Illinois Appellate Court Rejects Coverage For Blast-Fax Class Action Under The TCPA

On May 18, 2016, in First Mercury Insurance Company v. Nationwide Security Services, Inc. et al., the First District of the Illinois Appellate Court affirmed the Circuit Court of Cook County's ruling of no coverage after the insured settled a "Blast-Fax" class action lawsuit brought under the Telephone Consumer Protection Act. The TCPA provides for a $500 statutory award per violation of the Act. Significantly, the court found that a $500 "per claim" deductible applied for each recipient of the unsolicited fax and that the CGL policy did not cover "punitive or exemplary damages," which included any amounts above the statutory award.  

The underlying suit involved Nationwide Security Services, Inc., a private detective agency focusing on family-related matters. Nationwide sent an unsolicited fax advertisement to 3,671 recipients stating that Nationwide could help "track your spouse or significant other's daily activities" or "locate anyone, anywhere." A recipient of