Two years after agreeing to pay $17 million to settle a landmark privacy case, TV maker Vizio is back in court, accusing two insurers of failing to defend the suit.
Vizio filed suit against Navigators Insurance Co. and Arch Insurance Co. on Thursday, accusing both of wrongfully denying coverage. The lawsuit is particularly harsh about Navigators, accusing the firm of “despicable” conduct that hampered the Vizio’s ability to defend itself. The suit seeks $10 million from Navigators alone.
Vizio faced dozens of lawsuits following a November 2015 report in ProPublica, which revealed that the TV maker was selling data about customers’ viewing habits. The firm ultimately agreed to a $2.2. million settlement with the Federal Trade Commission in February 2017, under which it agreed not to track such data without an affirmative opt-in from customers.
Vizio sought to dismiss the class action claims, which were consolidated in a case in Santa Ana, Calif.. But Judge Josephine Staton twice denied that motion, forcing Vizio into a costly settlement in October 2018.
The insurance suit offers a some behind-the-scenes detail about the workings of that case. The suit states that Chubb, a.k.a. Federal Insurance Co., paid out millions to defend the case and fund the settlement under its commercial general liability and umbrella policies with Vizio.
Vizio also sought coverage from Navigators, which had issued a policy covering directors and officers’ liability up to a limit $5 million. But according to the suit, Navigators denied coverage — after first saying that it would contribute to defense costs — citing a policy exclusion for claims of “invasion of privacy.”
Vizio argues that the suits also cited other allegations, beyond invasion of privacy. Vizio also contends that Navigators’ refusal to defend the suit violated the standard in the insurance industry that defense costs are paid up front if the insured can show the mere “potential” for coverage.
Vizio’s attorneys sought to include Navigators in the settlement talks in early 2018, but were repeatedly rebuffed.
Arch also issued a policy covering costs above the limit of the Navigators policy. According to the suit, Arch never responded to Vizio’s request for coverage.
The suit states that the $17 million settlement was well in excess of the policy limits of the Navigators and Chubb policies. The suit also says that Chubb did not pay the full cost of defending the suits, and that Vizio and Chubb had a disagreement about Chubb’s obligations until they reached a confidential settlement in June 2018. Under that agreement, Chubb’s potential legal claims against Arch and Navigators were assigned to Vizio.
The suit alleges that Navigators’ conduct was “malicious” and showed “willful and conscious disregard for the rights of Vizio to receive the benefits under Navigators’ Policy.”
Vizio is seeking punitive damages in addition to its actual damages and costs.