The opinion
IN THE SUPREME COURT OF
CALIFORNIA
YAHOO INC.,
Plaintiff and Appellant,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA,
Defendant and Respondent.
S253593
Ninth Circuit 17-16452
Northern District of California
No. 5:17-cv-00447-NC
November 17, 2022
Justice Jenkins authored the opinion of the Court, in which
Chief Justice Cantil-Sakauye and Justices Corrigan, Liu,
Kruger, Groban, and Guerrero concurred.
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA
S253593
Opinion of the Court by Jenkins, J.
The law of privacy recognizes, among other things, a right
to secrecy and a right to seclusion. “[A] person claiming the
privacy right of seclusion asserts the right to be free, in a
particular location, from disturbance by others. A person
claiming the privacy right of secrecy asserts the right to prevent
disclosure of personal information to others. Invasion of the
privacy right of seclusion involves the means, manner, and
method of communication in a location (or at a time) which
disturbs the recipient’s seclusion. By contrast, invasion of the
privacy right of secrecy involves the content of communication
that occurs when someone’s private, personal information is
disclosed to a third person.” (ACS Systems, Inc. v. St. Paul Fire
& Marine Ins. Co. (2007) 147 Cal.App.4th 137, 148–149 (ACS
Systems).)1
Privacy injuries that involve the right of seclusion are
sometimes actionable under the federal Telephone Consumer
Protection Act of 1991 (TCPA) (47 U.S.C. § 227 (section 227)),
provided the violation involves the use of telephonic equipment.
1
Our case law also recognizes two other types of privacy
violations. Stated in general terms, these are: (1) “publicity
placing a person in a false light,” and (2) “misappropriation of a
person’s name or likeness.” (Hill v. National Collegiate Athletic
Assn. (1994) 7 Cal.4th 1, 24; see Fellows v. National Enquirer,
Inc. (1986) 42 Cal.3d 234, 238.)
1
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
Specifically, the TCPA protects the seclusion interests of
telephone users by placing restrictions on automated telephone
calls (“robocalls”) and unsolicited facsimile machine
advertisements (“junk faxes”). (See § 227; Duguid v. Facebook,
Inc. (9th Cir. 2019) 926 F.3d 1146, 1149.) Subject to certain
exceptions, the TCPA prohibits making “any call . . . using any
automatic telephone dialing system . . . to any telephone
number assigned to a . . . cellular telephone service.”
(§ 227(b)(1)(A)(iii).) The TCPA also prohibits, again subject to
exceptions, using “any . . . device to send, to a telephone
facsimile machine, an unsolicited advertisement.” (Id.,
§ 227(b)(1)(C).) Significantly, the TCPA’s prohibitions have
been interpreted to apply to text messages (“robotexts”), not just
to voice telephone calls. (Duguid, supra, 926 F.3d at p. 1149;
Satterfield v. Simon & Schuster, Inc. (9th Cir. 2009) 569 F.3d
946, 954.)
Many commercial general liability (CGL) insurance
policies provide coverage against liability for privacy violations,
but it is not always clear what specific types of privacy violations
are covered. The insurance policy at issue here, for example,
provides liability coverage for injuries “arising out of . . . [o]ral
or written publication, in any manner, of material that violates
a person’s right of privacy.” The question we must resolve is
whether this language provides liability coverage for right-of-
seclusion violations litigated under the TCPA. We conclude that
it does, assuming such coverage is consistent with the insured’s
reasonable expectations.
I. FACTS AND PROCEDURAL BACKGROUND
When defendant National Union Fire Insurance Company
of Pittsburgh, PA (National Union) declined to defend or
2
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
indemnify plaintiff Yahoo Inc. (Yahoo!) in a series of putative
class action lawsuits alleging that Yahoo!’s unsolicited text
messaging had violated the TCPA, Yahoo! sued National Union
in federal district court, alleging breach of contract and seeking
to obtain coverage. According to the complaint, National Union
sold Yahoo! a CGL policy covering the period when the alleged
TCPA violations occurred.2 The policy was in the form of
National Union’s standard CGL policy, modified by various
endorsements including a negotiated endorsement called
endorsement No. 1 (Endorsement No. 1).
The standard version of National Union’s policy provided
liability coverage for “personal and advertising injury,” which
the policy defined as injury arising out of any of seven specified
offenses, including “[o]ral or written publication, in any manner,
of material that violates a person’s right of privacy.” The
standard policy, however, excluded injuries arising from the
distribution of material in violation of the TCPA.
Endorsement No. 1 modified National Union’s standard
policy in three important ways. First, Endorsement No. 1
2
National Union actually sold Yahoo! four consecutive
policies, covering the period from May 31, 2008, to May 31, 2012,
each containing the same relevant terms. For the sake of
simplicity, we refer to these four policies collectively as if they
were a single policy. The complaint also alleges coverage under
a fifth consecutive policy, but Yahoo! concedes that this was
error because the fifth policy was materially different from the
others. Yahoo! states that it plans to amend its complaint to
correct this error.
