Eleventh Circuit Holds No Duty to Defend Credit Card Transaction Claim

In its recent decision in Creative Hospital Ventures, Inc. v. E.T. Limited, Inc., 2011 U.S. App. LEXIS 19990 (11^th Cir. Sept. 30, 2011), the United States Court of Appeals for the Eleventh Circuit, applying Florida law, addressed whether the issuance of a credit card receipt to a customer constitutes “publication” for the purpose of a general liability policy’s “personal and advertising injury” coverage.

The insured, ETL, was named as a defendant in a class action suit alleging that defendants violated the Fair and Accurate Credit Card Transaction Act (“FACTA”) by issuing credit card receipts to customers that revealed more than five digits of their credit card numbers.  ETL claimed that the underlying suit constituted the personal and advertising injury offense of “oral or written publication, in any manner, of material that violates a person’s right of privacy,” thus triggering a defense obligation under a policy issued by Essex Insurance Company.  Essex argued, and the federal district court agreed, that ETL’s issuance of a credit card receipt did not constitute “publication” as that term is used in a general liability policy.  Relying on the Florida Supreme Court decision in Penzer v. Transportation Ins. Co., 29 So. 3d 1000 (Fla. 2010), the lower court held that “publication” requires dissemination of information to the public rather than to the individual cardholder.

On appeal, the Eleventh Circuit agreed that the Penzer decision was determinative of what constitutes “publication” under Florida law.  Penzer involved an alleged violation of the Telephone Consumer Protection Act (“TCPA”) resulting from the insured’s transmittal of unsolicited facsimiles, or “blast faxes.”  Relying on a standard dictionary definition of the word, the Florida Supreme Court held that publication involves some act of communication or dissemination of information to the public at large.  This definition, explained the court, necessarily encompassed the act of faxing an advertisement to 24,000 people at the same time “because it constitutes a communication of information disseminated to the public and it is ‘the act or process of issuing copies … for general distribution to the public.’”  Penzer at 1005-06. 

With this definition in mind, the Eleventh Circuit held that distributing a credit card receipt to a customer is not “publication.”  Rather, the receipt “is a contemporaneous record of a private transaction between ETL and the customer, and ETL neither broadcasted nor disseminated the receipt or the credit card information to the general public.”  The court distinguished a credit card receipt from the blast-faxes in Penzer on the basis that plaintiffs in Penzer did not solicit the facsimiles whereas in the underlying class action, the plaintiffs initiated the purchase that generated a credit card receipt.  The court further rejected ETL’s argument that the use of the phrase “in any manner” as used in the defined offense of “oral or written publication” expanded the definition of “publication” to include credit card receipts.  As the court explained, the phrase “‘in any manner’ merely expands the categories of publication (such as e-mail, handwritten letters, and, perhaps, ‘blast-faxes’) covered by the Policy” but did not dispense with the requirement that the publication itself be directed to the public at large.