On December 6, 2013, Society issued a certain businessowners insurance policy for tavern and restaurant owners (the "Policy") to MCI (Filing No. 12-1). Under the terms of the Policy, Society promised to provide MCI with general business liability coverage, including coverage for sums MCI "becomes legally obligated to pay as damages because of 'bodily injury,' 'property damage,' or 'personal and advertising injury'" to which the Policy applies, and has a duty to defend MCI in any lawsuit seeking such damages. (Filing No. 12-1 at 71). The Policy defines "property damage" as "[p]hysical injury to tangible property, including all resulting loss of use of that property..." or "[l]oss of use of tangible property that is not physically injured..." (Filing No. 12-1 at 86). The definition of "property damage" further clarifies that "electronic data is not tangible property" under the Policy (Filing No. 12-1 at 86). Moreover, the Policy clearly states that it only covers "bodily injury" and "property damage" to the extent it is "caused by an 'occurrence' that takes place in the 'coverage territory' ... during the policy period" (Filing No. 12-1 at 71). An "occurrence" under the Policy "means an accident, including continuous or repeated exposure to substantially the same general harmful conditions" (Filing No. 12-1 at 85). The Policy also defines "personal and advertising injury" as
injury, including consequential 'bodily injury,' arising out of one or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the right of privacy occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services
e. Oral or written publication, in any manner, of material that violates a person's right to privacy;
f. The use of another's advertising idea in your "advertisement"; or
g. Infringing upon another's copyright, trade dress or slogan in your "advertisement".
(Filing No. 12-1 at 86).
In addition to the standard liability coverage provided by the Policy, MCI purchased coverage under an Employment-Related Practices Liability Endorsement that was incorporated into the Policy (the "Endorsement") (Filing No. 12-1 at 24-31). Under the Endorsement, Society is required to cover MCI for any damages it "becomes legally obligated to pay resulting from a 'wrongful act'" to which the Endorsement applies and imposes a duty to defend on Society in any lawsuits seeking such damages (Filing No. 12-1 at 25). The Endorsement defines "wrongful act" to mean
one or more of the following offenses, but only when they are employment-related:
a. Wrongful demotion or failure to promote, negative evaluation, reassignment, or discipline of your current "employee" or wrongful refusal to employ;
b. Wrongful termination, meaning the actual or constructive termination of an "employee":
(1) In violation of breach of applicable law or public policy; or
(2) Which is determined to be in violation of a contract or agreement, other than an employment contract or agreement, whether written, oral or implied, which stipulates financial consideration is due as the result of a breach of the contract;
c. Wrongful denial of training, wrongful deprivation of career opportunity, or breach of employment contract;
d. Negligent hiring or supervision which results in any of the other offenses listed in this definition;
e. Retaliatory action against an "employee" because the "employee" has:
(1) Declined to perform an illegal or unethical act;
(2) Filed a complaint with a governmental authority or a "suit" against you or any other insured in which damages are claimed;
(3) Testified against your or any other insured at a legal proceeding; or(4) Notified a proper authority of any aspect of your business operation which is illegal;
f. Coercing an "employee" to commit an unlawful act or omission within the scope of that person's employment;
g. Harassment;
h. Libel, slander, invasion of privacy, defamation or humiliation; or
i. Verbal, physical, mental or emotional abuse arising from "discrimination".
(Filing No. 12-1 at 30-31). Neither the Endorsement nor the Policy generally provides a definition for the term "employment-related."
Although the Policy generally provided coverage for business liabilities that MCI may incur, it also included several exclusions to its business liability coverage (Filing No. 12-1 at 74-81). Specifically, Society notes that the Policy excludes coverage for "personal and advertising injury" damages stemming from "Criminal Acts" and "Recording And Distribution Of Material Or Information In Violation Of Law." (Filing No. 12-1 at 79-80; Filing No. 66 at 11). Under the "Criminal Acts" exclusion, Society is not required to cover MCI for any "'[p]ersonal and advertising injury' arising out of a criminal act committed by or at the direction or the insured" (Filing No. 12-1 at 79). The "Recording And Distribution Of Material Or Information In Violation Of Law" exclusion further provides that Society is not obligated to cover damages incurred by MCI for
"[p]ersonal and advertising injury" arising directly or indirectly out of any action or omission that violates or is alleged to violate:
(1) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law; or
(2) The CAN-SPAM Act of 2003, including any amendment of or addition to such law; or
(3) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transaction Act (FACTA); or
(4) Any federal, state, or local statute, ordinance or regulation, other than the TCPA CAN-SPAM Act or 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing,dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.
(Filing No. 12-1 at 79-80).
On January 26, 2015, DirecTV, LLC ("DirecTV") filed two lawsuits against MCI, pursuant to the Cable Communications Policy Act of 1984 (the "CCPA"), 47 U.S.C. § 521, et seq. (collectively, the "DirecTV Action").1 DirecTV, LLC v. Martinsville Corral, Inc., No. 1:15-cv-00104-JMS-TSB (S.D. Ind. filed Jan. 26, 2015); DirecTV, LLC v. T.C. of Martinsville, LLC, No. 1:15-cv-00105-TWP-TAB (S.D. Ind. filed Jan. 26, 2015). In its complaints, DirecTV alleged that MCI used DirecTV's specialized satellite equipment to access DirecTV's television programs that are communicated electronically by DirecTV via satellite (the "Satellite Programming") in its restaurants for commercial gain without paying DirecTV a commercial subscription fee (Filing No. 54-1 at 5, 16).2 DirecTV also points out that since it also provides residential subscriptions to its Satellite Programming using the same transmission equipment, it is possible for its residential subscribers to remove the equipment from their homes and reinstall it in commercial establishments without DirecTV's knowledge (Filing No. 54-1 at 5, 16). Importantly, however, DirecTV never specifically alleged that MCI removed any transmission equipment in order to access the Satellite Programming for commercial purposes.
DirecTV specifically claimed that MCI (1) violated the CCPA because it "illegally and without authorization, intercepted, received and exhibited, or otherwise assisted in the unauthorized interception, reception or exhibition" of the content and substance of its Satellite Programming; (2) violated 18 U.S.C. § 2511 by "intentionally intercept[ing], endeavor[ing] to intercept, or procur[ing] other persons to intercept electronic communications from DIRECTV" and by "disclos[ing] or endeavor[ing] to disclose to others the content of electronic communications" when it knew or should have known "the information was obtained through the interception"; and (3) converted "DIRECTV's property for [its] own commercial use and benefit" (Filing No. 54-1 at 3, 7-9, 14, 18-20). DirecTV alleged that it was damaged by MCI's actions because "(a) DIRECTV has been denied subscription fees for commercial use of its...
