1. Zoom Appeals TW Win on Meaning of Non-Monetary Relief

Zoom, et al. v. Certain Underwriters, et al., Case No. H052221 (Cal. Court of Appeal)

Takeaway: California State Court rules an FTC Civil Investigative Demand (similar to an

administrative subpoena) was not a “demand for nonmonetary relief” and, therefore, not a

“claim,” because a request for information and documents does not seek “relief,” which the

Court suggested was a “redress or benefit, esp. equitable in nature (such as an injunction or

specific performance).”

Tech giant Zoom Video Communications, Inc. has appealed the entry of judgment in favor of

Certain Underwriters, represented by TittmannWeix, in an insurance coverage dispute arising

from the “Zoombombing” phenomenon of the COVID-19 pandemic. Zoom had tried to relate part

of its $85 million class action settlement to a 2019 tower of coverage, and another part to the

2020 tower, as Zoom held insufficient limits in each year alone to cover the full settlement.

On stipulated cross-motions for summary judgment, the Santa Clara Superior Court ruled that an

FTC subpoena issued in the 2019 policy period was not a “claim” and thus no coverage was

available under the policy. The Court concluded that the subpoena was not a “written demand

for nonmonetary relief” because it sought documents, not “relief,” i.e., “redress or benefit, esp.

equitable in nature (such as injunction or specific performance), that a party asks of a court.”

The Court also found it was not a “Regulatory Proceeding” because, although the FTC Act may be

used to enforce privacy and security lapses, the FTC Act does not itself require specific privacy or

security controls. Zoom has appealed the decision to California’s 6th District Court of Appeal.

2. Insurers May Want To Broaden Limita ons Clauses in Light of

California Supreme Court Ruling

Rosenberg-Wohl v. State Farm, Case No. S281510 (Cal. Supreme Ct. July 18, 2024)

Takeaway: The California Supreme Court approved a new avenue for policyholders to obtain

injunctive relief against insurance carriers after contractual limitations periods expire.

The Supreme Court of California held yesterday that a lawsuit for injunc ve relief to reform State

Farm’s claims handling prac ces was  mely, despite being filed a er the one-year limita ons

1 Serving up your favorite coverage li ga on updates from the bar, best enjoyed with coffee or tea.

clause in the insurance policy. Since the lawsuit did not seek monetary relief “on this policy for

the recovery of any claim,” and instead sought only broad declaratory relief pertaining to claims

handling prac ces under California’s unfair compe  on law, it was  mely filed under the fouryear limita ons period in the unfair compe  on statute.

The Court expressed no opinion whether an insured seeking a monetary award under the unfair

compe  on law would be subject to their policy’s shortened contractual limita ons period. We

an cipate plain ffs’ counsel will seek monetary recovery under this untested theory to sidestep

shorter contractual limita ons periods.

The Court also gave insurers a clue as to how to dra  policies to avoid these poten ally extended

periods for insureds to file suit: “We have no occasion here to consider the validity of a provision

… that purports to apply a one-year  me period for filing suit to a broader array of causes of

ac on ….’” Insurers may want to consider including broader limita ons provisions in their policies

going forward in light of this ruling.

3. Excess Insurers: California Supreme Court Rejects Horizontal

Exhaus on of Primary Policies in Other Years

Truck Insurance v. Kaiser Cement, Case No. S273179 (Cal. Supreme Ct. June 17, 2024)

Takeaway: Interpreting standard “other insurance” language, the California Supreme Court

ruled that “first-level excess policies only require vertical exhaustion” for indemnity obligations

to attach. So, a primary insurer may seek contribution from excess carriers in other policy

periods. The Court allowed excess carriers may “write their future excess policies in a manner

that expressly requires horizontal exhaustion.” This ruling applies to continuing loss claims.

Kaiser Cement was facing tens of thousands of lawsuits for alleged injuries caused by asbestoscontaining products it manufactured from 1944 to the 1970s, covered by primary and excess

general liability policies across the decades. The first-layer excess policies contained standard

“other insurance” language requiring “underlying insurance” to be exhausted.

Truck Insurance, a primary carrier, filed an equitable contribution claim against first-level excess

carriers. Truck argued the excess coverage attached immediately upon exhaustion of their direct

underlying primary layer; the excess carriers claimed all primary policies during the continuous

period of injury must first exhaust. The Supreme Court found in favor of Truck, holding that the

primary carrier could share the losses with first-layer excess policies as long as those excess

policies’ direct underlying insurance had been exhausted.

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