Thermoflex Waukegan LLC v. Mitsui Sumitomo Insurance USA, Inc.

Filing 70

MEMORANDUM Opinion and Order: For the reasons stated in the attached Memorandum Opinion and Order, the Court grants in part and denies in part Thermoflex's partial motion for summary judgment 54 , and grants in part and denies in part Mitsui� 39;s motion for summary judgment 57 . Mitsui owes no duty to defend under Coverage E. While Mitsui owes a duty to defend under Coverage U, that duty to defend does not arise until Thermoflex has exhausted its primary insurance limits. Signed by the Honorable Thomas M. Durkin on 1/19/2023. Mailed notice. (ecw, )

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 1 of 27 PageID #:1708

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
THERMOFLEX WAUKEGAN, LLC,
Plaintiff,

No. 21 C 788

v.

Judge Thomas M. Durkin

MITSUI SUMITOMO INSURANCE USA,
INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
Before this Court is an insurance coverage dispute between Plaintiff
Thermoflex Waukegan, LLC (“Thermoflex”) and Defendant Mitsui Sumitomo
Insurance USA, Inc. (“Mitsui”) concerning Mitsui’s duty to defend and indemnify
Thermoflex in state litigation brought under the Illinois Biometric Information
Privacy Act (“BIPA”), 740 Ill. Comp. Stat. 14/1 et seq. The Court previously held that
Mitsui had no duty to defend or indemnify Thermoflex under the commercial general
liability policies and requested separate briefing on whether there were such duties
under the excess and umbrella insurance policies. See R. 51. The parties have filed
cross-motions for summary judgment on that issue. For the reasons explained below,
the Court grants in part and denies in part Thermoflex’s partial motion for summary
judgment [54], and grants in part and denies in part Mitsui’s motion for summary
judgment [57].

1

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 2 of 27 PageID #:1709

Background
Mitsui issued several insurance policies to Thermoflex, namely a series of
commercial general liability policies (“CGL Policies”) as well as excess and umbrella
insurance policies (“E/U Policies”). Def. Statement of Facts (“DSOF”) ¶¶ 15, 21, R.
27. While those policies were in effect, Gregory Gates brought a class action lawsuit
(“Gates” or “Gates lawsuit”) against Thermoflex in Illinois state court. Id. ¶¶ 7, 14.
Gates alleged that Thermoflex violated BIPA by requiring hourly workers to scan
their handprints each time they clocked in and out of work, transmitting their
handprint data to a third party without authorization, and not providing them with
a publicly available policy identifying its retention schedule or procedures for
obtaining their consent and release. Id. ¶¶ 11, 12. Thermoflex requested that Mitsui
defend and indemnify it for any damages arising from the suit, and Mitsui refused,
asserting that none of the insurance policies it issued covers BIPA claims. Pl.
Statement of Facts (“PSOF”) ¶¶ 22, 23, R. 55. This suit followed.
Thermoflex and Mitsui previously filed cross-motions for summary judgment
as to whether Mitsui has a duty to defend and indemnify Thermoflex under the CGL
Policies and E/U Policies. See R. 26; R. 30. The Court concluded that the CGL
Policies’ “Access Or Disclosure Of Confidential Or Personal Information” exclusion
(“Access or Disclosure Exclusion”) barred coverage such that Mitsui has no duty to
defend under the CGL Policies. See R. 51 at 8–17. On that basis alone, the Court
granted Mitsui’s motion and denied Thermoflex’s cross-motion. Id. at 17. In so
holding, the Court declined to address whether the other two exclusions at issue—
the “Recording And Distribution Of Material Or Information In Violation Of Law”
2

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 3 of 27 PageID #:1710

and “Employment-Related Practices” exclusions—barred coverage. Id. at 17 n.6.
Further, because the parties did not address the E/U Policies with sufficient depth
in their briefs, the Court limited its discussion to the CGL Policies and set a separate
briefing

schedule

to

provide

the

parties with an opportunity

to

more

comprehensively address coverage under the E/U Policies. Id. at 2 n.1. The parties
filed the present cross-motions for summary judgment as to whether Mitsui has a
duty to defend Thermoflex under the E/U Policies. 1 See R. 54; R. 57.
The E/U Policies include Coverage E and Coverage U. DSOF ¶ 22. Under
Coverage E, Mitsui agreed, in relevant part, to pay on behalf of Thermoflex “those
sums in excess of ‘underlying insurance’ for which [Thermoflex] becomes legally
obligated to pay as ‘damages’” from “personal or advertising injury” that “is covered
by ‘underlying insurance’ or that would have been covered by ‘underlying insurance’
but for exhaustion of ‘underlying insurance’ ‘limits’ by the payment of claims,
settlements, or judgments.” Id. ¶ 23. Under Coverage U, Mitsui agreed, in relevant
part, to pay on behalf of Thermoflex “those sums in excess of . . . the ‘self-insured
retention’ [or] other insurance . . . for which [Thermoflex] becomes legally obligated
to pay as ‘damages’ because of . . . ‘personal advertising injury’ to which this
insurance applies.” 2 Id. ¶ 26. The E/U Policies define “personal and advertising
injury,” in relevant part, as injury arising out of an oral or written publication,

After the parties filed the present motions, the case was reassigned to the
undersigned. See R. 66.
2 Coverage U “does not apply to claims which are covered under Coverage E or would
have been covered except for exhaustion of ‘underlying limits.’” DSOF ¶ 26.
1