3
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
removed the exclusion for injuries arising from violations of the
TCPA.3
Second, Endorsement No. 1 provided liability coverage
only for “personal injury” (as compared to “personal and
advertising injury” in the standard version of the policy), and it
defined “personal injury” to include injury arising from any of
five offenses (as compared to seven offenses in the standard
version of the policy). The list of five offenses, however, still
included injuries arising from “[o]ral or written publication, in
any manner, of material that violates a person’s right of
privacy.”4 Therefore, although Endorsement No. 1 removed
3
A separate endorsement — the “Statute Endorsement” —
added an exclusion for liability arising from “any act that
violates any statute . . . of any federal [or] state . . .
government, . . . that . . . addresses or applies to the sending,
transmitting or communicating of any material or information,
by any means whatsoever.” (Italics added.) The existence of the
Statute Endorsement caused the Ninth Circuit to consider
whether the removal of the more specific exclusion for TCPA
liability had been without substantive effect. The Ninth Circuit
asked for supplemental briefing on the question, and Yahoo!
argued that Endorsement No. 1 superseded the Statute
Endorsement. We express no view on the question.
4
The five personal injury offenses are: “a. False arrest,
detention, or imprisonment; [¶] b. Malicious prosecution; [¶] c.
The wrongful eviction from, wrongful entry into, or invasion of
the right of private occupancy of a room, dwelling or premises
that a person occupies, committed by or on behalf of its owner,
landlord or lessor; [¶] d. Oral or written publication, in any
manner, of material that slanders or libels a person or
organization or disparages a person’s or organization’s goods,
products or services; or [¶] e. Oral or written publication, in any
manner, of material that violates a person’s right of privacy.”
4
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
coverage for advertising injuries, coverage for injuries to privacy
remained.
Third, and related to the second change, Endorsement
No. 1 expressly excluded liability coverage for “advertising
injury,” which it defined as injury arising from any of four
offenses, including “[o]ral or written publication, in any manner,
of material in your ‘advertisement’ that violates a person’s right
of privacy.”5 (Italics added.) Therefore, although Endorsement
No. 1’s coverage provision created liability coverage for privacy
injuries, the same endorsement expressly carved out liability
coverage for privacy injuries caused by material in a Yahoo!
advertisement.
Yahoo! argues that its policy — as modified by
Endorsement No. 1 — gave rise, at the very least, to the
potential for coverage of the TCPA claims alleged against it in
the underlying putative class action lawsuits, and therefore
National Union was obligated to defend Yahoo! in those suits,
and it breached its contract by declining to do so. (See Gray v.
Zurich Ins. Co. (1966) 65 Cal.2d 263, 276–277.) The federal
district court rejected that argument. It granted National
Union’s motion to dismiss, concluding that the TCPA lawsuits
do not fall within the policy’s coverage provision because they do
5
The four advertising injury offenses are: “a. Oral or
written publication, in any manner, of material in your
‘advertisement’ that slanders or libels a person or organization
or disparages a person’s or organization’s goods, products or
services; [¶] b. Oral or written publication, in any manner, of
material in your ‘advertisement’ that violates a person’s right of
privacy; [¶] c. The use of another’s advertising idea in your
‘advertisement’; or [¶] d. Infringing upon another’s copyright,
trade dress or slogan in your ‘advertisement.’ ”
5
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
not allege an injury arising out of the “publication . . . of
material that violates a person’s right of privacy.” (Italics
added.) Focusing on the italicized language quoted above, the
district court concluded that this language covers liability for
right-of-secrecy violations but that it does not cover right-of-
seclusion violations, including right-of-seclusion violations
litigated under the TCPA. In reaching this conclusion, the
district court applied the rule of the last antecedent, a rule of
construction under which a restrictive clause modifies only the
word or phrase that immediately precedes it. Applying that
rule, the court read the clause “that violates a person’s right of
privacy” as modifying only the word “material,” meaning that
for the policy to provide liability coverage, the alleged privacy
violation must relate to the content of the published material.
Finding that the TCPA claims asserted against Yahoo! focused
on the transmission of unsolicited text messages rather than the
content of those messages, the federal district court dismissed
Yahoo!’s insurance coverage action, entering judgment for
National Union.
Yahoo! appealed, and the United States Court of Appeals
for the Ninth Circuit certified a question of state law to this
court. We granted the Ninth Circuit’s request and rephrased its
question (see Cal. Rules of Court, rule 8.548(f)(5)). As
rephrased, we are called upon to answer the following question:
“Does a commercial general liability insurance policy that
provides coverage for ‘personal injury,’ defined as ‘injury . . .
arising out of . . . [o]ral or written publication, in any manner, of
material that violates a person’s right of privacy,’ and that has
been modified by endorsement with regard to advertising
injuries, trigger the insurer’s duty to defend the insured against
6
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
a claim that the insured violated the [TCPA] of 1991 (47 U.S.C.
