dcctofappealsThe problems that can arise from the wording of the professional services exclusion in a service company’s D&O insurance policy are perennial issues and a recurring topic on this blog (see for example here). When the exclusion in a service company’s management liability policy is interpreted broadly the exclusion can sweep so extensively that it can preclude coverage for the very types of claims the management liability policy was intended to insure. A recent decision from the District of Columbia’s highest court highlights these concerns.

 

In a February 11, 2016 District of Columbia Court of Appeals decision (here), the appellate court, applying District of Columbia law, reversed a lower court ruling that the professional services exclusion in the management  liability insurance policy of defunct Carlyle Management LLC precluded coverage for the various claims that had been asserted against Carlyle, related entities, and its senior officials. The Court of Appeals did not affirmatively conclude that the underlying claims were covered; rather, it held only that the broadly worded professional liability exclusion was ambiguous, and that the question of coverage is properly a question for a factfinder. While the appellate court did not affirmatively find coverage, the court’s opinion underscores the concerns with interpreting and applying the professional liability exclusion in a service firm’s management liability insurance policy too broadly. Continue Reading D.C. Appellate Court Reverses Ruling that Professional Services Exclusion Bars Coverage for Failed Investment Firm’s Claims

scalia
Antonin Scalia

U.S. Supreme Court Justice Antonin Scalia’s death on Saturday has already triggered concerns about the possible outcome of the numerous important cases now pending before the Court, and has further agitated an already tumultuous Presidential election campaign. The furious debate that is already well underway about the nomination of Justice Scalia’s successor could be one of the key issues in the current campaign, and perhaps beyond. While these controversies are likely to continue and to dominate the headlines for some time to come, a different process will also be taking place, and also will likely continue for some time – that is, the debate over Justice Scalia’s legacy. Continue Reading Justice Scalia’s Business Law Legacy

new jerseyAs anyone involved in D&O insurance knows, policyholders’ late provision of notice of claim is a recurring problem. All too often, delays in providing notice result in a preclusion of coverage, an outcome that I find in many cases to be troubling. Because of concerns about policyholders’ loss of coverage, some courts have held that an insurer must show that the late provision of notice prejudiced its interests in order to disclaim coverage. However, a number of other courts have also held that the “notice prejudice rule” does not apply to claims made policies.

 

Along these lines, on February 11, 2016, the New Jersey Supreme Court held that, at least where a “sophisticated” insured is involved, an insurer that contends that it was not provided with timely notice of claim under a claims made insurance policy does not have to show that it was prejudiced by the delayed provision of notice in order to disclaim coverage. The New Jersey Supreme Court’s opinion can be found here.

 

As I commented at the time when the intermediate appellate court reached the same conclusion in this case, I have some issues with this case and the way it all played out. Continue Reading N.J. Sup. Ct.: Notice Prejudice Rule Does Not Apply to “Sophisticated” Insured’s Claims Made Policy

can flag 2In the United States, securities class action lawsuit filings were at their highest level in years in 2015. The situation in Canada during 2015 was completely the opposite. According to a February 11, 2016 report from NERA Economic Consulting, securities class action lawsuit filings in Canada during 2015 were at their lowest levels since 2003. According to the report, which is entitled “Trends in Canadian Securities Class Actions: 2015,” and subtitled “Are We in Bear Territory?” (here), there were only four securities class action lawsuits filed in Canada in 2015, well below the levels seen in recent years and well below historical averages. Indeed, according to the report, case resolutions far outpaced new filings in 2015. NERA’s February 11, 2016 press release about the report can be found here. Continue Reading NERA: Canadian Securities Class Action Filings in 2015 at Lowest Level in Years

daveandbustersThe Affordable Care Act – better known as Obamacare – contains numerous provisions that define the relationships between employers and their employees with respect to health care benefits. Among the most critical are the statute’s employer mandates requiring employers with more than 50 employees to offer health insurance coverage to its employees who work 30 hours or more a week or face statutory penalties. As I have previously noted in discussing possible Obamacare-related employer liability issues, the ACA’s mandate creates incentives for employers to try to restructure their workforce to avoid the statute’s requirements. However, as I have also noted, employer actions to restructure their workforces to avoid providing health plan benefits could lead to liability claims under ERISA.

 

A recent decision from the Southern District of New York shows how an employer’s actions to reduce full-time staff to part-time status — allegedly undertaken in an effort to avoid the health care law’s impact — can lead to ERISA class action claims. The decision also underscores how the affected employees may be able to assert viable ERISA claims. Continue Reading Can Workforce Changes Made in Response to Obamacare Mandates Lead to Employer Liability Claims? Yes, They Can

Ninth Circuit bitmapPublic company D&O insurance provides coverage for “Securities Claims.” But whose securities must be involved in a claim in order for coverage to be triggered? Must the claim involve the securities of the corporate policyholder itself? Or can coverage be triggered by a claim involving mortgage-backed securities the corporate policyholder issued as part of its financial operations? Continue Reading D&O Insurance: Whose “Securities” Must a Claim Involve to Trigger Securities Claim Coverage?

federal depositFollowing the recent bank failure wave, the FDIC filed liability actions against the former directors and offices of many of the failed banks, as detailed here. But the FDIC did not sue the former executives of every failed bank. Why did the FDIC sue the executives of some failed banks but not others? Was it because the failed banks the agency targeted had engaged in qualitatively different conduct? Or was it merely because the ones the FDIC sued had D&O insurance in force from which the agency could extract a monetary recovery? Continue Reading Does the FDIC Target Only Failed Bank Directors and Officers That Have D&O Insurance?

increasingOn the panel in which I participated during last week’s PLUS D&O Symposium, one of the important topics we discussed was the question of coverage under a D&O insurance policy for claims under the Telephone Consumer Protection Act, a topic about which I have previously written on this blog. That a once-obscure statute like the TCPA has become an important topic of conversation is no accident. The fact is that the number of TCPA actions filed has absolutely exploded, as detailed in a recent study published by the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce. Continue Reading There’s a Reason You Are Suddenly Hearing About the TCPA Everywhere You Go

spain1The filing of securities class action lawsuits is, of course, well-established in the United States, and in recent years has become a regular phenomenon in Australia and Canada as well. In the wake of various recent scandals, numerous group or mass investor actions, if not full-blown class actions, have been filed or will be filed in a number of other countries, including the U.K. (for example, in connection with the Tesco accounting scandal), Germany (in connection with the VW emissions scandal), Japan (in connection with the Toshiba scandal), Italy (in connection with the Saipem scandal), and possibly Brazil (in connection with various companies’ involvement in the Petrobras scandal).

 

Now it appears that investors in the troubled Spanish banking company Bankia have initiated a class action lawsuit against the company. According to news reports (here), counsel for 660 individual investors has filed an action in a Madrid court seeking to have the individuals compensated for their investment losses in connection with the company’s 2011 stock flotation. The investors collectively seek recovery of 6.3 million euros (about $7 million). Continue Reading Spanish Class Action is the Latest Collective Investor Action Filed Outside U.S.

2016-01-28 03.43.42aThe D&O Diary is on assignment in Germany this week, with the first stop for a meeting and a short visit in the Free and Hanseatic City of Hamburg – “Free,” as a free Imperial city under the Holy Roman Empire, and “Hanseatic” for the Hanseatic League, the Northern European trading confederation in the late Middle Ages. Though Hamburg is 60 miles inland from the North Sea on the Elbe River, it is a seaport – the second largest in Europe, in fact. It remains a separate city-state within the present German federation. At 1.7 million people, it is also the second-largest city in Germany. Continue Reading Two German Cities in Winter