3

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 4 of 27 PageID #:1711

including electronic publication, of material that violates a person’s right to privacy.
Def. Statement of Add’l Material Facts (“DSOAF”) ¶ 2, R. 58. The E/U Policies define
“underlying insurance” as the CGL Policies. Id. ¶ 3. The CGL Policies have a limit
of $1 million for personal and advertising injury and a $2 million aggregate limit,
and the self-insured retention limit under the E/U Policies is $10,000. PSOF ¶¶ 13,
16. The E/U Policies also require Mitsui to defend Thermoflex in a suit seeking
damages which “may be covered” under Coverage E and Coverage U. DSOF ¶¶ 23,
26; R. 16 at 24. 3
As the Court previously held, “it is uncontested that the claims Gates asserts
in the underlying lawsuit allege ‘personal and advertising injury[.]’” R. 51 at 8. But
Coverage E and Coverage U are subject to several exclusions.
The first, titled “Exclusion – Data Breach Liability Coverages E and U” (“Data
Breach Exclusion”), precludes coverage for:
(1) “bodily injury”, “property damage”, or “personal and
advertising injury” arising out of disclosure of or access to
private or confidential information belonging to any person
or organization; or
(2) any loss, cost, expense, or “damages” arising out of
damage to, corruption of, loss of use or function of, or
inability to access, change, or manipulate “data records”.
This exclusion also applies to “damages” for any expenses
incurred by “you” or others arising out of 1) or 2) above,
including expenses for credit monitoring, notification,
forensic investigation, and legal research.
For Coverage E, this duty to defend arises “when the ‘limits’ of ‘underlying
insurance’ are exhausted by the payment of claims, settlements, judgments, and/or
defense costs if the applicable “limit” of ‘underlying insurance’ is reduced by the
payment of defense costs.” DSOF ¶ 23.

3

4

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 5 of 27 PageID #:1712

DSOF ¶ 27; PSOF ¶ 18; R. 16 at 53. The second, styled as Exclusion j. under
Coverage E and Exclusion z. under Coverage U (“Statutory Violation Exclusion”),
bars coverage for “personal and advertising injury” arising directly or indirectly out
of any violations or alleged violations of:
(1) the Telephone Consumer Protection Act (TCPA),
including any amendments thereto, and any similar
federal, state, or local laws, ordinances, statutes, or
regulations;
(2) the CAN-SPAM Act of 2003, including any
amendments thereto, and any similar federal, state, or
local laws, ordinances, statutes, or regulations;
(3) the Fair Credit Reporting Act (FCRA), including any
amendments thereto, such as the Fair and Accurate
Credit Transaction Act (FACTA), and any similar federal,
state, or local laws, ordinances, statutes, or regulations; or
(4) any other federal, state, or local law, regulation,
statute, or ordinance that restricts, prohibits, or otherwise
pertains to the collecting, communicating, recording,
printing, transmitting, sending, disposal, or distribution
of material or information.
DSOF ¶¶ 24, 28. The third, styled Exclusion k. under Coverage E and Exclusion n.
under Coverage U (“ERP Exclusion”), precludes coverage for “personal or advertising
injury” to a person arising out of any:
(a) refusal to employ that person;
(b) termination of employment of that person; or
(c) coercion, demotion, evaluation, reassignment,
discipline, defamation, harassment, humiliation, malicious
prosecution, discrimination, sexual misconduct, or other
employment-related practices, policies, acts, or omissions,
directed towards that person . . . .

5

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 6 of 27 PageID #:1713

Id. ¶¶ 25, 29. The ERP Exclusion applies whether the insured may be liable as an
employer or in any other capacity and to any obligation to reimburse a third party
for “damages” because of the injury, whether fully or partially. Id.
Mitsui argues that these exclusions bar coverage for the Gates lawsuit. In the
alternative, Mitsui argues that even if none of the exclusions apply, it does not
presently owe Thermoflex a duty to defend because Thermoflex has not exhausted
its primary insurance limits. Thermoflex argues that none of the exclusions apply,
and that disputed facts regarding primary coverage preclude granting summary
judgment in Mitsui’s favor.
Legal Standard
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317,
322–23 (1986). The Court considers the entire evidentiary record and must view all
of the evidence and draw all reasonable inferences from that evidence in the light
most favorable to the nonmovant. Horton v. Pobjecky, 883 F.3d 941, 948 (7th Cir.
2018). To defeat summary judgment, a nonmovant must produce more than a “mere
scintilla of evidence” and come forward with “specific facts showing that there is a
genuine issue for trial.” Johnson v. Advocate Health and Hosps. Corp., 892 F.3d 887,
894 (7th Cir. 2018). Ultimately, summary judgment is warranted only if a reasonable
jury could not return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).

6

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 7 of 27 PageID #:1714

Where the parties have filed cross-motions for summary judgment, the Court
applies this standard to each motion separately to determine whether there is a
genuine dispute of material fact and whether judgment should be entered as a
matter of law. Marcatante v. City of Chi., 657 F.3d 433, 438–39 (7th Cir. 2011). In
ruling on each cross-motion for summary judgment, the Court draws inferences in
favor of the party against whom the motion under consideration is made. Siliven v.
Ind. Dep’t of Child Servs., 635 F.3d 921, 925 (7th Cir. 2011).
Analysis
The parties agree that Illinois law applies. See R. 56 at 3 n.1; R. 59 at 6. Under
Illinois law, the “primary function of the court in construing contracts is to ascertain
and give effect to the parties’ intent as expressed in the insurance contract’s
language.” W. Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., 2021 IL 125978,
¶ 32 (citing Sanders v. Ill. Union. Ins. Co., 2019 IL 124565, ¶ 22). If a policy’s words
are unambiguous, the Court must afford them their plain and ordinary meaning.
U.S. Fid. & Guar. Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 74 (1991). If, however,
the terms are “reasonably susceptible to more than one meaning, [they are]
considered ambiguous and will be construed strictly against the insurer who drafted
the policy.” Rich v. Principal Life Ins. Co., 226 Ill. 2d 359, 371 (2007). In making such
a determination, the Court must assess “[t]he entire insurance contract, rather than
an isolated part.” Ind. Ins. Co. v. Pana Cmty. Unit Sch. Dist. No. 8, 314 F.3d 895,
903 (7th Cir. 2002).