§ 227) by sending unsolicited text message advertisements that
did not reveal any private information?”6
II. DISCUSSION
The parties agree that the TCPA creates a statutory cause
of action to redress telephonic intrusions that can, depending on
the factual circumstances, violate the common law right of
seclusion, and the parties also agree that the TCPA is not
concerned with disclosures that violate the common law right of
secrecy. (See Los Angeles Lakers, Inc. v. Federal Ins. Co. (9th
Cir. 2017) 869 F.3d 795, 806 [“ ‘[c]ourts have consistently held
the TCPA protects a species of privacy interest in the sense of
seclusion’ ”]; Auto-Owners Ins. Co. v. Websolv Computing, Inc.
(7th Cir. 2009) 580 F.3d 543, 549 [“The underlying [TCPA] suit
here only involves seclusion interests”]; Resource Bankshares
Corp. v. St. Paul Mercury Ins. Co. (4th Cir. 2005) 407 F.3d 631,
642 [“the TCPA’s unsolicited fax prohibition protects ‘seclusion’
privacy, for which content is irrelevant”]; American States Ins.
Co. v. Capital Associates of Jackson County (7th Cir. 2004) 392
F.3d 939, 943 [the TCPA “condemns a particular means of
communicating an advertisement, rather than the contents of
that advertisement”].) Therefore, if the policy at issue here does
not cover liability for violations of the right of seclusion, then it
6
The phrase “by sending unsolicited text message
advertisements” appears both in the Ninth Circuit’s original
certified question and in our rephrasing of the question.
Nonetheless, our statement of the certified question should not
be interpreted to express this court’s opinion as to whether the
text messages at issue in the underlying TCPA lawsuits were,
in fact, advertisements as defined in the policy.
7
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
does not cover Yahoo!’s potential TCPA liability in the
underlying lawsuits.
Whether Yahoo!’s policy covers liability for violations of
the right of seclusion, like all questions concerning the scope of
insurance coverage, is subject to de novo review. (Waller v.
Truck Ins. Exchange (1995) 11 Cal.4th 1, 18.) The relevant
principles are well settled. In Palmer v. Truck Ins. Exchange,
we said: “ ‘While insurance contracts have special features, they
are still contracts to which the ordinary rules of contractual
interpretation apply.’ [Citation.] Thus, ‘the mutual intention of
the parties at the time the contract is formed governs
interpretation.’ [Citation.] If possible, we infer this intent solely
from the written provisions of the insurance policy. [Citation.]
If the policy language ‘is clear and explicit, it governs.’ ” (Palmer
v. Truck Ins. Exchange (1999) 21 Cal.4th 1109, 1115 (Palmer).)
Similarly, in Boghos v. Certain Underwriters at Lloyd’s of
London, we said: “Our goal in construing insurance contracts,
as with contracts generally, is to give effect to the parties’
mutual intentions. [Citations.] ‘If contractual language is clear
and explicit, it governs.’ [Citations.] If the terms are ambiguous
[i.e., susceptible of more than one reasonable interpretation], we
interpret them to protect ‘ “the objectively reasonable
expectations of the insured.” ’ [Citations.] Only if these rules do
not resolve a claimed ambiguity do we resort to the rule that
ambiguities are to be resolved against the insurer.” (Boghos v.
8
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
Certain Underwriters at Lloyd’s of London (2005) 36 Cal.4th
495, 501.)7
When coverage is in dispute, the initial burden is on the
insured — Yahoo! in this case — to prove that its claim falls
within the scope of potential coverage. (See Waller v. Truck Ins.
Exchange, supra, 11 Cal.4th at p. 16.) If the insured establishes
that the policy provides at least the potential for coverage, the
burden shifts to the insurer — National Union in this case — to
show the claim falls within one of the policy’s exclusions. (See
ibid.; see also Liberty Surplus Ins. Corp. v. Ledesma & Meyer
Construction Co., Inc. (2018) 5 Cal.5th 216, 222 [“ ‘ “[T]he
insured must prove the existence of a potential for coverage,
while the insurer must establish the absence of any such
potential. In other words, the insured need only show that the
7
We have, in the past, formulated this inquiry slightly
differently. (See, e.g., State of California v. Continental Ins. Co.
(2012) 55 Cal.4th 186, 195 [“ ‘If an asserted ambiguity is not
eliminated by the language and context of the policy, courts then
invoke the principle that ambiguities are generally construed
against the party who caused the uncertainty to exist (i.e., the
insurer) in order to protect the insured’s reasonable expectation
of coverage.’ ”], quoting La Jolla Beach & Tennis Club, Inc. v.
