Claims made insurance policies provide coverage for claims first made during the policy period. So if the claim is made during the policy period, there’s coverage, right? Not so fast; there’s a catch. Under most claims made policies, the claim also has to be reported during the policy period or within a short period after the policy period ends. In many jurisdictions, the insurer can deny coverage for the late notice even if the delay did not prejudice the insurer in any way. The policy’s notice clause operates as a “Mother May I” provision – even though you paid your premium, you don’t get coverage unless you say “Mother May I” and provide notice within the time limits. The problem is that policyholders muff the notice requirements all the time. We all know that. Late notice happens all the time. As a result, policyholders often get no coverage for the claims but the insurers keep the premium. Continue Reading
A Q&A on Wage & Hour Insurance
Machua Millett
My recent post about wage and hour exposure and insurance triggered an email exchange with one of the blog’s readers, Machua Millett, who is the Chief Innovation Officer for the financial and professional unit (FINPRO) at Marsh. The email exchange involved a lot of information that we both agreed might be of interest to all of the blog’s readers. Rather than try to turn the email correspondence into a blog post, we reconstructed the exchange in the form of a Q&A, which is set out below. I would like to thank Mach for reaching out to me in the first place, for his willingness to share ideas and information, and for his willingness to participate in the Q&A, below. My questions are set out in italics, Mach’s answers to each question follow. Continue Reading
Is a Digital Coin that Functions as a Medium of Exchange a “Security”?
One of the cutting-edge legal issues – one that is raised in a number of pending securities class action lawsuits – is the question of whether cryptocurrencies are “securities” and therefore required to be registered with the SEC before they can be traded. Within this larger question are a host of related issues, perhaps the most interesting of which is the question whether digital currencies that act as “mediums of exchange” are securities, or rather are more like traditional currencies, which are exempt from the definition of securities. The answer to this question could have an enormous impact on the marketplace for digital currencies and could have significant liability implications in a number of pending actions and enforcement actions. Continue Reading
Litigants Have to Disclose Insurance, Does That Mean Litigation Financing Should be Disclosed, Too?
One of the hot topics in the litigation arena these day is the question of whether or not litigants should be obliged to disclose their litigation funding arrangements to opposing parties. Indeed, as discussed here, last month three U.S. senators introduced a bill to require litigation funding arrangements to be disclosed in class action litigation and multidistrict litigation. One of the arguments raised in favor of this type of disclosure is that under the Federal Rules of Civil Procedure defendants are already required to disclose to opposing parties at the outset of the case their insurance coverage information. In an interesting June 11, 2018 Law 360 article entitled “Claimants Shouldn’t Be Forced to Disclose Litigation Funding” (here), Matthew Harrison and John Harabadian of Bentham IMF litigation funding firm challenge the parallels that are usually drawn in this context between discovery of insurance and discovery of litigation funding arrangements, arguing that while this comparison is “superficially appealing,” the two types of disclosures “are far different by nature.” Continue Reading
U.S. Supreme Court: Equitable Tolling Does Not Allow Follow-On Class Claims Outside of the Limitations Period
In the latest of several recent high court decisions addressing the questions of statutes of limitations and related questions of tolling, on June 11, 2018, the U.S. Supreme Court unanimously held that equitable tolling principles do not apply to toll statutes of limitation to permit previously absent class members to bring a subsequent class action outside the applicable limitations period. This seemingly narrow ruling is consistent with the Court’s recent proclivity to provide sharper edges and cleaner lines to statutes of limitations issues and to reduce the likelihood that class securities claims may continue be filed after the end of the limitations period. The Supreme Court’s June 11, 2018 opinion in China Agritech, Inc. v. Resh can be found here. Continue Reading
Guest Post: Why Law Firms Should Never Accept Their Fees in Cryptocurrency
John Reed Stark
As the cryptocurrency phenomenon has developed, one of the interesting parts of the story has been the relationship between the digital currency firms and the lawyers that advise them. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at a particular aspect of this lawyer-client relationship, the question of whether the lawyers should accept cryptocurrency in payment of fees. A version of this article originally appeared on Cybersecurity Docket. I would like to thank John for allowing me to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article. Continue Reading
D&O Insurance: Company in Receivership, Insurer Can Advance Defense Expense, But Limits Exhausted?
An issue that frequently comes up when companies are in bankruptcy or in other forms of receivership is whether the companies’ D&O insurer can advance payment of individuals’ defense costs over the receiver’s objections. In a recent case, a Northern District of Texas judge has ruled that the individual defendants in an SEC enforcement action are entitled to have their defense expenses advanced notwithstanding the asset stay in the proceeding and despite the receiver’s objections. However the policy’s limits of liability are all but exhausted, which raises its own set of issues, as discussed below. Northern District of Texas Judge Sydney Fitzwater’s June 6, 2018 opinion in the case can be found here. Continue Reading
Report: Wage Law Violations Result in Billions of Dollars in Total Payouts
Violations of statutory wage and hour requirements represent a very big problem for corporate employers. Cumulative payouts in private lawsuits and government enforcement for wage payment violations run into the billions, according to a new report from an organization called Good Jobs First. The June 5, 2018 report, entitled “Grand Theft Paycheck: The Large Corporations Shortchanging Their Workers’ Wages” (here), details the findings from an analysis of private collective actions since 2000 and regulatory enforcement actions in eight states, concluding that the litigation and enforcement activity has involved thousands of claims and resulted in billions of dollars in payouts. But, as detailed below, as a result of a recent U.S. Supreme Court decision, the trend lines could take a different direction in the future. The June 5, 2018 press release from Good Jobs First about the report can be found here. The background data and detailed analysis reflected in the report can be found here. Continue Reading
Ninth Circuit: Professional Services Exclusion Precludes D&O Insurance Coverage
A recurring issue under private company D&O insurance policies is the scope of the preclusive effect of the professional services exclusion. This question is particularly important for companies in professional services industries, as just about everything these kinds of companies do arises in some way out of their delivery professional services. In a June 4, 2018 decision in a case presenting these issues, the Ninth Circuit affirmed the district court’s holding that the professional services exclusion in an educational services company’s D&O insurance policy precluded coverage for a False Claims Act claim. As discussed below, the case raises questions about the purposes of the professional services exclusion and the way it operates to restrict available coverage. The Ninth Circuit’s June 4, 2018 opinion can be found here. Continue Reading
Is Over-Regulation Really the Reason There are Fewer IPOs?
One of the recurring themes of financial commentators has been the decline in the number of IPOs compared to prior years. Articles about the dearth of IPOs are something of a staple in the financial press. The decline in the number of IPOs has also drawn the attention of Congress. One of the intended purposes of the Jumpstart Our Business Startups Act of 2012 was to try to encourage more companies to go public. A number of other initiatives to try to encourage more IPOs are currently circulating through Congress. The premise behind these various legislative initiatives is that if the regulatory burdens can be eliminated and costs reduced, more companies will go public. Columbia Law School Professor John Coffee recently testified before a Congressional committee about these latest initiatives. His testimony is set out in a May 29, 2018 CLS Blue Sky Blog article entitled “The Irrepresssible Myth That SEC Overregulation Has Chilled IPOs” (here), reflecting his skepticism that further deregulation alone will result in increased numbers of IPOs. Continue Reading