7

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 8 of 27 PageID #:1715

Here, the Court must determine whether, under the E/U Policies, Mitsui has
a duty to defend Thermoflex in the Gates lawsuit. 4 A duty to defend arises if the
Gates complaint “states a claim that is within, or even potentially or arguably within,
the scope of coverage provided by the policy.” Pipefitters Welfare Educ. Fund v.
Westchester Fire Ins. Co., 976 F.2d 1037, 1039 (7th Cir. 1992) (citing U.S. Fid., 144
Ill. 2d at 73). The Court “liberally construes the underlying complaint and the
insurance policy in the manner reasonably most favorable to the insured.” Title
Indus. Assurance Co., R.R.G. v. First Am. Title Ins. Co., 853 F.3d 876, 884 (7th Cir.
2017). Accordingly, “a decision to excuse an insurer’s duty to defend based on an
exclusionary clause in the contract ‘must be clear and free from doubt.’” Zurich Am.
Ins. Co. v. Ocwen Fin. Corp., 990 F.3d 1073, 1078 (7th Cir. 2021) (quoting Evergreen
Real Estate Servs., LLC v. Hanover Ins. Co., 2019 IL App (1st) 181867). By the same
token, “a policy provision that purports to exclude or limit coverage will be read
narrowly and will be applied only where its terms are clear, definite, and specific.”
Gillen v. State Farm Mut. Auto. Ins. Co., 215 Ill. 2d 381, 393 (2005).
I.

Coverage E

The pending motions do not address the duty to indemnify. That duty is not ripe
because the issue of Thermoflex’s liability in the Gates lawsuit has not yet been
decided. See Gregory v. Farmers Auto. Ins. Ass’n, 392 Ill. App. 3d 159, 161, 331 (2009)
(“[A]lthough a declaratory judgment action brought to determine an insurer’s duty
to defend is ripe upon the filing of a complaint against the insured, a declaratory
judgment action brought to determine an insurer’s duty to indemnify an insured is
not ripe for adjudication until an insured becomes legally obligated to pay the
damages in the underlying action.”); see also Grinnell Mut. Reinsurance Co. v.
Reinke, 43 F.3d 1152, 1154 (7th Cir. 1995) (“Illinois treats arguments about the duty
to indemnify as unripe until the insured has been held liable.”).

4

8

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 9 of 27 PageID #:1716

Coverage E provides coverage for damages Thermoflex becomes legally
obligated to pay for “personal and advertising injury” in excess of “underlying
insurance,” subject to certain exclusions. But Coverage E only kicks in if the
“underlying insurance” (the CGL Policies) provides coverage in the first place. And
here, the Court already held that they didn’t. See R. 51 at 17. Thermoflex thus asks
this Court to reconsider the prior ruling.
Rule 54(b) “provides that non-final orders ‘may be revised at any time before
the entry of a judgment adjudicating all the claims and all the parties’ rights and
liabilities.’” Galvan v. Norberg, 678 F.3d 581, 587 (7th Cir. 2012) (quoting Fed. R.
Civ. P. 54(b)). “Motions for reconsideration under Rule 54(b) serve the limited
function of correcting manifest errors of law or fact.” Ace Hardware Intern. Holdings,
Inc. v. Masso Expo Corp., No. 11 C 3928, 2012 WL 182236, at *1 (N.D. Ill. Jan. 23,
2012) (citations omitted). To that end, “[i]t is well established that a motion to
reconsider is only appropriate where a court has misunderstood a party, where the
court has made a decision outside the adversarial issues presented to the court by
the parties, where the court has made an error of apprehension (not of reasoning),
where a significant change in the law has occurred, or where significant new facts
have been discovered.” Broaddus v. Shields, 665 F.3d 846, 860 (7th Cir. 2011),
overruled on other grounds by Hill v. Tangherlinin, 724 F.3d 965, 967 n.1 (7th Cir.
2013). A party asserting that the court committed a manifest error of fact or law
bears a heavy burden. Brownlee v. Catholic Charities of Archdiocese of Chi., No. 16
C 665, 2022 WL 602535, at *1 (N.D. Ill. Mar. 1, 2022) (citation omitted).

9

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 10 of 27 PageID #:1717

Further, as relevant here, “[g]enerally speaking, a successor judge should not
reconsider the decision of a transferor judge at the same hierarchical level of the
judiciary when a case is transferred.” See Brengettcy v. Horton, 423 F.3d 674, 680
(7th Cir. 2005) (citations omitted). “Although the second judge may alter previous
rulings if he is convinced they are incorrect, he is not free to do so . . . merely because
he has a different view of the law or facts from the first judge.” Best v. Shell Oil Co.,
107 F.3d 544, 546 (7th Cir. 1997) (citation omitted).
Thermoflex asserts that Judge Lee erred in deeming the Access or Disclosure
Exclusion unambiguous. According to Thermoflex, the fact that other courts in this
district have held that the same exclusion does not bar coverage of BIPA claims
means that the exclusion is open to more than one reasonable interpretation. See,
e.g., Am. Fam. Mut. Ins. Co. v. Caremel, Inc., No. 20 C 637, 2022 WL 79868, at *2–3
(N.D. Ill. Jan. 7, 2022) (Leinenweber, J.); Citizens Ins. Co. of Am. v. Thermoflex
Waukegan, LLC, No. 20 C 5980, 2022 WL 602534, at *7 (N.D. Ill. Mar. 1, 2022)
(Kness, J.); Citizens Ins. Co. of Am. v. Highland Baking Co., Inc., No. 20 C 04997,
2022 WL 1210709, at *1 (N.D. Ill. Mar. 29, 2022) (Pacold, J.). But “disagreement
among courts regarding the interpretation of an insurance policy provision does not,
by itself, render the provision ambiguous.” CFIT Holding Corp. v. Twin City Fire Ins.
Co., 548 F. Supp. 3d 701, 707 (N.D. Ill. 2021); see also Cozzini Bros. v. Cincinnati
Ins. Co., Inc., No. 20 C 4274, 2021 WL 3408499, at *3 (N.D. Ill. Aug. 4, 2021), appeal
dismissed, No. 22-1034, 2022 WL 2644114 (7th Cir. Mar. 29, 2022). Indeed, Judge
Lee was well aware of his deviation from other courts in this district when he issued

