286                                                 3

missed with prejudice all claims related to Bibbs. Websolv
was insured by Auto-Owners under a commercial general
liability (“CGL”) policy and tendered its defense to the
insurer. Auto-Owners accepted the tender, appointed
counsel, and reserved its right to argue that it had no
duty to defend Websolv under the terms of the policy.
   Auto-Owners then filed this action in federal court
seeking a declaration that it had no duty to defend
Websolv. The parties agreed that Iowa law should control
and filed cross-motions for summary judgment. Despite
the parties’ stipulation to Iowa law, the district court
concluded that Illinois law governed. It granted Websolv’s
motion for summary judgment, holding that under
Illinois law the insurance contract required Auto-Owners
to defend the type of claims at issue here. It based its
decision on the Illinois Supreme Court’s opinion in
Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 

(Ill. 2006), which held that “advertising in-
jury” policy language like that at issue here covered
TCPA claims. Auto-Owners appealed, arguing that (1) the
district court erred by applying Illinois law rather than
Iowa law; and (2) Auto-Owners is entitled to summary
judgment under Iowa law.


                      II. Discussion
A. Choice of Law
  We begin by addressing the district court’s decision
to apply Illinois law rather than Iowa law to this dis-
pute. We review a district court’s choice-of-law decision de
4                                                No. 07-3286

novo. Gramercy Mills, Inc. v. Wolens, 

, 572 (7th
Cir. 1995). The parties expressly agreed in the district court
that Iowa law applied, but the district court applied Illinois
law for two reasons. First, the judge believed he was
required to apply the substantive law of the forum state.
This was incorrect. Second, the judge believed he could
ignore the stipulation of the parties because neither party
had briefed the court on the substance of Iowa law. This,
too, was incorrect.
  First, and most importantly, the parties agreed that
Iowa law should control their dispute. We honor reason-
able choice-of-law stipulations in contract cases regard-
less of whether such stipulations were made formally or
informally, in writing or orally. Lloyd v. Loeffler, 

, 495 (7th Cir. 1982). “Courts do not worry about
conflict of laws unless the parties disagree on which
state’s law applies.” Wood v. Mid-Valley Inc., 

,
427 (7th Cir. 1991). “[I]t is the exceptional circumstance
that a federal court, or any court for that matter, will not
honor a choice of law stipulation.” Mass. Bay Ins. Co. v.
Vic Koenig Leasing, Inc., 

, 1120 (7th Cir.
1998). Here, Auto-Owners filed its motion for sum-
mary judgment without explicitly making a choice-of-law
argument. Websolv immediately moved to certify ques-
tions of state law to the Iowa Supreme Court, arguing
that “the present matter [calls] for application of Iowa
law.” In its response Auto-Owners agreed that Iowa
law should apply and also noted that the parties had
“explicitly agreed in open court . . . that Iowa substan-
tive law applies in this case.” This plainly amounts to a
No. 07-3286                                                   5

stipulation by the parties that Iowa law controls their
dispute.
   Indeed, Websolv has never objected to the application
of Iowa law—either in the district court or on appeal. In
its brief on appeal, Websolv explicitly stated it “does not
disagree that Iowa law governs.” Rather, Websolv has
argued that Iowa courts would adopt the same inter-
pretation of the policy language as the Illinois Supreme
Court did in Valley Forge. This is an argument over the
content, not the applicability, of Iowa law. Because the
parties agreed that Iowa law should govern and because
the choice of Iowa law is entirely reasonable, the
district court should not have applied Illinois law.
   The district court also was mistaken in its belief that
it had to apply the substantive law of the forum state.
When a federal court hears a case in diversity, it does not
necessarily apply the substantive law of the forum
state; rather, it applies the choice-of-law rules of the
forum state to determine which state’s substantive law
applies. Klaxon Co. v. Stentor Elec. Mfg. Co., 

, 496
(1941). Illinois, the forum state, applies the “most signifi-
cant contacts” test to choice-of-law disputes. Westchester
Fire Ins. Co. v. G. Heileman Brewing Co., 

,
961 (Ill. App. Ct. 2001). In insurance-coverage cases,
Illinois considers a variety of factors to determine which
state’s substantive law should apply, including the domi-
cile of the insured, the place of delivery of the policy, and
the place of performance. 

the most
importance on the location of the insured risk. Mass. Bay
Ins. 

