Yahoo’s recently-announced $80 million settlement of its data breach-related securities lawsuit may be a signal that the plaintiffs’ bar is going to pivot away from pursuing these claims in the form of shareholder derivative lawsuits. In their ongoing effort to capitalize on large-scale data breaches, to date, plaintiffs have struggled to survive motions to dismiss in data breach-related derivative lawsuits (e.g. Target and Wyndham Worldwide). Although the plaintiffs in the Home Depot derivative litigation were able to extract a $1.125 million settlement while the dismissal …Continue Reading
Category: Directors and Officers
Insurer Scores a Slam Dunk in TCPA Suit Before the Ninth Circuit
A recent decision by the Ninth Circuit is sure to catch the eye of insurers for its favorable reasoning rejecting coverage as well as a potential warning sign that policyholders are seeking coverage for Telephone Consumer Protection Act (TCPA) suits beyond CGL policies. In Los Angeles Lakers, Inc. v. Federal Insurance Company, No. 15-55777, 2017 WL 3613340 (9th Cir. Aug. 23, 2017), the Ninth Circuit determined there was no coverage for violations of the TCPA under a D&O policy. In short, by analyzing the …Continue Reading
Ninth Circuit Confirms the FDIC Cannot Avoid the Insured-Versus-Insured Exclusion
In recent years, courts frequently have held that a D&O policy’s “insured-versus-insured” exclusion bars coverage for claims by the FDIC, as receiver of a failed bank, against the bank’s former directors and officers because the FDIC stands in the shoes of the insured bank. Therefore, the FDIC has tried to circumvent this exclusion by arguing that a policy’s shareholder derivative suit exception to the insured-versus-insured exclusion brought the FDIC’s claim back within coverage. A recent decision by the Ninth Circuit Court of Appeals rejected this …Continue Reading
Former FIFA Executive Entitled to Criminal Defense Costs in Bribery Case; D&O Insurers Required to Pay
Eduardo Li, one defendant of a widespread racketeering and fraud prosecution against FIFA and its members, brought this case seeking a declaration his insurers have to pay and advance his criminal defense costs regarding those prosecutions. The Eastern District of New York Court found that the insurers must immediately reimburse and advance legal costs for Li under a directors and officers liability policy.
Eduardo Li and other members of FIFA are the subject of criminal actions for corruption related to the administration of the international …Continue Reading
No Showing of Prejudice Remains the Rule for Insurers to Deny Coverage Under a Claims Made Policy Based on Late Notice
Extending the reach of its holding in Zuckerman v. National Union Fire Ins. Co., 100 N.J. 304 (1985), the New Jersey Supreme Court in Templo Fuente De Vida Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. A-18 (N.J. Feb. 11, 2016), ruled an insurer may deny coverage under a “claims made” policy based on late notice without having to show it was prejudiced by the late notice — even if the claim is made during the insurer’s policy period.
In …Continue Reading
Drafting History or Purpose Does Not Undermine Plain Language: Illinois Federal Court Enforces Insured-Versus-Insured Exclusion
In Travelers Casualty & Surety Co. of America v. Bernhardt, 2014 U.S. Dist. LEXIS 152416 (N.D. Ill. Oct. 28, 2014), the Northern District of Illinois granted summary judgment in favor of Travelers Casualty and Surety Company of America (Travelers), finding it had no duty to defend or indemnify Andrew Bernhardt in a breach of fiduciary duty and negligence lawsuit brought by Town Center Bank (TCB). The underlying complaint involved several claims by TCB against Bernhardt originating from Bernhardt’s issuance of 26 questionable, high risk, …Continue Reading
Insured vs. Insured Exclusion Bars Coverage for Bank Officers in FDIC Suit
St. Paul Mercury Ins. Co. v. Miller
(N.D. Ga. Aug. 19, 2013)
A Georgia court recently held that an insured-vs-insured exclusion in a directors and officers policy precluded coverage for two former officers of a failed bank sued by the FDIC.
The FDIC took over the failed Community Bank & Trust of Cornelia, Georgia and then sued two former officers in connection with their role in improperly approving loans. The bank’s D&O insurer agreed to defend the officers subject to a reservation of rights. In …Continue Reading
No Coverage for Sandusky under Not-For-Profit D&O Policy
Federal Ins. Co. v. Sandusky, United States District Court for the Middle District of Pennsylvania, March 1, 2013
Federal Insurance Company brought an action seeking a declaration that it had no obligation to provide coverage to Gerald Sandusky for civil and criminal claims brought against him for the sexual abuse and molestation of children. The court granted Federal summary judgment, finding that Sandusky did not commit those crimes in his insured capacity.
Federal insured The Second Mile, which was a nonprofit organization for at-risk youths, …Continue Reading
Andy Warhol Art Authentication Board Owed Coverage Under Directors and Officers Policy
The Andy Warhol Foundation for the Visual Arts, Inc. v. Philadelphia Indemnity Ins. Co., Supreme Court of the State of New York, County of New York (Dec. 6. 2012)
The plaintiffs, Andy Warhol Foundation for the Visual Arts, Inc. and the Andy Warhol Art Authentication Board, Inc., beat a summary judgment motion brought on by their insurer, Philadelphia Indemnity Ins. Co (PIIC), seeking a judgment that it owed no coverage for defense costs incurred in an underlying class action.
The plaintiffs business awards …Continue Reading
Fourth Circuit Finds Professional Liability Insurer has Duty to Defend Accounting Firm in Pension Plan Action
Trice, Geary & Myers, LLC v. Camico Mut. Ins. Co. (U.S. Ct. Apps., Fourth Circuit, Dec. 22, 2011)
The Fourth Circuit ruled that a professional liability insurer had a duty to defend its insured against negligence suits arising from advice the accounting firm gave relating to defined pension plans which were entirely funded by life insurance policies. The underlying actions accused the insured of negligence for recommending the plans which led to audits by the IRS citing numerous defects with the plans. The insurer argued …Continue Reading