10

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 11 of 27 PageID #:1718

his ruling. R. 51 at 12 n.4. And Thermoflex has not pointed to any other basis for
finding ambiguity that was not already considered and addressed by Judge Lee. This
Court is not convinced that Judge Lee’s ruling was incorrect, and thus the prior
ruling that the Access or Disclosure Exclusion bars coverage under the CGL Policies
stands. Accordingly, there can be no coverage for the Gates lawsuit under Coverage
E.
II.

Coverage U

Coverage U provides coverage for damages Thermoflex becomes legally
obligated to pay for “personal and advertising injury” in excess of its “self-insured
retention” or other insurance coverage, subject to certain exclusions. Mitsui and
Thermoflex disagree as to whether the exclusions apply to bar coverage.
A.

Statutory Violation Exclusion

The Statutory Violation Exclusion bars coverage for:
“personal and advertising injury” arising directly or
indirectly out of any violations or alleged violations of:
(1) the Telephone Consumer Protection Act (TCPA),
including any amendments thereto, and any similar
federal, state, or local laws, ordinances, statutes, or
regulations;
(2) the CAN-SPAM Act of 2003, including any amendments
thereto, and any similar federal, state, or local laws,
ordinances, statutes, or regulations;
(3) the Fair Credit Reporting Act (FCRA), including any
amendments thereto, such as the Fair and Accurate Credit
Transaction Act (FACTA), and any similar federal, state,
or local laws, ordinances, statutes, or regulations; or
(4) any other federal, state, or local law, regulation, statute,
or ordinance that restricts, prohibits, or otherwise pertains
11

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 12 of 27 PageID #:1719

to the collecting, communicating, recording, printing,
transmitting, sending, disposal, or distribution of material
or information.
While the exclusion does not explicitly refer to BIPA, Mitsui argues that
Subpart (4) nonetheless bars coverage of the Gates lawsuit because BIPA is a statute
that “governs the collection, recording, disclosure and dissemination of material or
information.” R. 28 at 9–10; R. 59 at 9–10. In response, Thermoflex argues that the
Illinois Supreme Court’s holding in Krishna that a similar, but not identical
“violation of statutes” exclusion did not bar coverage of a BIPA claim is dispositive.
R. 32 at 8–9. As an authoritative construction of Illinois law, the holding in Krishna
is binding unless it can be distinguished. See Kaiser v. Johnson & Johnson, 947 F.3d
996, 1013 (7th Cir. 2020).
In Krishna, the Illinois Supreme Court addressed an exclusion that included
three subparts: the first two excluded claims under the TCPA and CAN-SPAM Act
and the third was a catchall provision that applied to personal and advertising injury
arising out of a violation or alleged violation of “[a]ny statute, ordinance or
regulation, other than the TCPA or CAN-SPAM Act of 2003, that prohibits or limits
the sending, transmitting, communicating or distribution of material or
information.” 2021 IL 125978, ¶ 9. The Illinois Supreme Court began its analysis
with the title of the exclusion, “Violation of Statutes that Govern E-Mails, Fax,
Phone Calls or Other Methods of Sending Material or Information,” explaining that
the title indicated the exclusion covered statutes governing methods of
communication. Id. ¶ 58 (emphasis in original). The Krishna Court then delved into
the text of the exclusion, identifying the common theme between the two referenced
12

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 13 of 27 PageID #:1720

statutes as regulating methods of communication. Id. The Illinois Supreme Court
next applied the canon of ejusdem generis to the text, id. ¶¶ 57, 58, which provides
“that when a general word or phrase follows a list of specifics, the general word or
phrase will be interpreted to include only items of the same class as those listed.”
Ejusdem generis, Black’s Law Dictionary (11th ed. 2019). Accordingly, the Illinois
Supreme Court construed the “other than” phrase in the catchall provision to mean
other statutes of the same general kind as the TCPA and CAN-SPAM Act, which it
held regulated methods of communication such as calls, faxes, and e-mails. 2021 IL
125978, ¶ 58. The Krishna Court reasoned that because BIPA does not regulate
methods of communication, the exclusion did not apply. Id.
Here, the Statutory Violation Exclusion differs from the exclusion in Krishna
in several ways. For one, the exclusion references three specific statutes, not two:
the TCPA, the CAN-SPAM Act, and the FCRA (and its amendment FACTA). In fact,
it goes even further by pulling in “any similar federal, state, or local laws, ordinances,
statutes, or regulations” to the three referenced statutes. Additionally, Subpart (4)
contemplates other ways of handling material or information. That provision covers
not just sending, transmitting, communicating, and distributing material or
information, but also collecting, recording, printing, and disposing material or
information. And finally, while the exclusion in Krishna had a title that specifically
referenced “other methods of sending material or information,” the Statutory
Violation Exclusion as it appears in the E/U Policies has no title.