. All of these factors point to
6                                                No. 07-3286

Iowa in this case: The insurance policy was delivered to
Websolv, an Iowa corporation, at its Iowa headquarters
through an Iowa agency, and the risk is located in that
state. Under Illinois choice-of-law principles, Iowa sub-
stantive law clearly applies.
  Finally, the district court believed it could apply Illinois
law because neither party had briefed the court on the
substance of Iowa law. The court cited Employers
Mutual Casualty Co. v. Skoutaris, 

(7th Cir.
2006), to support this determination. That case, however,
simply notes that the default rule that the law of the
forum state applies when neither party suggests other-
wise. 

(“[W]e apply the law of the forum
state . . . since neither party has challenged the district
court’s choice of law.”). Here, by contrast, the parties
specifically agreed that Iowa law, not Illinois law, should
apply.
  In any event, the parties did brief the court on the sub-
stance of Iowa law. After agreeing that Iowa law applied,
Auto-Owners specifically requested permission to file
a supplemental memorandum in support of its motion
for summary judgment addressing the substance of Iowa
law. Instead of granting Auto-Owners’ motion, the
district court instructed the briefing to continue as sched-
uled. In its response to Auto-Owners’ summary-
judgment motion, Websolv explained that there was no
controlling Iowa law but argued that Iowa shared the
same basic contract principles as Illinois, which had
a decision—Valley Forge—directly on point. Auto-Owners
then filed a reply discussing why Iowa contract-law
No. 07-3286                                                    7

principles would lead Iowa to a different result from
that reached in Illinois.2


B. Does the Insurance Policy Cover Gortho’s Claims?
  Our next question is whether, under Iowa law, the
terms of the CGL policy require Auto-Owners to defend
Websolv against Gortho’s claims. Gortho’s primary
claim against Websolv is that it violated the TCPA by
faxing an unsolicited, one-page advertisement to Gortho.
The TCPA prohibits the use of “any telephone facsimile
machine, computer, or other device to send, to a tele-
phone facsimile machine, an unsolicited advertisement.”
47 U.S.C. § 227(b)(1)(C). It also permits persons or


2
   Websolv makes a related argument that Auto-Owners failed
to show that Iowa law differed from Illinois law in any material
respect. It cites Illinois cases purportedly standing for the
rule that Illinois courts presume the law of the governing
jurisdiction is the same as Illinois unless the party shows a
material difference between the two. The cases Websolv cites,
however, appear to be based on waiver; in those cases the
parties did not cite to any authority from the purportedly
applicable jurisdiction. Here, on the other hand, the parties
agreed that there is no Iowa case directly on point. Without
recourse to specific Iowa caselaw, Auto-Owners argued from
general principles of Iowa insurance law (for which it cited to
Iowa cases), as well as caselaw from other jurisdictions. We
do not think Illinois requires any more from litigants. See
Sterling Fin. Mgmt. v. UBS PaineWebber, Inc., 

, 902
(Ill. App. Ct. 2002) (assuming that a conflict exists when the
law of the applicable jurisdiction is unresolved or unclear).
8                                               No. 07-3286

entities to sue in state court for violations of the TCPA and
to recover between $500 and $1,500 in damages for
each violation. 

that Auto-Owners is
required to defend it from Gortho’s claims under two
separate provisions in the policy—the “advertising
injury” provision and the “property damage” provision.


