Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC

Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC

Opinion

MEMORANDUM OPINION AND ORDER

Plaintiff Citizens Insurance Company of America sold a business liability insurance policy to Defendant Wynndalco Enterprises, LLC. While the policy was in effect, Wynndalco was sued in two separate class action lawsuits for allegedly selling [*2]  biometric information in violation of the Illinois Biometric Information Privacy Act ("BIPA"), 740 Ill. Comp. Stat. 14/1 et seq.

In turn, Wynndalco and its officers, David Andalcio and Jose Flores, notified Citizens of the lawsuits and requested defense under the insurance policy. Citizens then filed this lawsuit, seeking a declaratory judgment that the policy does not cover the two underlying lawsuits. Wynndalco filed a counterclaim seeking the opposite.

Now Citizens and Wynndalco have filed cross-motions for judgment on the pleadings. Because the policy exclusion invoked by Citizens does not unambiguously preclude coverage for the underlying lawsuits, Citizens' motion is denied, and Wynndalco's cross-motion is granted.

I. Undisputed Facts

A. The Thornley and Calderon Lawsuits

The litigation that prompted this insurance coverage dispute involves the secret collection of more than three billion facial scans by Clearview AI, an artificial intelligence company that specializes in facial recognition software. See 1st Am. Compl. ("Compl.") ¶ 19, ECF No. 20. Clearview AI allegedly extracted, or "scraped," photographs from social media and content sharing platforms like Facebook, Twitter, Instagram, YouTube, and Venmo to create a database of facial scans ("Clearview Database"). [*3]  Id. Clearview AI also created a facial recognition application ("Clearview App") that allows its customers to identify individuals by comparing facial pictures they take to the Clearview Database. Id. Wynndalco, an information technology ("IT") services and consulting firm, licensed and sold access to the Clearview Database and Clearview App to customers in Illinois. Id. ¶¶ 21-22.

Melissa Thornley and Mario Calderon, on behalf of themselves and others similarly situated, each filed class action lawsuits (the "Thornley Lawsuit" and the "Calderon Lawsuit;" together, the "Lawsuits") against Wynndalco, alleging that Wynndalco had violated BIPA—an Illinois statute that regulates the collection, disclosure, retention, and destruction of biometric information, by selling Clearview's products in Illinois. Id. ¶¶ 18, 28; see Compl. Ex. B, Class Action Compl., Thornley v. CDW-Gov't, LLC, No. 2020 CH 04346 (Cir. Ct. Cook Cnty. May 27, 2020), ECF No. 20-2; Compl. Ex. C, 1st Am. Class Action Compl., Calderon v. Clearview AI, Inc., No. 1:20-cv-01296-CM (S.D.N.Y. July 22, 2020), ECF No. 20-3.¹

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