At the start of a storybook season last year, one that would see the team go on a record 17-0 run, the Los Angeles Clippers engaged in a promotion the team thought would generate a bit more fan engagement.

It worked, but not exactly as expected.

During a game last year, fan Ari Friedman posted a personal message on the Staples Center scoreboard by texting it to an advertised number. In addition to seeing the message on the scoreboard, Friedman said he was soon spammed with a series of unwanted texts.

He objected, arguing that the texts were an invasion of privacy, and in fighting back has caused the team to be caught in a shifting legal landscape dealing with mass marketing and privacy.

The law governing marketing of the sort used by the Clippers and thousands of other companies was broadened in October, opening more businesses to liability for unwanted communication. The law now requires unambiguous written consent for marketing communications, no longer granting exclusions for a “prior business relationship.”

Complicating matters for the Clippers, Friedman has decided to sue under a federal law that could award him up to $1,500 per text, and what might seem like a simple grievance has proved to be an unlikely legal headache for the team. Friedman has moved to certify his lawsuit as a class action, which puts millions of dollars at stake instead of thousands. What’s more, the Clippers’ insurance provider has refused to cover the cost of the suit, claiming privacy invasions are not covered under traditional corporate insurance policies.

The Clippers have been caught on two rapidly evolving fronts, said analysts: increasing liability from mass marketing and privacy issues and efforts by corporate insurance providers to avoid paying the mounting bills.

“These claims are going to be more and more of a topic of conversation,” said Linda Kornfeld, an attorney at Kasowitz Benson Torres & Friedman who reviewed the case for the Business Journal. “I expect to see more of these lawsuits and there will be more claims for coverage against insurers to pay for those lawsuits.”

The Clippers are accused of violating the federal Telephone Consumer Protection Act, or TCPA, which places restrictions on businesses sending unsolicited texts, calls and faxes – and has become a favorite of plaintiff’s attorneys. Statutory damages can add up quickly, at $500 or $1,500 per text or call. The number of TCPA lawsuits through September of this year jumped 70 percent from the same period a year ago, according to litigation data company WebRecon.

In June, Domino’s Pizza, accused of texting home delivery ads and promotional coupons to customers, settled a three-year-old case for nearly $10 million – only after the insurer of one of its franchise operators, which had denied coverage, reversed position and agreed to chip in. Papa John’s Pizza and Bank of America settled cases this year for $16 million and $32 million, respectively.

Costly text

Friedman claims he sent a text message at a game last year to post on the scoreboard, but soon began receiving texts that were spam advertisements or promotional offers.

Friedman filed his federal lawsuit in downtown Los Angeles in February, demanding up to $1,500 per text received. Named as defendants in addition to the Clippers were two mobile marketing firms for the team, Atlanta’s FanDrive Media – founded by Los Angeles Dodgers President Stan Kasten – and Chandler, Ariz.’s Mobivity Holdings Corp. Mobivity was later dropped from the case.

Friedman upped the ante in August by filing a motion to certify the case as a class-action complaint on behalf of all U.S. residents receiving unsolicited texts from the Clippers over four years – believed to number in the thousands, if not more. A hearing on the class-action certification has been scheduled for February.

Prior to changes in federal law in October, many companies took the position that voluntarily providing one’s mobile number amounted to consent for marketing messages. Companies that sent mass-marketing texts prior to October have reason to watch, said Dominique Shelton, an attorney at the downtown L.A. office of Alston & Bird specializing in intellectual property and privacy law.

“It will be interesting to see how the court interprets this new action,” she said.

The Clippers, like most large businesses, have several standard insurance policies meant to cover the costs of such litigation, and believed they were covered under a $5 million policy written by Federal Insurance Co. designed to indemnify wrongdoing of company directors and officers.

But within a month of the filing, Federal allegedly declined to pay for the claim, prompting the Clippers to file a lawsuit this month in Los Angeles Superior Court.

A spokesman for the Clippers declined to comment as did a spokesman at Federal.

Todd Friedman, attorney for Ari Friedman, also declined comment. It could not be determined whether he is related to his client.

Kornfeld, who represents corporate insurance policyholders, said that many insurers are flat-out refusing to pay for the rising tide of claims from unsolicited texts and calls.

Who has to pay for these rising costs is still a murky area. In some cases, businesses have successfully been able to argue they are covered under a common form of insurance known as general liability insurance. Very few policyholders have argued the claims are covered under the type of policy the Clippers are citing, Kornfeld said.

The increasing number of lawsuits is causing a change in the insurance market generally, she added. More insurance providers are writing in exclusions to these kinds of cases, and as they balloon, some are now selling coverage specifically for invasion-of-privacy claims.

But as far as the insurance piece of the Clippers’ legal fight is concerned, insurance attorney Howard Shernoff said there is a good chance the basketball team will prevail against its insurer or settle on favorable terms. “I’d be shocked if this case didn’t settle and pretty quickly,” he said. “You have things that are there to protect California policyholders, including corporate policyholders like the Clippers.”