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Insurer must defend Clearview 'facilitator' accused of BIPA violation

April 1, 2022

By Barbara Grzincic | Reuters (March 31, 2022) -- Citizens Insurance Co of America must defend IT services firm Wynndalco Enterprises against two potential class actions that say it violated Illinois’ Biometric Information Privacy Act (BIPA) by helping the Chicago Police Department access Clearview AI’s controversial facial-recognition database, a federal judge in Chicago ruled Wednesday.

U.S. District Judge John Z. Lee said the insurer was reading its policy exclusion for claims related to “Distribution of Material in Violation of Statutes” too broadly, and that it does not clearly exclude claims of BIPA violations.

The exclusion lists just four statutes – the Telephone Consumer Protection Act, the CAN-SPAM Act, the Fair Credit Reporting Act and the Fair and Accurate Credit Transaction Act – followed by a catch-all provision for any other statute that regulates the “dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.”

Citizens argued that the catch-all provision clearly described BIPA, because it is a statute that regulates how businesses can collect and use individuals’ biometric information. However, Lee said the catch-all was ambiguous.

“The only discernible resemblance between the TCPA, the CAN-SPAM Act, FCRA, and FACTA is that they all protect ‘privacy,’” Lee said. “But … ‘privacy’ in the BIPA context means something much different than ‘privacy’ in the TCPA context, so the similarity is superficial at best.”

Lee noted that the Illinois Supreme Court reached the same conclusion last May in a case involving a similar exclusion, and that Citizens’ attempt to distinguish that case was “not persuasive.”

Citizens’ attorneys at Lewis Brisbois Bisgaard & Smith did not immediately respond to requests for comment on Wednesday.

David Golub of Silver Golub & Teitell, lead counsel for Addison, Illinois-based Wynndalco, also had no immediate comment.

The allegations against Wynndalco are included in two potential class actions against Clearview AI pending in state court in Illinois (the Thornley complaint) and in federal multidistrict litigation (the Calderon complaint). Both actions accuse Clearview of creating a database of more than 3 billion facial scans by “scraping” or copying images and identifying information from Facebook, Twitter, Instagram, LinkedIn, YouTube, and other sites.

Wynndalco had no role in creating Clearview’s products but violated BIPA by profiting off of them, the plaintiffs allege. Specifically, the complaints say Wynndalco purchased licenses to use Clearview’s products and sold the licenses at a profit to CDW-Government, which resold the licenses to the Chicago Police Department.

Citizens filed its declaratory judgment action after Wynndalco asked for a defense against the Thornley and Calderon complaints.

The case is Citizens Insurance Company of America v. Wynndalco Enterprises et al., U.S. District Court for the Northern District of Illinois, No. 20-3873.

For Citizens Insurance: Jeffrey Goldwater and Kelly Ognibene of Lewis Brisbois Bisgaard & Smith

For Wynndalco: David Golub of Silver Golub & Teitell

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