13

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 14 of 27 PageID #:1721

Mitsui highlights some of these differences in arguing that the reasoning in
Krishna—that is, “interpreting the catch-all provision by looking at the statutes
expressly enumerated in the exclusion”—compels a different result here. 5 R. 36 at 9.
In Mitsui’s view, BIPA falls within the boundaries of the exclusion because it, like
the FCRA and FACTA, aims to “protect[] the privacy of personal information.” Id.
Other courts in this district have undertaken this analysis with similar
exclusions. Many of these cases are distinguishable in that the exclusions at issue
did not reference the FCRA. See, e.g., Am. Mut. Ins. Co. v. Carnagio Enters., Inc., No.
20 C 3665, 2022 WL 952533, at *6 (N.D. Ill. Mar. 30, 2022); Caremel, 2022 WL 79868,
at *3. But one case cited by Thermoflex, which involves an exclusion that
incorporates the FCRA (and FACTA), is instructive. See R. 56 at 9 n.3.
In Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC, the court observed at
the outset that even though BIPA would seem to fit in the catchall provision,
interpreting the exclusion to “cover every statute that concerns a person or entity
doing practically anything whatsoever with ‘information’” would “swallow the rule”
by making other coverage provisions in the policy, including that pertaining to
“personal and advertising injury,” “illusory.” 595 F. Supp. 3d 668, 673 (N.D. Ill.

Mitsui incorporates the argument from its original motion for summary judgment
distinguishing the similar exclusion in the CGL Policies (“Recording and
Distribution of Material Exclusion”) from that in Krishna. See R. 59 at 10. In its
original briefing, Mitsui pointed to the different titles, the inclusion of the FCRA
(and FACTA), and the other ways of handling material or information contemplated
in Subpart (4). See R. 28 at 11–12. Mitsui did not point out that the Statutory
Violation Exclusion has no title and references “any similar federal, state, or local
laws, ordinances, statutes, or regulations” to the three referenced statutes.
5

14

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 15 of 27 PageID #:1722

2022). Because the text of the exclusion was “ambiguous on its face,” the court turned
to canons of construction, but found them to be of little use. Id. at 674. Ejusdem
generis was inapplicable because the inclusion of the FCRA and FACTA severed the
common characteristic present in Krishna, which was required for its application.
Id. The court added that even if it were to apply ejusdem generis as Citizens
advocated, where the common characteristic was the protection of privacy interests
generally, it would not help the insurer “[b]ecause the type of ‘privacy’ that BIPA
protects is dissimilar to the type of privacy that the TCPA and the CAN-SPAM Act
regulate[.]” Id. at 675 (citing Am. States Ins. Co. v. Cap. Assocs. of Jackson Cnty.,
Inc., 392 F.3d 939, 941–43 (7th Cir. 2004)). The court further explained that the
canon of noscitur a sociis likewise provided no clarity because of the lack of a common
characteristic between the listed statutes. Id. at 676. Without clear meaning from
the plain text or the canons of construction, the court concluded that the exclusion
was ambiguous and construed it in favor of coverage. 6 Id.; see also Citizens, 588 F.
Supp. 3d at 854 (explaining that “[a]t best, it is unclear whether BIPA is sufficiently
similar to those other statutes; at worst, as in Krishna, BIPA is different in kind”
and finding in favor of coverage for Thermoflex because the exclusion could be viewed
as ambiguous).

The Court notes that there is currently an appeal pending before the Seventh
Circuit in Wynndalco on the question of whether the violation of law exclusion
applies to preclude coverage for BIPA litigation. See Citizens Ins. Co. of Am. v.
Wynndalco Enters., LLC, et al., No. 22-2313.
6

15

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 16 of 27 PageID #:1723

This Court is persuaded by the reasoning in Wynndalco. At first glance, a
BIPA claim would seem to fit within the exclusion’s boundaries as a “statute that . .
. restricts, prohibits, or otherwise pertains to the collecting, communicating,
recording, printing, transmitting, sending, disposal, or distribution of material or
information.” BIPA is a state statute, which “imposes on private entities . . . various
obligations regarding the collection, retention, disclosure, and destruction of
biometric identifiers and biometric information.” Rosenbach v. Six Flags Ent. Corp.,
2019 IL 123186; see also 740 ILCS 14/15(b) (“No private entity may collect, capture,
purchase, receive through trade, or otherwise obtain a person’s or a customer’s
biometric identifier or biometric information, unless . . . .”); 740 ILCS 14/15(d) (“No
private entity in possession of a biometric identifier or information may disclose,
redisclose, or otherwise disseminate a person’s or customer’s biometric identifier or
biometric information unless . . . .”).
But such a reading is not “narrow.” Gillen, 215 Ill. 2d at 393. And the
exclusion’s broad terms are far from “clear, definite, and specific.” Id. The exclusion
begins with the word “any” and extends across laws, regulations, statutes, and
ordinances at the federal, state, and local levels. It follows with three verbs, the last
of which is expansive: “otherwise pertains to.” See Merriam-Webster, “Otherwise”,
https://www.merriam-webster.com/dictionary/otherwise (defining “otherwise” as “in
other

respects”);

Merriam-Webster,

“Pertain”,

https://www.merriam-

webster.com/dictionary/pertain (defining “pertain” as “to belong as an attribute,
feature, or function” or “to be appropriate to something”). Next there are eight