Industrial Indemnity Co. (1994) 9 Cal.4th 27, 37); Producers
Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 912
[“It is a basic principle of insurance contract interpretation that
doubts, uncertainties and ambiguities arising out of policy
language ordinarily should be resolved in favor of the insured in
order to protect his reasonable expectation of coverage.”].) To
the extent these prior formulations are inconsistent with our
description of the inquiry here, our formulation in this opinion
controls.
9
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
underlying claim may fall within policy coverage; the insurer
must prove it cannot” ’ ”].)8
A. The Coverage Provision of Yahoo!’s Policy
The policy at issue here provides liability coverage for
injuries “arising out of . . . [o]ral or written publication, in any
manner, of material that violates a person’s right of privacy.”
We take the word “material” in this context to refer to
“[i]nformation, ideas, data, documents, or other things that are
used in reports, books, films, studies, etc.” (Black’s Law Dict.
(10th ed. 2014) p. 1124, col. 2.) The clause “that violates a
person’s right of privacy” is a restrictive relative clause with the
word “that” as its relative pronoun. According to the rules
governing word order in the English language, a restrictive
relative clause usually modifies the noun that immediately
precedes it, which in this case is the word “material.” In fact, if
a restrictive relative clause is located in a place that is remote
from the noun it modifies, it is usually described as a misplaced
modifier. Hence, Strunk and White advise that a “relative
pronoun should come, in most instances, immediately after its
antecedent.” (Strunk and White, The Elements of Style (4th ed.
2000) p. 29; see id. at pp. 28–31.) Sometimes, however, the
antecedent of a relative pronoun consists of a group of words. In
that case, “the relative [pronoun] comes at the end of the group,
unless this would cause ambiguity.” (Id. at p. 30.)
Here, it is unclear whether the restrictive clause “that
violates a person’s right of privacy” modifies a group of words or
8
The Ninth Circuit has only asked us to address the scope
of the coverage provision of Yahoo!’s policy; therefore, we do not
consider the exclusions.
10
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
just a single word. Specifically, it is ambiguous whether the
clause modifies the entire phrase “[o]ral or written publication,
in any manner, of material” or whether it modifies only the word
“material.” If the former, then the intrusive way the material is
published, not just its informational content, might give rise to
the privacy violation at issue, and the violation would,
nonetheless, be covered by the policy. Under this reading, even
if the published material were something that was not in the
least private (for example, weather forecasts or sports scores),
its publication in a manner that violated a person’s right of
seclusion would still amount to a covered privacy violation. But
if the clause “that violates a person’s right of privacy” modifies
only the word “material,” then it follows that something about
the material itself, viewed in isolation, must violate a person’s
right of privacy, which in turn implies that it must do so by
reason of its informational content. Thus, the coverage
provision is facially ambiguous, and the ambiguity is critical to
resolution of the question of coverage in this case.
In such situations, our first step is to consider whether the
standard rules of contract interpretation can resolve the facial
ambiguity in the policy’s language. Then, if the application of
those rules fails to resolve the ambiguity, we interpret the
provision in favor of protecting the insured’s reasonable
expectations. “Only if these rules do not resolve a claimed
ambiguity do we resort to the rule that ambiguities are to be
resolved against the insurer.” (Boghos v. Certain Underwriters
at Lloyd’s of London, supra, 36 Cal.4th at p. 501; see Minkler v.
Safeco Ins. Co. (2010) 49 Cal.4th 315, 321–322; Bank of the West
v. Superior Court (1992) 2 Cal.4th 1254, 1264–1265.)
11
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
1. Application of the Standard Rules of Contract
Interpretation
“The mere fact that a word or phrase in a policy may have
multiple meanings does not create an ambiguity.” (Palmer,
supra, 21 Cal.4th at p. 1118.) Rather, the meaning of the word
or phrase must be considered in light of its context. (See State
of California v. Continental Ins. Co., supra, 55 Cal.4th at p. 195;
Minkler v. Safeco Ins. Co., supra, 49 Cal.4th at p. 322; Bank of
the West v. Superior Court, supra, 2 Cal.4th at p. 1265.) Several
aspects of the policy at issue here suggest that in the policy’s
coverage provision, the restrictive clause “that violates a
person’s right of privacy” modifies only the word “material,”
meaning that, for there to be coverage, the material itself — that
is, its informational content — must give rise to the privacy
violation.
