A federal judge has a ruled a jury should decide whether an insurer is obligated to cover a small supermarket chain facing a class action lawsuit accusing it of violating a state biometrics privacy law.
U.S. District Judge Steven Seeger issued an opinion March 8 denying summary judgment to State Automobile Mutual Insurance, which had asked the judge to declare it wasn’t obligated to defend Tony’s Finer Food Enterprises. State Auto is a Liberty Mutual company.
Tony’s operates 16 Chicago area stores and is facing a lawsuit from lead plaintiff Charlene Figueroa.
Figueroa has alleged the retailer violated the Illinois Biometric Information Privacy Act when it required workers to use a fingerprint-scanner time clock to track their work hours.
Stephan Zouras LLP, of Chicago, is representing Figueroa, as it did in another BIPA class action in which she served as the lead plaintiff. That action resulted in a $15 million settlement with Kronos, a manufacturer of time clocks like the one she used while working at Tony’s from March 2017 to September 2018. Figueroa collected a $7,500 incentive award in that lawsuit.
The Chicago firms of Shook Hardy and Bacon and Perkins Coie, which represented Kronos, argued in September 2020 than Stephan Zouras was using discovery in the Kronos case to identify Kronos’ customers to bring BIPA claims using identical allegations.
Figueroa’s allegations against Tony’s mirror those levied against Kronos: The grocer violated BIPA by failing to get workers’ informed written consent to collect, store and disseminate fingerprint data. Judges have ruled workers, like Figueroa, are allowed to bring separate lawsuits, to collect from more than one entity for allegedly the same violations of the BIPA law.
Once Tony’s learned of Figueroa’s lawsuit, in January 2019, it notified its insurance broker Assurance Agency. According to Seeger, Assurance responded by indicating it would notify “all applicable insurance carriers,” a process that began in March 2019.
Tony’s had purchased several insurance policies, according to Seeger, including commercial general liability coverage from State Auto that ran from March 2013 through March 2016. But Assurance didn’t notify State Auto, Sleeger said. Tony’s notified State Auto directly in September 2020, as Figueroa’s complaint remained active, prompting the insurer to seek declaratory judgment. The case against Tony's is now on hold, awaiting a decision on key legal questions surrounding BIPA from a case now pending before the Illinois Supreme Court.
“It’s not clear why a policy from 2013 to 2016 would cover an employee who joined in 2017,” Seeger wrote. “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.”
Seeger further said only two of State Auto’s arguments remain unresolved: Whether an employment-related practices exemption in its policies means the insurer now doesn’t have to cover Tony’s and, if so, whether Tony’s forfeited coverage by breaching terms on of notification.
According to Seeger, State Auto’s policy is written such that exclusions for actions related to employment “applies to an adverse employment action, not any and all claims about something that happens at work. The structure of the language suggests that it requires a change in employment status or other negative treatment directed at the employee.”
Because every employee had to scan their fingerprint, Seeger explained, and because the policy language limits the types of actions excluded from coverage, State Auto can’t use this clause to avoid providing legal defense.
However, Seeger continued, “there is enough evidence to create a genuine issue of material fact about the timeliness of notice, so the decision must go to a jury.”
Tony’s said State Auto wasn’t legally harmed by not knowing of Figueroa’s lawsuit for roughly 20 months — the parties have not engaged in “discovery, class certification briefings or settlement talks,” Seeger wrote — but the insurer said the delay is unacceptable. Tony’s also said it did notify three of its insurers and reached out to State Auto once learning a general commercial policy might cover BIPA claims.
Tony's is represented in the insurance action by attorneys Eamon P. Kelly and Matthew H. Rice, of Sperling & Slater, of Chicago.
State Auto is represented by attorney Robert Marc Chemers, of Pretzel & Stouffer, of Chicago.