16

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 17 of 27 PageID #:1724

different activities, and a similarly broad phrase, “material or information,” to finish.
This language is even less specific than in Wynndalco. The catchall provision in
Wynndalco stated: “any [statute] other than [the listed statutes and their
amendments] that address, prohibit, or limit [the ways of handling] material or
information” framework. 595 F. Supp. 3d at 671 (emphasis added). In contrast,
Subpart (4) contemplates “any other [statutes] that restrict, prohibit, or otherwise
pertain to [the ways of handling] material or information.” (emphasis added).
Additionally, reading the exclusion to encompass any statute that relates in
any other way to handling material or information would seem to swallow up large
swaths of Coverage U’s coverage. See Founders Ins. Co. v. Munoz, 237 Ill. 2d 424,
433 (2010) (“[A]n insurance policy must be considered as a whole[.]”). Here, the E/U
Policies expressly cover “personal and advertising injur[ies],” which arise out of
“[o]ral or written publication, including electronic publication, of material that:
slanders or libels a person or organization,” as well as copyright infringement. R. 16
at 14. Such claims could similarly be said to arise under statutes that “restrict[],
prohibit[], or otherwise pertain[] to the . . . communicating . . . or distribution of
material or information.” See, e.g., Illinois Slander and Libel Act, 740 Ill. Comp. Stat.
145/0.01 et seq.; Copyright Act, 17 U.S.C. § 101 et seq.
Given the provision’s facial ambiguity, the Court follows the Illinois Supreme
Court’s lead in turning to canons of construction. But as in Wynndalco, they do not
provide clarity. Ejusdem generis requires the general term to share a characteristic
that is common to all of the specific terms. Sw. Airlines Co. v. Saxon, 142 S. Ct. 1783,

17

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 18 of 27 PageID #:1725

1792 (2022). And here, the three listed statutes do not lend themselves to any
common characteristic. Indeed, Mitsui acknowledges that the TCPA and SPAM
“address means of communicating,” while the FCRA and FACTA “address the use of
specific kinds of information.” R. 28 at 11; see also R. 36 at 7.
Mitsui cites two cases that have concluded similar exclusions bar coverage for
claims under other statutes. See Zurich, 990 F.3d 1073 (applying exclusion to Fair
Debt Collection Practices Act); Nat’l Union Fire Ins. Co. of Pitt. v. Coinstar, Inc., 39
F. Supp. 3d 1149, 1156 (W.D. Wash. 2014) (Washington law) (applying exclusion to
Michigan Video Rental Privacy Act). But neither case considered whether those
exclusions covered BIPA, as Krishna and Wynndalco do. Those cases therefore do
not move the needle.
Without clear meaning from the text or with the aid of canons of construction,
the exclusion is ambiguous and must be construed in favor of coverage.
B.

Data Breach Exclusion

The Data Breach Exclusion precludes coverage for “personal and advertising
injury” arising out of “disclosure of or access to private or confidential information
belonging to any person or organization” or “‘damages’ arising out of damage to,
corruption of, loss of use or function of, or inability to access, change, or manipulate
‘data records.’” Mitsui asserts that this exclusion is, in all material aspects, identical
to the Access or Disclosure Exclusion, which the Court previously held barred
coverage under the CGL Policies. R. 28 at 6; R. 59 at 7–9. Thermoflex argues that

18

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 19 of 27 PageID #:1726

the exclusions are meaningfully different, with the Data Breach Exclusion limited
to data breaches. R. 64 at 4–5.
To be sure, certain language in the Data Breach Exclusion tracks closely with
the Access or Disclosure Exclusion. Compare Data Breach Exclusion (“‘personal and
advertising injury’ arising out of disclosure of or access to private or confidential
information belonging to any person or organization”) with Access or Disclosure
Exclusion (“‘personal and advertising injury’ arising out of any access to or disclosure
of any person’s or organization’s confidential or personal information . . .”). However,
reading the exclusion in its entirety suggests that it was not intended to bar coverage
beyond data breach liability.
Illinois law requires “that all the provisions of an insurance contract, rather
than an isolated part, should be read together to interpret it[.]” Mkt. St. Bancshares,
Inc. v. Fed. Ins. Co., 962 F.3d 947, 954–55 (7th Cir. 2020); see also AFM Mattress Co.,
LLC v. Motorists Com. Mut. Ins. Co., 503 F. Supp. 3d 602, 606 (N.D. Ill. 2020)
(“[E]very part of the contract must be given meaning, so no part is meaningless or
surplusage.”). Accordingly, this Court must read the language Mitsui focuses on
alongside its surrounding language, beginning with the title. See Krishna, 2021 IL
125978, ¶ 58 (beginning the analysis of an exclusion’s meaning with the text of its
title). The title of this exclusion reads “Exclusion—Data Breach Liability.” R. 16 at
53. This is markedly different than the exclusion Mitsui asserts is identical, which
is titled “Access or Disclosure of Confidential or Personal Information and DataRelated Liability – With Limited Bodily Injury Exception.” DSOF ¶ 18. Because the

19

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 20 of 27 PageID #:1727

E/U Policies do not supply a definition for “data breach,” the Court gives the phrase
its “plain and ordinary meaning, which can be derived from a dictionary.” Gulino v.
Econ. Fire & Cas. Co., 2012 IL App (1st) 102429, ¶ 18. Merriam-Webster defines
“data” as “factual information (such as measurements or statistics) used as a basis
for reasoning, discussion, or calculation” or “information in digital form that can be
transmitted or processed” and “breach” as “a broken, ruptured, or torn condition or
area” or “a gap (as in a wall) made by a battering.” Merriam-Webster, “Breach”,
https://www.merriam-webster.com/dictionary/breach.