    1. “Advertising Injury” Coverage
  The insurance policy specifically requires Auto-Owners
to defend against suits alleging “ ‘advertising injury’
caused by an offense committed in the course of advertis-
ing [the insured’s] goods, products or services.” The
contract then defines “advertising injury” as follows:
     “Advertising injury” means injury arising out of one
     or more of the following offenses:
           a. Oral or written publication of material that
           slanders or libels a person or organization or
           disparages a person’s or organization’s goods,
           products or services;
           b. Oral or written publication of material that
           violates a person’s right of privacy;
           c. Misappropriation of advertising ideas or style
           of doing business; or
           d. Infringement of copyright, title or slogan.
Websolv contends that the language in subsection (b)
triggers Auto-Owners’ duty to defend the TCPA claim.
In response Auto-Owners claims that the right of privacy
referred to in subsection (b) only covers secrecy-based
No. 07-3286                                                        9

privacy interests rather than seclusion-based privacy
interests and that a TCPA suit asserts an invasion of a
seclusion-based interest. While Iowa has no caselaw
precisely on point, 3 we conclude that it would more
likely accept the interpretation that Auto-Owners ad-
vances.
  The insurance policy does not define the “right of
privacy,” and that phrase can have multiple meanings
and refer to a variety of rights. The Restatement (Second)
of Torts identifies four ways in which one’s right of
privacy can be invaded: (1) unreasonable intrusion
upon another’s seclusion; (2) appropriation of another’s
name or likeness; (3) unreasonable publicity given to
another’s private life; and (4) publicity that places



3
  Because Iowa has no pertinent caselaw on this question,
Gortho asks us to certify this issue to the Iowa Supreme Court.
Certification is appropriate only when “ ‘the case concerns a
matter of vital public concern, where the issue will likely recur
in other cases, where resolution of the question to be certified
is outcome determinative of the case, and where the state
supreme court has yet to have an opportunity to [decide] . . . the
issue.’ ” State Farm Mut. Auto. Ins. Co. v. Pate, 

, 672
(7th Cir. 2001) (quoting In re Badger Lines, Inc., 

, 698-
99 (7th Cir. 1998)). While the issue is certainly outcome-determi-
native, it is hardly one of vital public concern. Furthermore,
the issue is not likely to recur. As both parties acknowledge,
the insurance industry in 2005 began issuing a standard en-
dorsement specifically excluding coverage for TCPA claims.
As this issue only arises in cases involving insurance con-
tracts issued before 2005, it is not worthy of certification.
10                                                 No. 07-3286

another in a false light. § 652A(2). We have previously
organized these rights into two broad categories—rights
involving secrecy interests and rights involving seclusion
interests. Am. States Ins. Co. v. Capital Assocs. of Jackson
County, Inc., 

, 941 (7th Cir. 2004) (“The
two principal meanings [of privacy] are secrecy and
seclusion, each of which has multiple shadings.”). Secrecy
interests involve the right to keep certain information
confidential; seclusion interests involve the right to be
left alone. For example, “[a] person who wants to con-
ceal a criminal conviction, bankruptcy, or love affair
from friends or business relations asserts a claim to
privacy in the sense of secrecy. A person who wants to
stop solicitors from ringing his doorbell and peddling
vacuum cleaners at 9 p.m. asserts a claim to privacy in
the sense of seclusion.” 

suit here only involves seclusion inter-
ests. Gortho does not contend that Websolv’s fax adver-
tisement revealed secret or proprietary information
about it; rather, it alleges that the unsolicited fax
intruded on its right to be left alone.4 Therefore, the
question in this case is whether the “advertising injury”
coverage in the CGL policy requires Auto-Owners to


4
   Gortho, as a corporation, does not have any common-law
seclusion rights. See R ESTATEMENT (S ECOND ) OF T ORTS § 652I
cmt. c (“A corporation, partnership or unincorporated associa-
tion has no personal right of privacy. It has therefore no cause
of action for any of the four forms of invasion covered by
[§ 652B].”). Any seclusion interests it asserts derive from the
TCPA, not common law.
No. 07-3286                                                      11

defend Websolv in a suit claiming an infringement of
Gortho’s seclusion interests.
   As we have noted, Iowa has no precedent on this exact
question.5 Instead, the parties offer only general principles
of insurance-contract interpretation culled from Iowa
cases, which are too generic to be of much help. How-
ever, this is not the first time that we have been asked
to interpret this particular policy language without the
benefit of a state high-court decision on point. In American
States Insurance Co. v. Capital Associates, we were faced
with this same “advertising injury” question under
Illinois law. 

