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Yahoo! Inc. v. National Union Fire Insurance Company of Pittsburgh, PA

United States District Court, N.D. California

June 2, 2017

YAHOO! INC., Plaintiff,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Defendant.

          ORDER GRANTING NATIONAL UNION'S MOTION TO DISMISS WITH LEAVE TO AMEND Re: Dkt. No. 15

          NATHANAEL M. COUSINS United States Magistrate Judge

         In this insurance breach of contract action, defendant National Union Fire Insurance Company of Pittsburgh, PA (National Union) moves to dismiss plaintiff Yahoo! Inc.'s (Yahoo) complaint. The issue presented is whether the disputed insurance provision provides coverage for Yahoo's alleged violations of privacy. The Court grants dismissal because National Union showed that Yahoo's construction of the disputed insurance provision did not provide for coverage. For the reasons set forth below the motion is GRANTED WITH LEAVE TO AMEND.

         I. BACKGROUND

         A. Factual Background

         National Union sold Yahoo five consecutive Commercial General Liability (CGL) insurance policies. Dkt. No. 1 at 6. The policies each contain similar language, which provides coverage for personal and advertising injury. Id. at 82-85. The policies contain Endorsement No. 1, which alters coverage as to personal injury. Id. at 84. The policy contains an endorsement in order to provide extended coverage for personal and advertising injury. Endorsement No. 1 defines personal injury as “injury, including consequential ‘bodily injury', arising out of one more of the following offenses: . . . (e) oral or written publication, in any manner, of material that violates a person's right of privacy.” Dkt. No. 1 at 85. The CGL policies provide that National Union will pay the sums that Yahoo becomes legally obligated to pay as damages due to personal injury. Dkt. No. 15 at 4.

         During the period of January 2013 to April 2014, several class action lawsuits (Text Message Litigations) were filed against Yahoo as a result of Yahoo's alleged transmission of unsolicited text messages. Dkt. No. 1 at 2-6. These lawsuits allege violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA). Id. The Text Message Litigations allege that through the unsolicited transmission of the text messages, Yahoo invaded the privacy of the plaintiffs. Id. at 3, 4.

         Once the Text Message Litigations began, Yahoo notified National Union to obtain coverage under the policy. Id. at 7. National Union denied coverage. Id.

         B. Procedural History

         On January 27, 2017, Yahoo filed its complaint, which alleges a breach of contract claim due to National Union's denial of coverage and consequent failure to defend. Dkt. No. 1. On April 10, 2017, National Union filed its motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). See Dkt. No. 15. This Court has jurisdiction under 28 U.S.C. § 636(c) as both parties consented to proceeding before a magistrate judge. See Dkt. Nos. 6, 17.

         II. LEGAL STANDARD

         A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a motion to dismiss, all allegations of material fact are taken as true and construed in the light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need not allege detailed factual allegations, it must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         If a court grants a motion to dismiss, leave to amend should be granted unless the pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).

         III. DISCUSSION

         National Union moves to dismiss Yahoo's complaint because the insurance policy does not cover the Text ...


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