(CN) - OneBeacon and Hanover Insurance Cos. need not defend Urban Outfitters in three class actions alleging they illegally gathered credit card customers' ZIP codes, a federal judge ruled.
Whitney Hancock sued Urban Outfitters and Anthropologie in D.C. federal court, alleging they illegally collected customer ZIP codes on three occasions since June 21, 2010.
The defendants allegedly have a corporate policy to "train and require" employees to ask credit card customers for their ZIP codes, despite knowing that it is illegal to do so.
Urban Outfitters can use the info "for their own pecuniary benefit, including by engaging in direct marketing campaigns without customers' permission," the D.C. plaintiffs claim.
Andrew Dremak filed a similar suit in San Diego County Court, which was later consolidated with five other suits filed in California from Feb. 15 to March 21, 2011.
The California plaintiffs allege that Urban Outfitters "systematically and intentionally" had cashiers gather customer names, credit card numbers, and ZIP codes - info not required to complete transactions - on at least eight occasions since Feb. 15, 2010.
Urban Outfitters then used the data for targeted marketing and sold it to other businesses, the California plaintiffs claimed.
Lauren Miller filed similar claims in Massachusetts, asserting that the store has used ZIP codes to send customers junk mail since Aug. 15, 2009.
Plaintiffs of all three suits allege violations of various state consumer protection and privacy laws, and seek damages and other monetary awards.
Though the D.C. complaint was dismissed
on March 14, 2014, those plaintiffs appealed.
After Urban Outfitters requested defense coverage from OneBeacon America Insurance Co., the latter sought a declaration that it need not defend the defendants in the three suits.
The defendants joined The Hanover Insurance Co. as a third-party defendant on Oct. 25, 2013, which, in turn, sought a declaration that it has no obligation to indemnify the stores.
Urban Outfitters then moved for partial summary judgment for the opposite declaration.
But Senior U.S. District Judge Stewart Dalzell of the Eastern District of Pennsylvania ruled in the insurers' favor May 15.
The judge tossed aside Urban Outfitters' claim that the three suits allege oral or written publication of private customer information, which is covered under the insurance policies.
"The Hancock plaintiffs make no such allegation," Dalzell wrote. "Rather, they allege only that the retailers used their ZIP code information 'to determine their home or business addresses,' where '[d]efendants sent unsolicited mailings or other material.' Although the complaint stated that the retailers could identify customers' home or business addresses 'by matching the customers' names with their ZIP codes . . . via commercially available databases,' that claim notably does not allege that the information gathered from Urban Outfitters customers was publicly disseminated."
The insurance policies exclude coverage of the Dremak allegations, the ruling states.
"The language of the exclusion, which bars collecting and recording information, is consonant with the Song-Beverly [Credit Card Act of 1971] prohibition against 'request[ing], require[ing]' or 'record[ing]' ZIP code data as a condition of purchase," Dalzell wrote. "Accordingly, we find that because the Dremak allegations arise out of the alleged violation of the statutory right to privacy that prohibits collecting or recording information, the exclusions bar coverage under the policies."
The policies neither cover the Massachusetts plaintiffs' claims that Urban Outfitters breached their privacy by sending them junk mail, according to the ruling.