11th Circuit Refuses to Enforce Knowing Violation of Rights of Another Exclusion in FACTA Lawsuit

In Travelers Property Casualty Co. of America v. Kansas City Landsmen, L.L.C., No. 14-11006, 2015 U.S. App. LEXIS 453 (11th Cir. Jan. 12, 2015), the Eleventh Circuit reversed the district court’s grant of summary judgment in favor of Travelers Property Casualty Company of America and St. Paul Fire and Marine Insurance Company (“insurers”). The Eleventh Circuit determined that the insurers may have a duty to defend The Kansas City Landsmen, LLC and A Betterway Rent-a-Car, Inc. (“Car Rental Companies”).

The underlying disputes arose from a putative class-action suit filed by Robert Galloway against the Car Rental Companies for violations of the Fair and Accurate Credit Transaction Act (“FACTA”), which prohibits companies from printing more than the last five digits of a credit/debit card or the expiration date upon any receipt provided to the cardholder. Notably, the underlying complaint alleged that the Car Rental Companies printed receipts that were purportedly given to cardholders and customers who were not cardholders.

On appeal, the Eleventh Circuit rejected the district court’s decision in favor of the insurers, finding that the Car Rental Companies could be liable under FACTA for reckless conduct. Although the allegations of the Underlying Complaint never specifically claimed that the Car Rental Companies had knowledge of any violations of FACTA, it alleged that the Car Rental Companies had knowledge of the FACTA requirements yet “willfully” disregarded them. Therefore, since “willful” could both mean knowledge as well as “reckless disregard,” the underlying complaint left open the possibility that the Knowing Violation of Rights of Another Exclusion did not bar coverage. The Eleventh Circuit remanded the case to the district court for further determination with respect to the “publication” element of the Privacy Offense.