. At the time, Illinois had no
relevant decisions interpreting this sort of provision, and
we had to predict how the Illinois Supreme Court would
decide the question. We concluded that the advertising-
injury provision did not cover claims arising under the
TCPA for two reasons. First, we noted that businesses
generally do not enjoy a common-law right to seclusion,
making it unlikely that the “right to privacy” provision
in a corporate insurance policy was meant to cover seclu-
sion interests. 

Second, we reasoned that the
use of the word “publication” in the provision made it
more probable that the provision only covered claims


5
  In 2007 a district court in this circuit attempted to answer this
question under Iowa law and concluded that the advertising-
injury provision covered TCPA claims. Am. Home Assurance
Co. v. McLeod USA, Inc., 

(N.D. Ill. 2007). It
rested its conclusion on the fact that Illinois had recently
adopted this interpretation and predicted that Iowa would
too. 

We disagree for the reasons we explain in the text.
12                                              No. 07-3286

involving secrecy interests. As we noted, “[i]n a secrecy
situation, publication matters; otherwise secrecy is main-
tained. In a seclusion situation, publication is irrele-
vant.” 

that the insurer had no duty
to defend against seclusion-type claims under Illinois
law. 

   Two years later, the Illinois Supreme Court had the
opportunity to decide the issue. It disagreed with our
analysis in American States and held instead that under
Illinois law advertising-injury policy provisions cover
TCPA claims. Valley Forge Ins. Co. v. Swiderski Elecs., Inc.,

(Ill. 2006). Specifically, the court dis-
agreed that the word “publication” narrowed the scope
of “privacy rights” to only those related to secrecy. The
court interpreted “publication” to mean nothing more
than “communication.” 

“By faxing adver-
tisements to the proposed class of fax recipients as
alleged in [the] complaint, Swiderski published the ad-
vertisements . . . in the general sense of communicating
information to the public . . . .” 

The Illinois
Supreme Court disavowed our conclusion to the
contrary, stating that our interpretation of the provision
was inconsistent with Illinois’ policy of giving undefined
contract terms their plain and ordinary meanings. 

  We are now faced with this question a second time, but
under Iowa law rather than Illinois law. We stand by our
analysis in American States, even though Illinois has
since adopted a different approach. We conclude that
Iowa is more likely to adopt our interpretation rather
No. 07-3286                                               13

than the one adopted by the Illinois Supreme Court. It is
true that Iowa, like Illinois, gives undefined words in an
insurance contract their ordinary meaning. A.Y. McDonald
Indus., Inc. v. Ins. Co. of N. Am., 

, 618 (Iowa
1991). However, Iowa also refers to closely related or
associated policy language to illuminate the meaning of
insurance-coverage provisions. Kibbee v. State Farm Fire &
Cas. Co., 

, 869 (Iowa 1994). We continue
to read the policy’s use of the word “publication” in the
advertising-injury definition to narrow the scope of the
“privacy rights” referred to in the same clause. The pro-
vision provides coverage for “oral or written publication
of material that violates a person’s right of privacy.” The
most natural reading of this language is that it covers
claims arising when the insured publicizes some secret
or personal information—not claims arising when the
insured disrupts another’s seclusion.
   “Publication” is implicated only where the relevant
concern is secrecy; one can violate another’s right to
seclusion without publicizing anything. See, e.g., Doe v.
Mills, 