Courts will favor an interpretation that gives meaning to
each word in a contract over an interpretation that makes part
of the writing redundant. (See Carson v. Mercury Ins. Co. (2012)
210 Cal.App.4th 409, 420.) Reading the restrictive clause “that
violates a person’s right of privacy” as modifying the entire
phrase “[o]ral or written publication, in any manner, of
material,” and thus as creating liability coverage for right-of-
seclusion violations, might be seen as somewhat unnatural
because it is a reading that arguably makes the word “material”
superfluous. In other words, if the policy were intended to cover
liability for any publication that violated a person’s right of
privacy, whether by disclosing a person’s secrets or intruding
upon a person’s seclusion, or otherwise, then the word
“material” could simply have been omitted from the coverage
provision altogether. But the coverage provision at issue here
12
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
includes the word “material.” The addition of the word
“material” immediately before the restrictive clause “that
violates a person’s right of privacy” arguably suggests that
something about the content of the material itself, viewed in
isolation, must violate a person’s right of privacy. Thus, since
content is irrelevant to right-of-seclusion violations, the
inclusion of the word “material” implies that the policy does not
cover right-of-seclusion liability.
This reading of the coverage language finds support in
various other provisions of Yahoo!’s policy. As modified by
Endorsement No. 1, the policy provides liability coverage for
“personal injury,” which it defines to include injury arising from
any of five offenses. One of those offenses is the one we have
been discussing here (“[o]ral or written publication, in any
manner, of material that violates a person’s right of privacy”),
but another offense, one not at issue here, uses parallel phrasing
(“[o]ral or written publication, in any manner, of material that
slanders or libels a person or organization or disparages a
person’s or organization’s goods, products or services”).
Although the latter offense is not implicated here directly, it is
nonetheless relevant. Published material can slander, libel, or
disparage a person only by reason of its informational content —
it cannot do so in any other way. Therefore, the parallel
phrasing between these two offenses supports an inference that
both offenses are concerned with the informational content of
the published material. (See E.M.M.I. Inc. v. Zurich American
Ins. Co. (2004) 32 Cal.4th 465, 475 [“the same word used in an
instrument is generally given the same meaning unless the
policy indicates otherwise”].) And that, in turn, suggests that
13
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
the liability coverage for privacy injuries does not extend to
violations of the right of seclusion.
In addition, the policy at issue here excludes “[o]ral or
written publication, in any manner, of material in your
‘advertisement’ that violates a person’s right of privacy.” With
respect to this advertisement injury exclusion, the content of the
advertisement is clearly referenced by the word “material”
because the provision uses the phrase “material in your
‘advertisement.’ ” (Italics added.) Again, because this
advertisement provision, like the slander provision discussed
above, uses phrasing that parallels the provision we are
interpreting in this case, a plausible argument can be made that
the latter provision is likewise concerned with the content of
what is being published. (See E.M.M.I. Inc. v. Zurich American
Ins. Co., supra, 32 Cal.4th at p. 475.)
Yet other aspects of Yahoo!’s policy suggest that in the
policy’s coverage provision, the restrictive clause “that violates
a person’s right of privacy” modifies the entire phrase “[o]ral or
written publication, in any manner, of material,” thus creating
coverage for any publication-based right-of-privacy violation,
including right-of-seclusion violations. For example, even if the
slander provision and the advertising injury exclusion refer only
to content-based injuries, those provisions are worded
differently from the provision now before us. The specific
provision at issue here (“[o]ral or written publication, in any
manner, of material that violates a person’s right of privacy”)
does not include language that similarly requires such a narrow
interpretation.
Moreover, it may be that the parties affirmatively
intended to modify the policy to cover right-of-seclusion injuries
14
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
litigated under the TCPA. In its brief in this court, Yahoo! says:
“In the National Union Policies, the ‘personal injury’ coverage
was deliberately expanded by manuscript endorsement [(i.e.,
Endorsement No. 1)] to cover specialized risks beyond what was
covered by the standard form language. The endorsement
removed certain exclusions, including the TCPA liability
exclusion, and provided expanded coverage for conduct-based
‘personal injury’ offenses, separate and distinct from content-
based ‘advertising injury’ offenses.” (Italics added.) Relying on
this conduct-content distinction, Yahoo! argues that, in the
context of the coverage provision, the restrictive clause “that
violates a person’s right of privacy” should be interpreted
broadly to include conduct that violates a person’s right of
privacy (i.e., right-of-seclusion violations), whereas in the
context of the advertising injury exclusion, the same restrictive
clause should be limited to content that violates a person’s right
of privacy (i.e., right-of-secrecy violations).
The arguments favoring Yahoo!’s broad reading of the
coverage provision at issue are far from conclusive. However,
Yahoo!’s arguments serve to persuade us that the policy remains
ambiguous even when we apply the standard rules of contract
interpretation in an effort to clarify the policy’s meaning. The
restrictive clause “that violates a person’s right of privacy” can
reasonably be read to modify the entire phrase “[o]ral or written
publication, in any manner, of material,” and the standard rules
of contract interpretation do not foreclose that reading. 9
9
Insurance companies can easily avoid the ambiguous
language used here, by revising the language to clarify the scope
of the coverage they are providing.
