The Seventh Circuit found that the insured's illegal recording of conversations with customers did not constitute a publication under the insured's liability policy. Defender Security Co. v. First Mercury Ins. Co., 2015 U.S. App. LEXIS 17116 (7th Cir. Sept. 29, 2015). A class action complaint was filed in California, alleging that Defender Security Company, a provider of home security systems, illegally recorded conversations in which customers provided personal information, including full names, addresses, dates of birth, and social security numbers. The complaint also alleged that Defender used "call recording technology" that allowed it to record conversations with customers and then store the recordings for various business purposes. These actions violated the California Penal Code, which prohibited the recording of confidential telephone communications without the consent of all parties. Defender tendered to its liability carrier, First Mercury. The policy promised to pay amounts that the insured became legally obligated to pay as damages because of "personal injury" or "advertising injury." The policy defined both "advertising injuries" and "personal injuries" as those "arising out of . . . oral or written publication of material that violates a person's right of privacy." First Mercury denied coverage because there was no publication. Defender sued and First Mercury filed a motion to dismiss. The district court granted First Mercury's motion to dismiss. On appeal, the Seventh Circuit considered the proper interpretation of "publication." Defender argued that publication was achieved when the material was transmitted to Defender's recording device. The Seventh Circuit disagreed. The common dictionary definitions of "publication" described the release of information by the party holding it. There were no allegations that any third party received the information. Therefore, the Seventh Circuit affirmed the dismissal of Defender's complaint.
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