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May 15, 2020

Laridae Communications Inc. Successful in Bringing Application Against the Co-Operators General Insurance Company

Timothy J. Hill and Brian Chung

Laridae Communications Inc. (“Laridae”), a communications and media consulting firm, successfully brought an application against its insurer, the Co-Operators General Insurance Company (“Co-Operators”), requiring it to defend Laridae in respect of a third party claim arising from a class action seeking damages for $75 million resulting from a data breach. The representative plaintiffs in that action alleged that their personal and confidential information, which were stored on a website, were illegally accessed and made publicly available on various social media websites. Laridae and the children’s aid society defendant which hired Laridae to overhaul its communications and media platforms, including its website, both brought their own applications against Co-Operators, which were heard together.

In her decision, Justice Pollak of the Ontario Superior Court of Justice examined the broadly-worded “data exclusion” clauses which Co-Operators sought to rely on. In granting both applications, Justice Pollak held that there are some allegations in the claims which are not triggered by the data exclusion clauses (for example, physical distribution of the sensitive information), and accordingly held that Co-Operators has a duty to defend both insureds in respect of all of the claims, even those which are excluded. Both applicants further argued that given how broad the data exclusion clauses are worded, enforcement of same would be inconsistent with the main purpose of the insurance coverage. Justice Pollak agreed that until the courts have had an opportunity to adjudicate the complex issues raised by the exclusion clauses, it would be premature to deny that Co-Operators has any duty to defend.

Laridae Communications Inc. was represented by litigation lawyers Tim Hill and Brian Chung. This decision dealt with the effect of a broadly-worded data exclusion clause in an insurance policy. Until this decision, the parties were unable to find any reported decisions dealing with such issue directly, which was somewhat surprising given the increasing number of data breaches that occur in Canada each year.

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