, 832 (Mich. Ct. App. 1995) (“An
action for intrusion upon seclusion focuses on the
manner in which information is obtained, not its publica-
tion; it is considered analogous to a trespass.”) (emphasis
added); R ESTATEMENT (SECOND) OF T ORTS § 652B cmt. b
(1977) (“The intrusion itself makes the defendant subject
to liability, even though there is no publication . . . .”).
One who knocks repeatedly on another’s door late at
night or takes photographs of another from across the
street may violate the person’s seclusion rights even
though no “publication” has occurred. We think it
14                                                 No. 07-3286

stretches the advertising-injury language too far to inter-
pret “publication” to include the type of activity at issue
in this case. The TCPA protects seclusion interests ir-
respective of publication, but the “publication” language
in subsection (b) of the policy’s definition of “advertising
injury” strongly suggests that this coverage only applies
to alleged invasions of secrecy interests.
   The other subsections of the definition of “advertising
injury” also support this interpretation. The other three
provisions of the advertising-injury definition focus on
harm arising from the content of an advertisement
rather than harm arising from mere receipt of an adver-
tisement. The surrounding provisions cover advertising-
injury claims for libel, slander, misappropriation, and
copyright infringement—all of which require the exam-
ination of the content of the offending advertisement. 6 It
is therefore reasonable to infer that subsection (b) also
concerns harm emanating from the content of an adver-
tisement; that is, it is reasonable to read subsection (b) to


6
  Auto-Owners also argues that the phrase “right of privacy”
refers only to Iowa’s state-law tort of invasion of privacy and
does not include violations of federal law like the TCPA, which
protects similar interests. As support it argues that the sur-
rounding provisions all refer to specific state-law torts. Given
our conclusion, we need not address this alternative argu-
ment. We note, however, that subsection (d) refers to copy-
right infringement, which arises under federal law rather than
state common law. Therefore, it is not unreasonable to assume
that the phrase “right of privacy” encompasses rights
arising under federal law as well as state tort law.
No. 07-3286                                                15

refer only to violations of secrecy interests. Here, Gortho
is not complaining about the content of the fax; rather,
it complains that the very fact the fax was sent violated
the corporation’s right to be left alone under the TCPA.
Accordingly, we conclude that the advertising-
injury provision does not cover claims brought under
the TCPA.


  2. Property-Damage Provision
  Under the CGL policy, Auto-Owners also has a duty to
defend its insured against claims arising from property
damage, defined as “physical injury to tangible property.”
However, the policy specifically excludes property
damage that is expected or intended from the stand-
point of the insured. Websolv argues that Gortho’s claim
is a claim for property damage because the unsolicited
fax advertisement used ink and paper from Gortho’s
fax machine. While it is true that the one-page fax ad-
vertisement consumed a small amount of ink and one
sheet of paper from Gortho’s machine, this consequence
was both expected and intended by Websolv. Because
the policy expressly excludes damage that is expected or
intended by the insured, Auto-Owners has no duty to
defend Websolv under this provision. See Resource
Bankshares Corp. v. St. Paul Mercury Ins. Co., 

,
639 (4th Cir. 2005) (“It is obvious to anyone familiar with
a modern office that receipt is a ‘natural or probable
consequence’ of sending a fax, and receipt alone [results
in] . . . depletion of the recipient’s time, toner and
paper . . . .”); Am. States Ins. 

(“[J]unk
16                                           No. 07-3286

faxes use up the recipients’ ink and paper, but senders
anticipate that consequence.”).
  Websolv attempts to evade this fairly obvious con-
clusion by arguing that the policy’s “separation of
insureds” provision requires us to evaluate the property
damage from the perspective of the company separately
from the perspective of the employee who actually sent
the fax. In other words, Websolv contends that while the
fax-sending employee may have intended to use up
Gortho’s toner and paper, Websolv itself intended no
such thing, and therefore it did not expect or intend the
resulting property damage. The primary problem with
this argument is that Gortho’s complaint in the under-
lying case alleges that Websolv sent the fax and that
Pabrai (the individual defendant in the case) merely
“authorized and approved” it. Accordingly, the “separa-
tion of insureds” provision does not help Websolv.
  For the foregoing reasons, we R EVERSE the decision of
the district court and R EMAND with instructions to
enter summary judgment in favor of Auto-Owners.




                          9-1-09