Vizio Says Insurers Wrongly Didn't Cover Privacy Litigation Costs

Liability policy insurers Navigators and Arch are in breach of contract for refusing to cover Vizio’s costs defending itself against dozens of smart TV class-action privacy lawsuits, alleged Vizio in a complaint (in Pacer) Thursday in U.S. District Court in Los Angeles. The 29 class actions began in November 2015, alleging the “smart interactivity” feature on Vizio smart TVs violates the Video Privacy Protection Act because it tracks the content viewers are consuming, links the data with their IP addresses and sells the data to marketing companies (see 1512060005). The lawsuits stemmed from Vizio’s July 2015 initial public offering, never consummated, in which it boasted that its Inscape data platform captures smart TV viewing behavior better than any previous service (see 1507260001). The class actions were consolidated into a single case in U.S. District Court in Santa Ana, California, where a judge approved a final settlement agreement in July 2019. The agreement required Vizio to establish a $17 million settlement fund, plus make available prominent on-screen disclosures and opt-out forms about Inscape data collection. Vizio paid $2.2 million in February 2017 to settle similar allegations at the FTC (see 1702060042). Navigators and Arch, using technicalities in their policies, walked away from their “obligations” to cover Vizio for the settlement fund or its “defense costs,” said the Los Angeles complaint. Navigators “disclaimed such an obligation,” while Arch never responded to Vizio’s "notice of claim of defense,” it said. Vizio seeks compensatory and punitive damages, plus a court declaration that the insurers are responsible for their obligations. Navigators and Arch didn’t comment Friday.