15
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
2. Insured’s Reasonable Expectations and Other
Considerations
Where, as here, the standard rules of contract
interpretation do not resolve an ambiguity in the operative
language of an insurance policy, “we interpret [that language]
to protect ‘ “the objectively reasonable expectations of the
insured.” ’ ” (Boghos v. Certain Underwriters at Lloyd’s of
London, supra, 36 Cal.4th at p. 501.) As noted above, “[o]nly if
these rules do not resolve a claimed ambiguity do we resort to
the rule that ambiguities are to be resolved against the insurer.”
(Ibid.; see Minkler v. Safeco Ins. Co., supra, 49 Cal.4th at p. 321;
State of California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008,
1018.)
Therefore, “a court that is faced with an argument for
coverage based on assertedly ambiguous policy language must
first attempt to determine whether coverage is consistent with
the insured’s objectively reasonable expectations.” (Bank of the
West v. Superior Court, supra, 2 Cal.4th at p. 1265.) Here,
however, the question whether it was objectively reasonable for
Yahoo! to expect coverage of its TCPA liability cannot be
resolved without further litigation focusing on the scope of the
Statute Endorsement, the scope of the advertising injury
exclusion, the specific factual circumstances of the alleged TCPA
violations (i.e., whether they amount to a right-of-seclusion
violation under California law), and perhaps other unresolved
issues not presented to this court. In this context, it also merits
noting that merely removing an exclusion for TCPA liability is
not, by itself, enough to establish coverage of such liability. (See
Waller v. Truck Ins. Exchange, supra, 11 Cal.4th at p. 16.)
16
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
As regards the next and final step — the rule that we
interpret unresolvable ambiguities in favor of the insured — the
application of that rule must take into consideration the specific
circumstances in which the policy was drafted. The rule derives
from the principle of contra proferentem (“against the drafter”),
and it is justified on the grounds that the drafter of a contract
should bear the responsibility for ambiguities the drafter could
have resolved. (See Abraham, A Theory of Insurance Policy
Interpretation (1996) 95 Mich. L.Rev. 531, 533.) Therefore, the
rule favoring the insured does not necessarily apply where the
insured is one of the contract’s drafters.
Here, sophisticated parties have bargained over the terms
of a manuscript endorsement, and the ambiguous coverage
provision appears in that manuscript endorsement. In this
situation, it is appropriate to ask whether the insurer can be
considered the sole drafter of the provision and therefore
whether the insurer is solely responsible for the ambiguity in
that provision. But even in the case of a manuscript
endorsement, ambiguities should be resolved in favor of
coverage when the specific ambiguous language is “adopted
verbatim from standard form policies used throughout the
country.” (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807,
823, fn. 9; see id. at pp. 823–824.) In the present case, despite
the characterization of Endorsement No. 1 as a manuscript
endorsement — which would normally imply that it contains
nonstandard, negotiated provisions — the disputed coverage
language under review is standard form language adopted
verbatim from insurer-drafted policies. Under such
circumstances, the insured — Yahoo! — cannot be charged with
creating the ambiguity that led to the dispute, and therefore it
17
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
is appropriate for courts to interpret any unresolvable
ambiguities in Yahoo!’s favor. (See Minkler v. Safeco Ins. Co.,
supra, 49 Cal.4th at p. 321; State of California v. Allstate Ins.
Co., supra, 45 Cal.4th at p. 1018.)
To summarize, we do not find Yahoo!’s broad reading of
the coverage provision to be conclusive. Rather, we agree with
Yahoo! that the coverage provision is ambiguous and that the
standard rules of contract interpretation do not resolve the
ambiguity. Because the provision is ambiguous, we conclude
that it must be interpreted in a way that fulfills Yahoo!’s
objectively reasonable expectations, which must be determined
in further litigation. Finally, if the foregoing procedures do not
resolve the ambiguity, then we resort to the rule that
ambiguities are to be resolved against the drafter, and here the
insurer is considered to be the drafter of the specific coverage
language whose meaning is in dispute.
The federal district court, however, took a different
approach, a point that we now address.
B. The Rule of the Last Antecedent
As noted above, the district court relied on the rule of the
last antecedent in arriving at its conclusion that the policy in
question did not cover the claims asserted against Yahoo!.
According to the last antecedent rule, “[r]elative and qualifying
words and phrases, grammatically and legally, where no
contrary intention appears, refer solely to the last antecedent.”
(Sutherland, Statutes and Statutory Construction (1891) § 267,
p. 349; see Black’s Law Dict., supra, pp. 1532–1533.) This rule
of construction has been repeatedly recognized and applied by
the United States Supreme Court (see, e.g., Lockhart v. United
States (2016) 577 U.S. 347, 351; Barnhart v. Thomas (2003) 540
18
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
U.S. 20, 26–27; FTC v. Mandel Brothers, Inc. (1959) 359 U.S.
385, 389–390), and it was mentioned by the high court as early
as 1799 (see Sims Lessee v. Irvine (1799) 3 U.S. 425, 444, fn. *).
