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American Family Insurance, McDonald’s BIPA Lawsuit Overview:
- Why: The judge determined that the allegations that employees’ fingerprint information was disclosed to a third-party vendor without their consent fell into a coverage exclusion within the AmFam insurance policy.
- Who: An Illinois federal judge granted AmFam’s motion for summary judgment after finding the insurer has no duty to defend a McDonald’s operator from an employee’s biometric information violation lawsuit.
- Where: The lawsuit was filed in Illinois federal court.
An Illinois federal judge has granted American Family Mutual Insurance’s motion for summary judgment after finding the insurer does not have a duty to defend a biometric information violation lawsuit against a McDonald’s franchise operator.
Caremel Inc., Lawrence Linman and Judith Linman reportedly own and operate several McDonald’s locations in Illinois and held a business owner’s policy with AmFam.
In 2019, a McDonald’s employee sued Caremel, alleging the company violated the Illinois Biometric Information Privacy Act (BIPA) by collecting employees’ fingerprints to record their time worked and disclosing that identifying information to a third party timekeeping vendor without employees’ consent.
Caremel notified American Family about the employee’s BIPA lawsuit but the insurer denied coverage because the issue allegedly fell into an excluded category within Caremel’s insurance policy.
Judge: AmFam’s Exclusionary Provisions Exempt Insurer From Defending BIPA Lawsuit
In a Jan. 7 order, U.S. District Judge Harry D. Leinenweber agreed with American Family that it has no duty to defend Caremel from the employee’s BIPA lawsuit, pointing to several of the American Family insurance policy’s exclusionary provisions.
The judge points to three specific exclusionary provisions, including the Access or Disclosure Exclusion, the Employment Related Practices (ERP) Exclusion and the Violation of Statute Exclusion.
The Access or Disclosure Exclusion reportedly excludes coverage for “access or disclosure of confidential or personal information and data related to liability.” American Family claims that the plain meaning of the exclusion includes fingerprints as personal information. Additionally, American Family says the Illinois Personal Information Act defines “personal information” as including “unique biometric information” and specifically includes fingerprints in this definition.
The ERP Exclusion allegedly excludes coverage for personal and advertising injury that arise from employment-related policies, practices, acts or omissions. American Family argues that this exclusion applies because the requirement that employees use their fingerprints to track their work hours is clearly an employment-related practice.
The Violation of Statute Exclusion allegedly excludes coverage for liability that results from the distribution of material in violation of statute. The judge found that American Family failed to show that this policy excludes coverage for the BIPA lawsuit.
However, because the judge found that the ERP exclusion applies to the case at hand, he granted the insurer’s motion for summary judgment after finding American Family does not have a duty to defend Caremel from the employee’s BIPA lawsuit.
Should American Family be responsible for defending the McDonald’s operators against their employee’s BIPA lawsuit? Tell us your thoughts in the comments below!
AmFam is represented by Holly A. Harrison, Katherine Anne Garceau Sobiech and Micheal Lyn Rice of Harrison Law LLC.
The American Family Biometric Information Lawsuit is American Family Mutual Insurance Company S.I. v. Caremel Inc., et al., Case No. 1:20-cv-00637, in the U.S. District Court for the Northern District of Illinois.
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