Cox Enters., Inc. v. Hiscox Ins. Co.

• Decision Date: 29 July 2020
• Docket Number: CIVIL ACTION FILE NO. 1:20-CV-415-MHC
• Citation: 478 F.Supp.3d 1335
• Parties: COX ENTERPRISES, INC. and Cox Radio, Inc., Plaintiffs, v. HISCOX INSURANCE COMPANY, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

478 F.Supp.3d 1335

COX ENTERPRISES, INC. and Cox Radio, Inc., Plaintiffs,

v.HISCOX INSURANCE COMPANY, INC., Defendant.

CIVIL ACTION FILE NO. 1:20-CV-415-MHC

United States District Court, N.D. Georgia, Atlanta Division.

Signed July 29, 2020

Andrew N. Bourne, Pro Hac Vice, Joshua L. Blosveren, Pro Hac Vice, Steven Silverberg, Pro Hac Vice, Hoguet Newman Regal & Kenney, LLP, New York, NY, Dara D. Mann, Petrina Ann McDaniel, Squire Patton Boggs (US) LLP, Atlanta, GA, for Plaintiff Cox Enterprises, Inc.

Joshua L. Blosveren, Hoguet Newman Regal & Kenney, LLP, New York, NY, for Plaintiff Cox Radio, Inc.

Andrea Mahady Price, Celeste R. Coco-Ewing, Pro Hac Vice, Judy Yetta Barrasso, Robert J. Dressel, Barrasso, Usdin, Kupperman, Freeman & Sarver, LLC, New Orleans, LA, Sterling Gardner Culpepper, III, Rogers & Hardin, LLP, Atlanta, GA, for Defendant.

ORDER

MARK H. COHEN, United States District Judge

This case comes before the Court on Defendant Hiscox Insurance Company, Inc. ("Hiscox")’s Rule 12(b)(6) Motion to Dismiss [Doc. 29].

I. BACKGROUND¹

This case involves Hiscox's denial of multimedia liability insurance coverage to Cox Enterprises, Inc. ("CEI") and Cox Radio, Inc. ("Cox Radio") (collectively "Cox"). Second Am. Compl. ¶ 1.

A. Insurance Policy Coverage

Hiscox sold CEI US TNT Multimedia Liability Policy No. US UAA 261.9952.11 (the "Policy") [Doc. 29-2 at 42-51],² with a policy period of December 1, 2011, through December 1, 2012. Id. ¶ 14. The Policy's basic insuring clause states:

We will indemnify you for defense costs and damages incurred as a result of a claim that falls within WHAT HAS TO GO WRONG (Section II) under this policy, WHAT WE WILL PAY (Section IV) under this policy, and HOW MUCH WE WILL PAY (Section V) under this policy.

Id. ¶ 17 (citing Policy § I). The insured has coverage under the Policy when

[t]he performance of media activities by you or anyone on your behalf during the policy period results in a claim against you that arises from covered media or advertising , regardless of when such claim is made or where such claim is brought, and including but not limited to any claim for actual or alleged:

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e. infliction of emotional distress or outrage;

f. breach of any duty of confidentiality, invasion of privacy or violation of any other legal protections for personal information, including but not limited to false light, intrusion upon a person's seclusion, public disclosure of a person's picture, name, voice, or identify for commercial gain, or unauthorized interception or recording of sound or date in violation of a civil anti-wiretap statute;

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l. negligent supervision of an employee, but only when asserted in conjunction with and based on the same factual allegations as a claim under (a) - (m); and/or

m. any form of negligence (including any negligent act, negligent error, negligent omission, negligent misrepresentation, negligent misstatement, including negligent transmission of a computer virus) but only where arising from your media content disseminated in covered media or advertising .

Id. ¶ 18 (citing Policy § II; Policy Decl. [Doc. 29-2 at 6-39], Endorsement 1). The Policy defines "media activities" as:

1. the gathering, acquisition, investigation, collection, researching, creation and compilation of media content ;

2. any broadcast, transmission, dissemination, telecast, cablecast, syndication, serialization, podcast, streaming, or production of media content ;

3. any publication, republication, or dissemination of media content including any special editions or supplements to such media content ;

4. any digital, online, or electronic dissemination of media content ;

5. the release, distribution, licensing, sale, lease, or exhibition of media content;

regardless of the mode or method of communication of such media content .

Id. ¶ 19 (citing Policy § VIII). The Policy defines "media content" as:

the substance of any communication of any kind whatsoever within covered media or advertising , regardless of the nature or form of such "media content" or the medium by which such "media content" is communicated, including but not limited to language, data, facts, fiction, music, photographs, advertisements, artistic expression, or visual or graphical materials.

Id. ¶ 20 (citing Policy § VIII).

The parties disagree whether Cox performed "media activities" that resulted in a claim against Cox arising from covered media or advertising. See id. ¶¶ 81-83; Def.’s Mem. at 1. The Policy defines "covered media" as "the specific media described as ‘covered media’ in the Declarations." Policy § VIII. The Policy Declaration states that "covered media" means

[a]ll publications, programming and other communications (but not including ordinary business communications not directly related to the preparation, dissemination or promotion of your multimedia products) produced or disseminated by you; including but not limited to content of personal appearances by you and all content disseminated via websites owned or operated by you.