Consistent

with

the

dictionary definitions, a “data breach” can be ordinarily understood as improperly
obtaining access to protected information.
Mitsui does not argue that the Gates lawsuit alleges a data breach, but instead
asserts that the title does not limit the exclusion. Of course, under Illinois law, a
court “does not construe a contractual provision by looking at its title alone.” Zurich
Am. Ins. Co. v. Ocwen Fin. Corp., 357 F. Supp.3d 659, 673 (N.D. Ill. 2018), aff’d, 990
F.3d 1073 (7th Cir. 2021). But other language in the exclusion reasonably suggests
that the exclusion is limited to data breaches. The second subsection, which follows
the “disclosure of or access to” language, speaks of “damage to, corruption of, loss of
use or function of, or inability to access, change, or manipulate ‘data records.’” R. 16
at 53. And the E/U Policies define “data records” as “files, documents, and
information in an electronic format that are stored on instruments used with
computer hardware, networks, or other computer programs and applications,
including those used with electronically controlled equipment.” Id. at 11. In addition,

20

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 21 of 27 PageID #:1728

the exclusion references “expenses for credit monitoring, notification, [and] forensic
investigation,” which relate to actions taken in the aftermath of a data breach. Id.
Taken together, the exclusion would seem to be focused on the “disclosure of or access
to private or confidential information” in a data breach or the resulting impact of
that data breach.
The Data Breach Exclusion’s language indicates that it is limited to the data
breach context, which the Gates lawsuit does not implicate. But to the extent the
Data Breach Exclusion is open to another reasonable interpretation in light of its
similar language to the Access or Disclosure Exclusion, it is ambiguous and must be
construed in favor of coverage.
C.

ERP Exclusion

The ERP Exclusion precludes coverage for “personal and advertising injury”
arising out of “other employment-related practices, policies, acts, or omissions
directed towards that person.” The parties disagree as to whether the exclusion
extends to the alleged conduct in Gates, which Mitsui describes as arising out of a
“policy” of requiring hourly workers to use a biometric time tracking and attendance
system. See R. 28 at 12–13; R. 32 at 10–13; R. 59 at 10–11.
Beginning with the text, the exclusion bars coverage for “‘personal and
advertising injury’ arising out of any: (a) refusal to employ that person; (b)
termination of employment of that person; or (c) coercion, demotion, evaluation,
reassignment,

discipline,

defamation,

harassment,

humiliation,

malicious

prosecution, discrimination, sexual misconduct, or other employment-related

21

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 22 of 27 PageID #:1729

practices, policies, acts, or omissions directed towards that person . . . .” Mitsui does
not claim that Gates involves allegations related to improper hiring or firing, so the
focus is on the third subpart.
The phrase “other employment-related practices, policies, acts, or omissions”
does not stand alone. It is expressly modified by the phrase that follows: “directed
towards that person.” And it is preceded by a list of examples. The list includes some
legal claims (defamation, harassment, discrimination, malicious prosecution), some
adverse employment actions (demotion, evaluation, reassignment, discipline), and
some other personalized harms that may occur in the workplace setting (coercion,
humiliation, sexual misconduct). See Citizens, 588 F. Supp. 3d at 852. But all can
fairly be characterized as actions taken against a worker in the employment context
in a targeted, personal way. See State Auto. Mut. Ins. Co. v. Tony’s Finer Foods
Enters., Inc., 589 F. Supp. 3d 919, 928 (N.D. Ill. 2022) (describing listed examples as
“mistreatment that is targeted at a specific employee in a direct, personal way.”).
It is difficult to see how Thermoflex’s “policy” that hourly workers use a
biometric time tracking and attendance system would fit the bill. It is a workplace
policy that applies to everyone in the same way; it is not conduct directed towards a
specific person at an individual level. Indeed, if someone added “biometric time
tracking policy” to the list of examples, it would “stick out like a sore thumb.” See id.
at 928.
Several courts in this district have addressed this precise question, and most
have found in favor of the insured. See, e.g., Citizens, 588 F. Supp. 3d at 851–54

22

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 23 of 27 PageID #:1730

(holding that the claims in the Gates lawsuit “do not unambiguously share ‘general
similitude with . . . the matters specifically enumerated in the employment-related
practices exclusion’”); Highland Baking, 2022 WL 1210709, at *1 (employmentrelated practices exclusion did not unambiguously preclude coverage of BIPA claim);
Tony’s, 589 F. Supp. 3d at 930 (“BIPA claims do not fall within the exclusion for
employment-related practices.”); Cheese Merchants, No. 21 C 1571, 2022 WL
4483886, at *4 (N.D. Ill. Sept. 27, 2022) (adopting the reasoning of Tony’s in holding
that employment-related practices exclusion did not unambiguously preclude
coverage of BIPA claim arising out of hand scanning practice); Carnagio, 2022 WL
952533, at *6 (holding practice of fingerprinting when clocking in and out of work
did not fall within the employment-related practices exclusion and finding ambiguity
that required resolution in the insured’s favor).
However, Mitsui points to Caremel, wherein another court in this district held
that a similar exclusion unambiguously excluded coverage for BIPA violations. R. 59
at 10. That court explained that the fingerprinting requirement applied to employees
at an individual level and that a “BIPA violation was of the same nature” as the
listed examples, which “reflect a practice that can cause individual harm to an
employee.” 2022 WL 79868, at *4. But, as explained in Citizens, reading the
exclusion to bar coverage for any employment-related practice that “can” cause harm
to an employee would sweep in essentially any claim against an employer. 588 F.
Supp. 3d at 852. Such a reading is contrary the rule that exclusions must be read
“narrowly.” Id. (citing Gillen, 215 Ill. at 393). Further, notwithstanding its initial

23

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 24 of 27 PageID #:1731

finding that the fingerprinting requirement applied to employees individually, the
Caremel court then shifted its definition of the practice in question to a BIPA
violation. That the conduct at issue could be framed, for example, as a policy of
biometric time keeping, a practice of collecting, storing, and transmitting biometric
information, an act of violating BIPA or privacy rights, or the omission of obtaining
authorization only indicates ambiguity in the exclusion as applied. 7 See Citizens, 588
F. Supp. 3d at 852.
Accordingly, Thermoflex’s “policy” of requiring hourly workers to use a
biometric time tracking and attendance system does not fall within the ERP
Exclusion. At a minimum, the ambiguity as to whether the exclusion bars coverage
of the conduct at issue in Gates requires resolution in favor of coverage.
D.

