State Auto. Mut. Ins. Co. v. Tony's Finer Foods Enters., Inc.
| Docket Number | Case No. 20-cv-6199 |
| Decision Date | 08 March 2022 |
| Citation | 589 F.Supp.3d 919 |
| Parties | STATE AUTOMOBILE MUTUAL INSURANCE COMPANY, Plaintiff, v. TONY'S FINER FOODS ENTERPRISES, INC., Tony's Finer Foods No. 6, Inc., Tony's Finer Foods No. 9, Inc., and Charlene Figueroa, individually and on behalf of all others similarly situated, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Robert Marc Chemers, Pretzel & Stouffer, Chtd., Chicago, IL, Jonathan L. Federman, Gordon & Rees, Chicago, IL, for Plaintiff.
Eamon Padraic Kelly, Matthew H. Rice, Sperling & Slater PC, Chicago, IL, for Defendants Tony's Finer Foods Enterprises, Inc., Tony's Finer Foods No. 6, Inc., Tony's Finer Foods No. 9, Inc.
Haley Renee Jenkins, James B. Zouras, Ryan F. Stephan, Stephan Zouras, LLP, Chicago, IL, for Defendant Charlene Figueroa.
This case involves insurance coverage for a claim in state court under the Illinois Biometric Information Privacy Act ("BIPA") against a grocery store chain known as Tony's. The insurer, State Automobile Mutual Insurance Company, filed suit for a declaratory judgment about its duty to defend. State Automobile later moved for summary judgment.
For the reasons stated below, State Automobile's motion for summary judgment is hereby denied.
Tony's is a family-owned and family-operated grocery store chain with 16 locations in Chicagoland. See Pl.’s Resp. to Defs.’ Statement of Facts, at ¶ 1 (Dckt. No. 28). This case involves three relatives in the corporate family: (1) Tony's Finer Foods Enterprises, Inc., (2) Tony's Finer Foods No. 6, Inc., and (3) Tony's Finer Foods No. 9, Inc. (collectively, "Tony's").
In December 2018, Charlene Figueroa, a former employee, filed suit against Tony's in state court under the Biometric Information Privacy Act ("BIPA"). See Defs.’ Resp. to Pl.’s Statement of Facts, at ¶¶ 18, 22 (Dckt. No. 26); State Ct. Cplt., at ¶¶ 103–04 (Dckt. No. 1-4); Igraffia Decl., at ¶ 3 (Dckt. No. 27-1); see also 740 ILCS 14/1. She worked for Tony's from March 2017 to September 2018. See State Ct. Cplt., at ¶ 48.
According to the state court complaint, Tony's takes the fingerprints of each employee that it hires. See Defs.’ Resp. to Pl.’s Statement of Facts, at ¶ 22 (Dckt. No. 26); State Ct. Cplt., at ¶ 37 (Dckt. No. 1-4). Employees use their fingerprints to clock in and out of work. See Defs.’ Resp. to Pl.’s Statement of Facts, at ¶ 22; State Ct. Cplt., at ¶ 38. That practice, according to Figueroa, violates BIPA.
Tony's received service of process on January 8, 2019, and filed an appearance within a week. See Defs.’ Resp. to Pl.’s Statement of Facts, at ¶¶ 19–20 (Dckt. No. 26).
Tony's notified its insurance broker, Assurance Agency, of the existence of the Figueroa lawsuit. See Pl.’s Resp. to Defs.’ Statement of Facts, at ¶ 4 (Dckt. No. 28). Assurance responded that "all applicable insurance carriers would be provided with notice." Id. ; see also Igraffia Decl., at ¶ 5 (Dckt. No. 27-1).
The parties don't reveal when, exactly, Tony's notified its broker. But it was sometime between January 2019 (when Tony's received service of process) and March 2019 (when Assurance started giving notice to insurers).
Tony's had purchased a number of insurance policies over the years. One of the policies was a commercial general liability insurance policy from State Automobile. See Defs.’ Resp. to Pl.’s Statement of Facts, at ¶ 6 (Dckt. No. 26). The policy ran for one year, starting in March 2013, and Tony's renewed it twice. So Tony's had coverage from March 2013 through March 2016. Id.
But Assurance Agency did not provide notice to State Automobile about the state court lawsuit against Tony's, at least not right away (in 2019). Maybe it figured that there was no coverage under a policy covering 2013 to 2016 for claims by an employee who joined in 2017. Or maybe it thought that there was no coverage for BIPA. Or maybe it was an oversight.
The parties don't reveal the backstory. The key point is that Tony's told the insurance broker about the state court lawsuit, and the broker didn't give notice to State Automobile (again, at least not right away, in 2019).
Instead, in March 2019, Assurance provided notice to one or more insurance carriers for Tony's under different policies. See Pl.’s Resp. to Defs.’ Statement of Facts, at ¶ 5 (Dckt. No. 28). Specifically, those policies included (1) a general liability insurance policy for 2017–18; (2) employment practices liability policies (plural) for 2018–20; and (3) cyber liability insurance policies for 2018–20. Id. ; see also Igraffia Decl., at ¶ 5 (Dckt. No. 27-1).
