This is the second part of a six part series of articles discussing insurance coverage for claims that can be brought against individuals or companies because of the use of Social Media websites. Additional articles in this series can be found here: Part 1 and Part 3.This article discusses coverages potentially triggered under Coverage B — Personal and Advertising Injury and any applicable exclusions.
Personal Injury Offenses Covered In Commercial General Liability And Homeowners Policies
Most Commercial General Liability policies contain Coverage Part B that provides coverage for personal and advertising injury. Some homeowner and renters policies, but not all, provide coverage for personal injury. Carefully review the policy to determine if it does provide personal injury coverage. If not, then coverage must still be analyzed under Coverage Part A for bodily injury coverage, which will be discussed in part three of this series.
The definition of “personal injury” is typically:
13. “Personal and advertising injury” means injury including consequential “bodily injury” arising out of one or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies committed by or on behalf of an owner, landlord, or lessor;
d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;
e. Oral or written publication, in any manner, of material that violates a person's right of privacy;
f. The use of another's advertising idea in your “advertisement” or
g. Infringing upon another's copyright, trade dress, or slogan in your “advertisement.”
The policy may contain additional offenses or endorsement that modifies the definition of “personal injury.” However, typically only subsections d (libel/slander) and e (invasion of privacy) are typically implicated when a claim is presented for claims related to social media.
To trigger “personal injury” coverage, the complaint must arguably allege a claim that constitutes at least one of the offenses listed in the policy. The policy does not provide coverage for other torts alleged in the complaint that do not constitute specifically enumerated offenses contained in the definition of “personal injury,” but that may bear some similarity to those offenses listed in the policy. There is no coverage if the complaint does not allege or the plaintiff does not recover for an enumerated offense.
There may still be coverage under the policy for a claim asserted in the Complaint that alleges a non-enumerated offense so long as it occurred during the course of an enumerated offense.
In Western Cas. & Sur. Co. v. International Spas of Ariz., 130 Ariz.76, 634 P.2d 3 (1981), for example, the insured had leased a portion of its premises for the operation of a beverage service. The insured had terminated the lease and excluded the lessee from the premises. The lessee sued the insured for breach of the lease, conversion of personal property, conspiracy to interfere with business and contractual relationships, and imposition of a constructive trust. The insured sought “personal injury” coverage under a Commercial General Liability policy, arguing that the lawsuit alleged a wrongful eviction even though no such claim was asserted.
The carrier argued that the policy only provided coverage for wrongful evictions of patrons to the insured's facilities and not the wrongful eviction of its customers (i.e., lessees). The Arizona Supreme Court rejected this contention and stated that the policy contained no such restriction limiting liability. Instead, the Supreme Court held that the carrier had an initial duty to defend because two of the counts (conversion and interference with business relations) alleged torts committed during the course of the alleged wrongful eviction.
In the social media context, a complaint may not specifically allege an invasion of privacy or a defamation claim, but alleges that the defendant intentionally or negligently inflicted emotional distress when it published defamatory comments about the plaintiff. Under those circumstances, the policy may provide coverage because the emotional distress claim, although not an enumerated offense, occurred during the course of an enumerated offense; namely, defamation or invasion of privacy. A similar analysis would apply if the complaint alleges an intentional interference with business relationships claim that arose out of the publication of defamatory materials or material that invades the privacy of an individual.
Some policies contain the enumerated offense “outrageous conduct,” but may not define what constitutes the offense of “outrageous conduct.” A savvy insured's attorney may argue that because the term “outrageous conduct” is undefined, it is ambiguous and should be construed against the carrier to provide coverage for the social media claim; more specifically, that the conduct of posting any comments, pictures, videos, or other items on the Internet is outrageous. Some jurisdictions have held that the lack of a definition of an operative term in a policy does not necessarily render the term ambiguous. In determining whether a policy term is ambiguous, a court may first examine the purpose of the term or phrase, public policy considerations, and the purpose of the transaction as a whole and also construe the policy's provisions according to their plain and ordinary meaning.
The term “outrageous conduct” is defined by Black's Law Dictionary as “Conduct so extreme that it exceeds all reasonable bounds of human decency. See EMOTIONAL DISTRESS.” Black's Law Dictionary also defines “emotional distress” as follows:
A highly unpleasant mental reaction (such as anguish, grief, fright, humiliation, or fury) that results from another person's conduct; emotional pain and suffering. Emotional distress, when severe enough, can form a basis for the recovery of tort damages. — Also termed emotional harm; mental anguish; mental distress; mental suffering. See INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS. Cf. mental cruelty under CRUELTY. [Cases: Damages 48-56.20. C.J.S. Damages §§ 94-104; Parent and Child § 344; Torts §§ 66-83.]
Thus, the offense of “outrageous conduct” involves the infliction of mental distress. Indeed, the term “outrageous conduct” is a legal term of art that refers to a claim typified by the Restatement (Second) of Torts § 46. Various courts have concluded such, albeit in the non-social media context. See, e.g., Hines v. Hills Dept. Stores, Inc., 454 S.E.2d 385, 390 (W. Va. 1994) (“Our review of the case law discussing the tort of outrageous conduct illustrates that it is a difficult fact pattern to prove. A certain level of outrageousness is required, as explained in the Restatement (Second) of Torts….”); Kelly v. Resource Housing of Am., Inc., 615 A.2d 423, 426 (Pa. Super. 1992)(“The tort of outrageous conduct causing severe emotional distress is outlined at the Restatement (Second) of Torts, § 46….”); LaBrier v. Anheuser Ford, Inc., 612 S.W.2d 790, 793 (Mo. Ct. App. 1981)(“Missouri has recognized the tort of outrageous conduct as defined by § 46 of the Restatement (Second) of Torts”).
Whether posting inappropriate comments, pictures, videos, etc. constitutes outrageous conduct is probably a factual issue that will not be addressed in this article. Suffice it to say that in reviewing policies, attorneys, adjusters, and insureds should be careful to review the actual offenses listed, review the relevant case law addressing those enumerated offenses, and any legal or common dictionaries that may define such phrases before making a determination whether the social media claim may be covered by the policy.