Second Am. Compl. ¶ 21 (citing Policy Decl. § III).

The Policy Declaration defines "advertising" in two different ways. In Endorsement 1, advertising is defined as "advertising, marketing, publicity, or promotion of the insured's, existing subsidiary's , or acquired entity's own goods and services and of the goods and services of their clients." Second Am. Compl. ¶ 22; Policy Decl., Endorsement 1 (deleting and replacing the definition of "advertising" in the Policy). In Endorsement 6, "advertising" is defined as "advertising, publicity, or promotion in or of covered media regardless of the form of such ‘advertising’ including ‘advertising’ via any social media platforms (including but not limited to Facebook, Twitter, LinkedIn or MySpace)." Policy Decl., Endorsement 6 (deleting and replacing the definition of "advertising" in the Policy).

B. Factual Allegations

In 2016, Cox Radio, an employee of Cox Radio, Michael Calta ("Calta"), and a former employee of Cox Radio, Matthew Loyd ("Loyd"), were all named as defendants in a lawsuit filed in Florida state court by Terry Bollea, a/k/a Hulk Hogan ("Bollea") (the "Bollea Action"). Second Am. Compl. ¶¶ 2, 27. The Bollea Action asserted nine causes of action against Cox Radio³ related to an alleged conspiracy among Cox Radio, Calta, and Loyd to disseminate videotaped recordings (and excerpts and images thereof) of sexual encounters between Bollea and the then-wife of a Tampa radio personality. Id. ¶ 27.

Bollea alleged that Cox Radio, Calta, and Loyd "repeatedly victimized Bollea by obtaining, using, disclosing, dissemination, and exploiting surreptitiously recorded and illegally obtained video footage of Bollea naked, engaged in sexual activity, and having private conversations in a private bedroom (the ‘Footage’)." Id. ¶ 28. Bollea alleged that Cox Radio, Calta, and Loyd conspired (1) to leak and sell information about and excerpts from the Footage to TMZ and TheDirty.com in March-April 2012, and (2) to anonymously send a DVD containing some of the Footage to the then-editor of Gawker.com in September-October 2012. Id. ¶¶ 29-30. TMZ published a story about the Footage, TheDirty published screenshots from and stories about the Footage, and Gawker posted a video showing excerpts of the Footage. Id. Further, in July 2015, the National Enquirer published a story quoting excerpts from the Footage, which it described as coming from a court-protected, confidential transcript that contained racist comments made by Bollea. Id. ¶ 31. Bollea alleged that Cox Radio, Calta, and Loyd's actions substantially contributed to the National Enquirer’s publication. Id. Calta was employed by Cox during the entire relevant period, and Loyd was employed by Cox when the Footage was sent to Gawker. Id. ¶¶ 32-33. Bollea alleged that both employees were acting within the course and scope of their employment with Cox. Id.

On May 6, 2016, CEI provided notice to Hiscox of a claim for insurance coverage arising from the Bollea Action (the "Claim"). Id. ¶¶ 2, 50. On June 3, 2016, Hiscox issued a reservation-of-rights letter wherein it acknowledged that:

(1) the Claim arose "out of the dissemination of certain videos of Terry Bollea (a/k/a Hulk Hogan) engaged in sexual activity and making certain racist statements";

(2) Bollea alleged that Cox Radio disseminated the Footage through its "disclosure of the videos" to both TMZ.com and Gawker.com "for inclusion in their programming";

(3) Bollea alleged that Calta and Loyd were "acting within the scope of their employment with Cox and with the knowledge of their superiors at Cox";

(4) the claims in the Bollea Action may have arisen from the creation or dissemination of "advertising," as defined in the Policy; and

(5) the Policy "is a duty to pay policy" and consented to Cox Radio's choice of defense counsel and promised to pay defense costs once the $500,000.00 retention was exhausted.⁴

Id. ¶¶ 51-55.

Before Cox filed this case, the parties had several communications regarding coverage for defense costs in the Bollea Action. Between July 11, 2017, and August 22, 2017, Ms. Greenhill, a CEI employee, and Ms. Bodden, a Hiscox employee, exchanged emails regarding reimbursement of defense costs. Id. ¶¶ 56-60. On July 20, 2017, Ms. Bodden wrote that Hiscox "will be reimbursing defense costs" and "will need to look at allocation for non[-]covered matters." Id. ¶ 57. Then on August 22, 2017, Ms. Bodden wrote that there was "no issue with allocation at this point." Id. ¶ 59. On March 19, 2018, Hiscox sent a letter acknowledging that Cox has exhausted the retention and found that it was "appropriate to discuss allocation of further defense costs." Id. ¶ 61. On April 9, 2018, Cox responded, stating that it "d[id] not agree that this claim presents a situation of covered and noncovered matters" and thus did not agree with Hiscox's views on allocation. Id. ¶ 62. Further communication ensued between the parties throughout April 2018, April 2019, October 2019, and December...