In California, reliance on the last antecedent rule dates
back at least a century. As formulated by this court, the rule
provides that “ ‘ “qualifying words, phrases and clauses are to be
applied to the words or phrases immediately preceding [them]
and are not to be construed as extending to or including other[]
[words or phrases] more remote.” ’ ” (Renee J. v. Superior Court
(2001) 26 Cal.4th 735, 743, quoting White v. County of
Sacramento (1982) 31 Cal.3d 676, 680; see Los Angeles County
v. Graves (1930) 210 Cal. 21, 26–27.) The last antecedent rule
is often applied where there is a list of terms, and the qualifying
words or phrases follow the last item in the list. (See People ex
rel. Lockyer v. R.J. Reynolds Tobacco Co. (2003) 107 Cal.App.4th
516, 530 [“The exemplar application of the last antecedent rule
is a case where a modifying phrase appears after a list of
multiple items or phrases”].) But more generally, the last
antecedent rule can be understood to express the same rules of
English word order discussed in part II.A., ante, meaning that a
restrictive relative clause usually modifies the noun
immediately preceding it. Employing the last antecedent rule
in this manner, California courts have held that insurance
policies using language similar to the language at issue here
cover only right-of-secrecy liability, not right-of-seclusion
liability.
In ACS Systems, supra, 147 Cal.App.4th 137, for example,
the court applied the last antecedent rule to a group of insurance
policies that covered liability for “ ‘[m]aking known to any
person or organization written or spoken material that violates
19
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
an individual’s right of privacy.’ ” (Id. at p. 143.) The ACS
Systems court read the clause “ ‘that violates an individual’s
right of privacy’ ” as modifying only the word “ ‘material,’ ” not
as modifying the phrase “ ‘[m]aking known.’ ” (Id. at p. 150.)
Hence, the court concluded that for there to be liability coverage,
the content of the material, not the manner of making it known,
had to violate someone’s privacy, meaning that the policy
provided liability coverage only for disclosures that violated the
right of secrecy. (Id. at pp. 150, 152.) A few years later, State
Farm General Ins. Co. v. JT’s Frames, Inc. (2010) 181
Cal.App.4th 429 (JT’s Frames) reached the same conclusion in
a case in which the relevant insurance policies, like the policy at
issue here, used the phrase “ ‘publication of,’ ” not the phrase
“ ‘making known.’ ” (Id. at p. 447.)10
Not surprisingly, National Union relies on ACS Systems
and JT’s Frames, but Yahoo! directs our attention to decisions
from other jurisdictions that have rejected the rule of the last
antecedent in the present context. Yahoo! relies, for example,
10
Courts in several other jurisdictions have also reached the
same conclusion as the court in ACS Systems. (See Auto-Owners
Ins. Co. v. Websolv Computing, Inc., supra, 580 F.3d at pp. 550–
551 [7th Cir. reaching same conclusion as ACS Systems, relying
on the word “publication,” which, the court said, suggests the
disclosure of secrets]; Subclass 2 of Master Class of Plaintiffs v.
Melrose Hotel (3d Cir. 2007) 503 F.3d 339, 340 [3d Cir. reaching
same conclusion as ACS Systems by approving a district court
analysis similar to that of ACS Systems]; Resource Bankshares
Corp. v. St. Paul Mercury Ins. Co., supra, 407 F.3d at p. 640 [4th
Cir. reaching the same conclusion as ACS Systems]; American
States Ins. Co. v. Capital Associates of Jackson County, supra,
392 F.3d at p. 943 [7th Cir. reaching the same conclusion as ACS
Systems].)
20
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
on Penzer v. Transp. Ins. Co. (Fla. 2010) 29 So.3d 1000. In
Penzer, the Florida Supreme Court downplayed the significance
of the rule of the last antecedent, noting that it is “not an
absolute rule.” (Id. at p. 1007.) Interpreting policy language
nearly identical to the language at issue here,11 the Penzer court
concluded that the restrictive clause “that violates a person’s
right of privacy” modifies both the word “publication” and the
word “material.” The court therefore held that the policy at
issue in that case provided liability coverage when the manner
of publication, not just the content of the published material,
violated someone’s privacy. (Ibid.)
In our view, the rule of the last antecedent, as articulated
in our case law, does not resolve the ambiguity in the policy
language at issue here. The rule of the last antecedent states
that “ ‘ “qualifying words, phrases and clauses are to be applied
to the words or phrases immediately preceding [them] . . . .” ’ ”
(Renee J. v. Superior Court, supra, 26 Cal.4th at p. 743, italics
added.) As noted above, the rule is most readily applied where
there is a list of several items, and the modifier comes
immediately after the last item on the list. (See People ex rel.
