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The courts clash again: the Seventh Circuit refuses to accede to Illinois Appellate Court’s determination of insurance coverage for BIPA claims

6/3/25

By: Amy E. Frantz and Jonathan Schwartz

On May 2, 2025, the U.S. Court of Appeals for the 7th Circuit found that an insurer, Citizens Insurance Co. of America, may have a duty to defend its policyholder, Mullins Food Products Inc., against a class action lawsuit alleging violations of the Illinois Biometric Information Privacy Act. Citizens Ins. Co. of Am. v. Mullins Food Prods., Inc., 2025 WL 1276033. However, the 7th Circuit remanded the case to the district court to determine whether Mullins provided timely notice of the suit to Citizens.  

Mullins sought defense from Citizens under three separate commercial liability insurance policies issued in 2015, 2016 and 2017. Citizens declined to defend and instead filed a declaratory judgment action in federal court. Upon reconsideration, the district court entered summary judgment in Citizens’ favor, finding two exclusions—the Access or Disclosure Exclusion and the Statutory Violations Exclusion—applied to preclude coverage for the underlying class action lawsuit. The district court relied in part on the Illinois Appellate Court’s 1st District’s decision in National Fire Insurance Co. v. Visual Pak Co. Inc., 2023 IL App (1st) 221160, where the Appellate Court found that coverage for BIPA claims was barred by a near-identical exclusion. 

On appeal, the 7th Circuit addressed the applicability of both exclusions. First, it agreed that the Access or Disclosure Exclusion, which applies to injury arising out of “any access to or disclosure of any person’s… confidential or personal information…”, unambiguously precludes coverage for BIPA claims. However, that exclusion was contained in the 2016 and 2017 policies only.  

The Statutory Violations Exclusion, in contrast, was present in all three policies and provided, in relevant part, that coverage is excluded for: 

“Personal and advertising injury” arising directly or indirectly out of any action or omission that violates or is alleged to violate: 

(1) The Telephone Consumer Protection Act (TCPA)…; (2) The CAN-SPAM Act of 2003…; (3) The Fair Credit Reporting Act (FCRA)…including the Fair and Accurate Credit Transactions Act (FACTA); or (4) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA…that addresses, prohibits or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or in-formation. 

The 7th Circuit relied on its previous decision in Thermoflex Waukegan LLC v. Mitsui Sumitomo Ins. USA Inc., 102 F.4th 438 (7th Cir. 2024), in holding the Statutory Violations Exclusion does not apply to BIPA claims. Notably, Thermoflex was premised on the Illinois Supreme Court’s analysis of a similar, albeit materially different, statutory violations exclusion in West Bend Mutual Insurance Co. v. Krishna Schaumburg Tan, Inc., 2021 IL 125978. Based on its interpretation of the exclusion in Thermoflex, and in spite of Visual Pak holding the opposite (and the Illinois Supreme Court declining the policyholder’s petition for leave to appeal), the 7th Circuit reaffirmed its belief that the catch-all provision in the final paragraph of the exclusion is ambiguous. 

It comes as little surprise, then, that the 7th Circuit in Mullins felt “Thermoflex leaves no doubt as to how [it] should read the catchall provision here,” noting the 7th Circuit was able to consider both Visual Pak, as well as its prior decision in Citizens Insurance Co. v. Wynndalco Enterprises, 70 F.4th 987 (7th Cir. 2023), when it decided Thermoflex. The court then concluded that Krishna’s approach sufficiently indicated how the Illinois Supreme Court would decide the issues in Mullins such that certification to the Illinois Supreme Court was not warranted. “Taking [its] cue from Krishna,” the 7th Circuit further concluded, as it did in Thermoflex, applying the canon of ejusdem generis, that the statutes named in the first three paragraphs are “patently different in kind from BIPA” since the TCPA and CAN-SPAM Act regulated communications, while the FCRA deals with individual’s credit history. Accordingly, it held that the catch-all provision does not encompass BIPA violations. Consequently, the 7th Circuit panel found that Citizens may have a duty to defend and indemnify Mullins under the 2015 policy, which lacked the Access or Disclosure Exclusion.

The 7th Circuit in Mullins, as in Krishna and Thermoflex, relied on the application of canons of interpretation, like ejusdem generis, to reach its holding that the catch-all provision in the Access or Disclosure Exclusion is ambiguous. However, in doing so, the Court appeared to ignore that use of canons of interpretation is not necessary unless and until the policy language is determined to be ambiguous. As the Visual Pak court noted, conflicts in policy language do not automatically render the language ambiguous, as doing so would render many exclusions meaningless. This is significant because in applying the same catch-all provision, the Illinois Appellate Court in Visual Pak found no ambiguity, observing: “[I]t is simply impossible to deny that [the catchall provision] describes BIPA. BIPA regulates the collection, dissemination and disposal of one’s biometric identifiers and information.” Moreover, in light of the holding in Visual Pak, it is perplexing that the 7th Circuit relied on Krishna, finding it dispositive on interpretation of the Statutory Violations Exclusion, when the exclusion at issue in Krishna was so critically different from the one in Mullins.

The final issue before the 7th Circuit in Mullins was whether Mullins provided timely notice of the state court BIPA action to Citizens. That issue was not resolved by the 7th Circuit, but instead, was remanded to the district court for further proceedings. As the Seventh Circuit explained, if Mullins gave timely notice, Citizens will be liable to reimburse Mullins for its defense costs in the state litigation, under the 2015 policy, the amount of which will also need to be resolved by the district court.

Note: Our analysis of the Visual Pak decision and its disagreement with the 7th Circuit’s ruling in Wynndalco can be found here: https://www.fmglaw.com/insurance/clash-of-the-courts-how-the-illinois-appellate-courts-discord-with-the-seventh-circuit-continues-to-shape-the-evolving-landscape-of-insurance-coverage-for-bipa-claims  

For any questions or further clarification, please contact Amy E. Frantz at amy.frantz@fmglaw.com, Jonathan Schwartz at jonathan.schwartz@fmglaw.com or your local FMG attorney. 

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