Ninth Circuit Rules That Statutory Violation Exclusion Bars Coverage For All Underlying Claims

Applying an exclusion for statutory violations, the Ninth Circuit barred coverage for all underlying claims, including non-statutory claims. Big 5 Sporting Goods Corp. v. Zurich Am. Ins. Co., 2015 WL 8057228 (9th Cir. Dec. 7. 2015) (unpublished decision). This follows a growing trend reported on in our April and May 2014 and January 2015 Alerts.

Several class action suits were filed against Big 5 Sporting Goods, alleging the violation of plaintiffs' privacy rights by obtaining and publishing consumers' ZIP codes during credit card transactions. The complaints alleged violations of the Song-Beverly Act and the common law right to privacy. A California federal district court ruled that the insurers had no duty to defend or indemnify the suits based on the policies' Statutory Violation Exclusion, which barred coverage for injury "arising directly or indirectly out of any action or omission that violates or is alleged to violate any statute ... ." The Ninth