Lockyer v. R.J. Reynolds Tobacco Co., supra, 107 Cal.App.4th at
p. 530; see also Sutherland, Statutes and Statutory
Construction, supra, § 267, pp. 349–351.) Here, however, there
is no list of items followed immediately by a modifier; instead,
there is the phrase “[o]ral or written publication, in any manner,
of material” followed immediately by a modifier. In applying the
11
The policy language at issue in Penzer omitted the words
“in any manner” after the word “publication” but was otherwise
the same as the language at issue here.
21
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
rule of the last antecedent, if we identify the possible
antecedents as either (1) the word “publication,” or (2) the word
“material,” then the word “material” would be the last
antecedent. But if, instead, we identify the possible antecedents
as either (1) the entire phrase “[o]ral or written publication, in
any manner, of material,” or (2) merely the final word of that
phrase, “material,” then both potential antecedents would
qualify as the last antecedent, as each would immediately
precede the modifying restrictive clause. Accordingly, the rule
does not resolve, in the present case, whether the relative clause
“that violates a person’s right of privacy” modifies just the word
that immediately precedes it (i.e., the word “material”) or
whether the clause modifies the entire phrase that immediately
precedes it (i.e., the phrase “[o]ral or written publication, in any
manner, of material”). Therefore, we reach a different
conclusion from the courts in ACS Systems, supra, 147
Cal.App.4th 137 and JT’s Frames, supra, 181 Cal.App.4th 429,
and find that the rule of the last antecedent does not resolve the
ambiguity that characterizes coverage provisions like the one at
issue here.12
C. The Advertising Injury Exclusion
National Union asks us to apply the advertising injury
exclusion of the policy to conclude that the policy does not cover
12
The case before us does not involve the phrase “making
known,” a phrase that was at issue in ACS Systems, supra, 147
Cal.App.4th 137, and that some courts have interpreted more
narrowly than the phrase “publication of.” (See Cynosure, Inc.
v. St. Paul Fire and Marine Ins. Co. (1st Cir. 2011) 645 F.3d 1.)
Therefore, we express no view on whether ACS Systems was
correctly decided.
22
YAHOO INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PA
Opinion of the Court by Jenkins, J.
Yahoo!’s potential TCPA liability in the underlying lawsuits. In
the proceedings up to this point, however, National Union has
not litigated the case based on the advertising injury exclusion,
and the record before us does not indicate whether the text
messages at issue here were advertisements as that term is
defined in the policy. Accordingly, we express no view on the
question.
III. CONCLUSION
We answer the Ninth Circuit’s question as follows: A CGL
insurance policy that provides coverage for “personal injury,”
defined, in part, as “injury . . . arising out of . . . [o]ral or written
publication, in any manner, of material that violates a person’s
right of privacy,” can cover liability for violations of the right of
seclusion if such coverage is consistent with the insured’s
objectively reasonable expectations. Such a policy can also
trigger the insurer’s duty to defend the insured against a claim
that the insured violated the TCPA by sending unsolicited text
messages that did not reveal any private or secret information,
provided that the alleged TCPA violation amounts to a right-of-
seclusion violation under California law. The fact that such a
policy has been modified by an endorsement with regard to
advertising injuries may affect such coverage and such duty to
defend, but we have no occasion to decide that issue here.
JENKINS, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CORRIGAN, J.
LIU, J.
KRUGER, J.
GROBAN, J.
GUERRERO, J.
23
See next page for addresses and telephone numbers for counsel who
argued in Supreme Court.
Name of Opinion Yahoo Inc. v. National Union Fire Insurance
Company of Pittsburgh, PA
__________________________________________________________
Procedural Posture (see XX below)
Original Appeal
Original Proceeding XX on request by 9th Circuit (Cal. Rules of
Court, rule 8.548)
Review Granted (published)
Review Granted (unpublished)
Rehearing Granted
________________________________________________________
Opinion No. S253593
Date Filed: November 17, 2022
__________________________________________________________
Court:
County:
Judge:
__________________________________________________________
Counsel:
Jassy Vick Carolan and William T. Um for Plaintiff and Appellant.
Hunton Andrews Kurth, Lorelie S. Masters, Kevin V. Small,
Alexandrea H. Young; Reed Smith, Timothy P. Law and Andrew B.
Breidenbach for United Policyholders as Amicus Curiae on behalf of
Plaintiff and Appellant.
Horvitz & Levy, Mitchell C. Tilner, Steven S. Fleischman, Emily V.
Cuatto; Nicolaides Fink Thorpe Michaelides Sullivan, Richard H.
Nicolaides, Jr., Daniel I. Graham, Jr., and Jodi S. Green for Defendant
and Respondent.
Counsel who argued in Supreme Court (not intended for
publication with opinion):
William T. Um
Jassy Vick Carolan LLP
355 South Grand Avenue, Suite 2450
Los Angeles, CA 90071
(310) 870-7048
Steven S. Fleischman
Horvitz & Levy LLP
3601 West Olive Avenue, 8th Floor
Burbank, CA 91505
(818) 995-5824