D & O Insurance

Subscribe to D & O Insurance

Regular readers know that a recurring topic on this site is the question of the proper scope of the contractual liability exclusion found in many professional liability and management liability insurance policies. In prior posts I have argued that insurers sometimes apply the exclusion overly-broadly so as to exclude matters I believe should otherwise be covered under the policy. A recent Delaware Superior Court decision once again considered these issues in the context of an underlying qui tam action alleging violations of federal law. As discussed below, the court concluded that the applicable policy’s contractual liability did not preclude coverage for the underlying claim. A copy of the Delaware Superior Court’s March 12, 2025, opinion in the case can be found here.Continue Reading Del. Court: Contract Exclusion Does Not Preclude Coverage for Qui Tam Action

The typical D&O insurance policy provides coverage, subject to all of its terms and conditions, for an insured’s payment of “Loss.” The policy typically provides that “Loss” includes settlements. But what happens if in settling a lawsuit a policyholder issues stock rather than paying cash? Does the stock issuance represent “Loss” within the meaning of the policy? In an interesting recent opinion, the Delaware Superior Court held that AMC Entertainment Holding’s issuance of stock in connection with the settlement of a stockholders’ claim did represent “Loss” within the meaning of the applicable policy. As discussed below, the court’s opinion raises some interesting questions. The Delaware court’s February 28, 2025, opinion can be found here.Continue Reading Is Stock Issuance in Connection with a Settlement “Loss”?

The 2019 merger between Viacom and CBS to form ViacomCBS (later renamed Paramount Global) generated extensive litigation that ultimately settled. The Merger — and the Merger-related litigation — followed events involving the two companies going back to 2016, and in fact there had been prior litigation back in 2016 as well. National Amusements, Inc. (NAI), which owned a majority of the voting shares of both CBS and Viacom, sought coverage for the defense and settlement of the 2019 litigation from its D&O insurers. The insurers contended that the 2019 post-Merger litigation and the 2016 lawsuits were interrelated, and therefore that the settlement was covered under policies in force in 2016, rather than under the policies in force in 2019.

In an opinion dated February 17, 2025, but only recently made public, the Delaware Superior Court granted NAI’s motion for summary judgment, holding that the 2019 Suit is not interrelated with the 2016 Suits, and therefore that costs associated with the 2019 Suit were covered under the 2019 Policy and not under the 2016 Policy. The court’s analysis, in which it concluded that the two sets of litigation were not “meaningfully linked,” is detailed and interesting, and helps to explain what factors are relevant in the analysis of the meaningfully linkage issue. A copy of the court’s opinion can be found here.Continue Reading Del. Court Holds Merger Litigation Not “Meaningfully Linked” to Prior Suits

John McCarrick

Readers of this blog have no doubt followed both the recent ongoing controversy over whether companies should leave Delaware for supposedly friendlier jurisdictions as well as the legislation recently introduced in the state’s General Assembly to try to address some of the legal concerns behind the leaving Delaware initiative. In the following guest post, and in the context of these issues, John McCarrick, a partner at the Robinson & Cole law firm in New York, takes a look at recurring Delaware issues that in his view are of significant concern to D&O insurers. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.Continue Reading Guest Post: DExit Drama and D&O Insurance Issues

A D&O insurance policy provides its most important protection in the bankruptcy context, when the company is unable to indemnify its executives for claims arising out of their service as directors or officers. But because of the competing interests in bankruptcy – including the interests of the bankruptcy estate itself – bankruptcy can also be a complicated insurance coverage context. A Fourth Circuit decision, in which it held that two bankruptcy trustees lacked standing to sue a bankrupt company’s D&O insurer in a declaratory judgment action, highlights important principles governing D&O insurance in the bankruptcy context.Continue Reading 4th Circ.: Bankruptcy Trustees Lack Standing to Sue D&O Insurer

In a closely watched case, the Delaware Supreme Court has reversed a lower court holding that a prior SEC subpoena and a later securities class action lawsuit were not interrelated. The Supreme Court held, contrary to the lower court, that the allegations in the subsequent securities suit were “meaningfully linked” to the alleged wrongful acts referenced in the insured’s prior notice of the subpoena. While the Supreme Court’s opinion provides clarification on important recurring “interrelatedness” issues, its ultimate holding may in the end provide relatively little guidance for other future wrestling with “interrelatedness” disputes. A copy of the Delaware Supreme Court’s February 4, 2025, opinion can be found here.Continue Reading In Reversal, Del. Sup. Ct. Holds Subpoena and Securities Suit Interrelated

Sarah Abrams

In recent years, student athletes in the U.S. have gained the rights to profit from their “name, image, and likeness” (NIL). As these rights have emerged, NIL collectives have formed. The purpose of these collectives is for a school’s athletic supporters to have a way to pool their funds in order to create opportunities for their school’s student athletes. The collectives are in many ways new kinds of organizations, and they are certainly organized for new purposes. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, examines the challenges involved with trying to develop management liability insurance for these kinds of collectives. A version of this article previously was published on Law360. I would like to thank Sarah for allowing me to publish her 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 Sarah’s article.Continue Reading Guest Post: Challenges of Insuring an NIL Collective

Whether or not two or more claims are interrelated within the meaning of a D&O insurance policy is a recurring issue. The outcome of interrelatedness disputes often reflects the specific facts involved and the relevant policy language. In addition, the applicable law can also be a factor. A recent decision of the Delaware Superior Court reflects all these factors, and the case outcome at least raises the question whether the applicability of New York law to the dispute was determinative. The Court’s opinion, as updated and reissued on January 6, 2025, can be found here.Continue Reading Delaware Court, Applying NY Law, Addresses Related Claims Dispute

One of the recurring D&O insurance coverage issues is whether or not the so-called “bump-up” exclusion precludes coverage for amounts paid in settlement of post-merger litigation. The outcome of these disputes is often a reflection of several situation-specific factors, including the specific policy language involved, the nature of the underlying transaction, the claims alleged in the underlying litigation, the features of the settlement, and the applicable law. All of these factors came into play in a recent Delaware Superior Court decision in which the court held that the primary policy’s bump-up exclusion does not preclude coverage for the settlement of the lawsuit relating to the 2017 merger of Harman International Industries and Samsung’s American division. The court’s January 3, 2025 opinion, as amended in a January 7, 2025 corrected opinion, can be found here.Continue Reading Del. Court: Bump Up Exclusion Doesn’t Bar Coverage for Post-Merger Suit Settlement

Is a company’s action against a corporate executive to recover the costs of defense the company advanced on his behalf “restitutionary” in nature and are the amounts involved therefore precluded from coverage under the D&O insurance policy’s definition of Loss? In an opinion that undoubtedly will gladden the hearts of policyholder-side advocates, a California appellate court held that it is not. As discussed below, there are a number of interesting features to the court’s opinion. The California Court of Appeals’ November 12, 2024 opinion can be found here.Continue Reading CA Court: Suit to Recover Executive’s Defense Fees not “Restitutionary”