Exhaustion

Mitsui argues that even if none of the exclusions in Coverage U preclude
coverage of the Gates lawsuit, it has no present duty to defend Thermoflex because
under Illinois law, such a duty would not arise until Thermoflex exhausts primary
coverage. R. 59 at 11 (citing Kajima Const. Servs., Inc. v. St. Paul Fire & Marine Ins.
Co., 227 Ill. 2d 102, 115 (2007)). Mitsui asserts that Thermoflex is unable to make
such a showing because another court in this district held that a different, primary

Elsewhere in its original briefing, Mitsui adopts different characterizations for the
practice or policy at issue. Compare R. 36 at 11 (“Thermoflex does not dispute that
its alleged clock-in/clock-out policy is an employment-related practice, policy, act, or
omission) (emphasis added) with id. at 13 (“Thermoflex’s alleged violations of its
employees’ or workers’ privacy rights in their biometric identifiers are precisely “of
the same kind” as the examples of employment-related harms enumerated in the
exclusion) (emphasis added).
7

24

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 25 of 27 PageID #:1732

insurer owes Thermoflex a duty to defend in the Gates lawsuit. Id. at 11 (citing
Citizens, 588 F. Supp. 3d at 848 (Kness, J.)).
Kajima dealt with the doctrines of targeted tender and horizontal exhaustion.
Targeted tender allows an insured covered by multiple and concurrent primary
insurance policies to choose one of those carriers to defend and indemnify it against
a claim. Kajima, 227 Ill. 2d at 107. Horizontal exhaustion “requires an insured to
exhaust all available primary limits before invoking excess coverage.” Id. at 113.
Horizontal exhaustion is “based on the recognition of the difference between primary
and excess insurance.” Id. In Kajima, the Illinois Supreme Court declined to extend
targeted tender to “require an excess policy to pay before a primary policy” because
it would “eviscerate the distinction between primary and excess insurance.” Id. at
116. Rather, the Illinois Supreme Court held that “to the extent that defense and
indemnity costs exceed the primary limits of the targeted insurer, the deselected
insurer or insurers’ primary policy must answer for the loss before the insured can
seek coverage under an excess policy.” Id. at 117.
Thermoflex does not argue that the E/U Policies are not excess in nature, but
instead contends that there are no facts in the record regarding other primary
coverage. R. 64 at 6. But courts regularly take judicial notice of the actions of other
courts. Daniel v. Cook Cty., 833 F.3d 728, 742 (7th Cir. 2016) (citing Gen. Elec. Cap.
Corp. v. Lease Resol. Corp., 128 F.3d 1074, 1081 (7th Cir. 1997)); Opoka v. Immigr.
& Naturalization Serv., 94 F.3d 392, 394 (7th Cir. 1996) (citations omitted) (“Indeed,
it is a well-settled principle that the decision of another court . . . is a proper subject

25

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 26 of 27 PageID #:1733

of judicial notice.”) And in Citizens, the court held that Citizens Insurance Company
of America, which issued Thermoflex a Commercial Lines Policy, owed Thermoflex
a duty to defend in the Gates lawsuit. 588 F. Supp. 3d at 848. Applying the principle
of horizontal exhaustion, Mitsui’s duty to defend Thermoflex under Coverage U is
not triggered until the limits of the Citizens policy are exhausted.
Thermoflex further argues that because Judge Kness did not decide the duty
to indemnify, Citizens does not establish that Thermoflex has primary coverage
through another insurer that it has not exhausted. But whether or not Citizens has
a duty to indemnify does not change the fact that Citizens is a primary policy, and
the E/U Policies are excess policies. And “[i]nsurers which issue excess policies . . .
are not liable to pay defense costs before the conclusion of the underlying suit.
Instead, insurers which issue primary policies have the primary duty to pay defense
costs.” Am. States Ins. Co. v. Liberty Mut. Ins. Co., 291 Ill. App. 3d 336, 339 (1997)
(citations omitted).
Thermoflex finally argues that that the Citizens policy has different effective
dates than the E/U Policies, and that Citizens is refusing to provide a defense and
denying coverage notwithstanding the holding in Citizens. Id. at 5–6. That the E/U
Policies cover a different time period than the Citizens policy does not mean that the
E/U Policies are not excess to it. See Kajima, 227 Ill. 2d at 114. Nor does the fact that
Citizens apparently continues to deny this duty negate Judge Kness’s ruling that
there is a duty owed.

26

Case: 1:21-cv-00788 Document #: 70 Filed: 01/19/23 Page 27 of 27 PageID #:1734

Accordingly, while Mitsui owes Thermoflex a duty to defend under the E/U
Policies because the Gates lawsuit is potentially within the scope of coverage under
Coverage U, that duty to defend does not arise until the limits of the Citizens policy
are reached. Metzger v. Country Mut. Ins. Co., 2013 IL App (2d) 120133, ¶ 20 (“Thus,
if there is even potential coverage, the insurer must assume the defense of the
underlying lawsuit, unless the insurer is secondary or excess, in which case the
insurer’s duty to defend will not arise until the limits in the primary policy are
reached.”)
Conclusion
For the foregoing reasons, the Court grants in part and denies in part
Thermoflex’s partial motion for summary judgment, and grants in part and denies
in part Mitsui’s motion for summary judgment. Mitsui owes no duty to defend under
Coverage E. While Mitsui owes a duty to defend under Coverage U, that duty to
defend does not arise until Thermoflex has exhausted its primary insurance limits.

ENTERED:

______________________________
Honorable Thomas M. Durkin
United States District Judge

Dated: January 19, 2023

27