In June 2019, Tony's filed a motion to dismiss the state court case, arguing that it was barred by BIPA's statute of limitations. See Pl.’s Resp. to Defs.’ Statement of Facts, at ¶¶ 9, 11. (Dckt. No. 28). In December 2019, the Illinois court denied the motion to dismiss. Id. at ¶¶ 12–13.
Not much happened in the state court case for the next three months. But in March 2020, the state court stayed the case to await a decision in a related BIPA case in an Illinois appellate court. Id. at ¶ 14; Igraffia Decl., at ¶ 9 (Dckt. No. 27-1); Stay Order (Dckt. No. 27-6).
In March 2020, an Illinois appellate court issued its decision in West Bend Mutual Insurance Co. v. Krishna Schaumburg Tan, Inc. , 2020 IL App. (1st) 191834, 445 Ill. Dec. 388, 166 N.E.3d 818 (2020). That holding clarified the landscape of coverage for BIPA claims. The court held, in relevant part, that providing fingerprinting data to third parties is a form of "publication" within the meaning of a general liability policy. Id. , 445 Ill. Dec. 388, 166 N.E.3d at 826–27. As a result, the insurer in that case had a duty to defend the employer who took the fingerprints. Id. , 445 Ill.Dec. 388, 166 N.E.3d at 830.
In June 2020, Tony's got wind of the decision, and asked its broker about it. The Figueroa lawsuit covered the same issues as West Bend . So, presumably, Tony's wanted to make sure that its general liability providers knew about the underlying action, and explore the possibility of a duty to defend. Assurance, in turn, said that it would report the underlying action to any other general liability providers. See Pl.’s Resp. to Defs.’ Statement of Facts, at ¶ 22 (Dckt. No. 28).
On September 8, 2020, Tony's tendered its defense in the underlying action to State Automobile. The insurer accepted the tender from that date forward subject to a reservation of rights. See Defs.’ Resp. to Pl.’s Statement of Facts, at ¶ 7 (Dckt. No. 26). Putting that date in perspective, State Automobile received notice in September 2020, meaning 20 months after Tony's received service of process in January 2019.
State Automobile responded by filing the case at hand, advancing six counts. See Cplt. (Dckt. No. 1). Five counts request a declaratory judgment that it does not have a duty to defend Tony's in the underlying action in state court. Id. at ¶¶ 10–35. The other count requests reimbursement for any defense costs incurred. Id. at ¶¶ 36–39.
As an aside, one of the unexplained mysteries in the filings is why a policy that ran from 2013 to 2016 could cover claims by an employee who joined the company in 2017. Maybe it has something to do with the fact that Figueroa brought a class action. That is, maybe the proposed class and class period include claims by members from 2016 or earlier. Another possibility is that it has something to do with BIPA's retention schedule provision, which has a look-back period of three years from the company's last contact with the employee. And here, Figueroa left the company in 2018, so the three year period stretches back to 2015.
But the parties don't tell that part of the story. It's not clear why a policy from 2013 to 2016 would cover an employee who joined in 2017. Who knows. The key point is that State Automobile is not arguing that a policy covering 2013 to 2016 cannot apply to an employee who joined the company in 2017 because she joined after the end of the policy period. It's not an issue in the motion, so the Court will put it to the side.
Turning back to the story, the state court continued a start-and-stop approach. Seven months later, in October 2020, the state court lifted the stay, but it didn't last long. See Pl.’s Resp. to Defs.’ Statement of Facts, at ¶ 15 (Dckt. No. 28). Four months later, in February 2021, the state court stayed the case for a second time. It put the case on ice because a related case is currently before the Illinois Supreme Court. Id. at ¶ 16; Igraffia Decl., at ¶ 10 (Dckt. No. 27-1); Order Staying Litigation and Duty to Answer (Dckt. No. 27-8).
The state court has stayed the case twice, and the second stay remains in effect. Or, at the very least, the parties have not notified this Court that the stay was lifted.
Since service of process in January 2019, the state case has been stayed much of the time. The case was stayed from March 2020 to October 2020 (i.e. , seven months), and again from February 2021 to the present (i.e. , thirteen months). That's roughly 20 out of 39 months – about half the time.
Looking at it from a different angle, the case has been stayed much of the time since the state court denied the motion to dismiss in December 2019 (i.e. , 20 months out of the 28 months from December 2019 to March 2022). (The Court is rounding the months, but the point is directionally correct.)
In light of the two stays, the state court case is still in the early stages. In fact, the pleadings aren't even complete. Tony's has not yet filed an answer. See Pl.’s Resp. to Defs.’ Statement of Facts, at ¶ 16 (Dckt. No. 28). It has not produced discovery, and has not briefed the issue of class certification. Id. at ¶¶ 17–18. Tony's also has not settled, or offered to...
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