The subject of invasion of privacy has been in the news (pretty tragically) lately with the terrible suicide death of a Rutgers University freshman.   Classmates allegedly had been spying on his personal life through a webcam, which upset him to the point that he took his own life. 

I don’t mean to seem insensitive or disrespectful  by leading off this post with such a heart-wrenching case.  But it’s a stark reminder of the facts:  With the proliferation of electronic gadgetry and the ever-expanding reach of cyberspace, the environment is right for invasion of privacy cases to increase exponentially.  From a risk management perspective, these cases frequently generate insurance issues under the “personal injury” coverage part of general liability policies.  Personal injury insurance coverage generally protects the policyholder against liability arising from claims of false arrest, detention or imprisonment, or malicious prosecution; libel, slander, defamation, or violation of right of privacy; and wrongful entry, eviction, or other invasion of right of private occupancy.   As the years have gone by, this type of coverage has gotten more and more restrictive.  Some coverage forms limit “invasion of privacy” to situations where a landlord actually interferes with a tenant’s privacy in a rented room, for example.  So you need to read the coverage form carefully.

In any event, a Pennsylvania school district and its insurance company have just settled a case of first impression over whether the personal injury provisions of a commercial general liability policy cover claims stemming from secret video surveillance inside a home.  Settlement details were not included in court papers, and an attorney for the insurance company, Graphic Arts Mutual Insurance Co., declined to shed light on the agreement in the press.

The facts of the case are, well…weird.  Lower Merion School District, outside of Philadelphia, issued laptops to students that were equipped with webcams. For reasons known only to school authorities and the Almighty, school administrators remotely activated the cameras to take pictures of students in their homes, and the photos were later used in disciplinary proceedings against the students.

For you “Get Smart” fans out there, this sounds like something K.A.O.S. would have pulled.  But one of the students, upon learning of the spying activities, understandably was not amused. The student brought a putative class action against the school district, alleging invasion of privacy, wiretapping violations and intellectual property theft against the district. Graphic Arts agreed to defend the case under a reservation of rights, and filed a declaratory judgment action alleging no coverage.

(By the way, I sometimes close my e-mails with a quote from the American lawyer and statesman Elihu Root [1845-1937], who once said:  “About half the practice of a decent lawyer consists in telling would-be clients that they are damned fools and should stop.”  Spying on students in their homes would have fallen within that category had anyone from the school district asked me.)

In the DJ action. Graphic Arts argued that the claims in the underlying complaint did not fit into any of the defined offenses included in the personal injury coverage, and moved for judgment on the pleadings.

Graphic Arts and the school district  settled before the judge had a chance to rule on the motion. R. Bruce Morrison, an attorney for Graphic Arts, is quoted in the press as follows:  “Recognizing the existence of these issues is the most significant feature going forward, but we don’t have a judicial decision. I don’t know that it is likely to arise again in this exact context, but given the advances in technology, I’m confident that we’re going to see variations of this issue going forward.”

The insurance settlement came shortly after the underlying case ended.  The district court issued a permanent injunction preventing the school district from remotely activating the webcams and restricting its access to student-created files on the laptops.  The school district also agreed to pay $610,000 in settlements.

The insurance case is Graphic Arts Mutual Insurance Co. v. Lower Merion School District et al., case number 10-1707, in the U.S. District Court for the Eastern District of Pennsylvania.

The underlying case is Robbins et al. v. Lower Merion School District et al., case number 10-665, in the U.S. District Court for the Eastern District of Pennsylvania.