The California Court of Appeal has affirmed that Lloyd’s of London and other insurers cannot escape coverage for $132.5 million in settlements arising from the 2008 Chatsworth train crash, in which 25 individuals were killed and more than 130 injured. In Those Certain Underwriters at Lloyd’s, London v. Connex Railroad LLC, No. B276373, 2018 WL 1871278 (Cal. App. 2d Dist. Apr. 19, 2018), the Second District Court of Appeal affirmed the Los Angeles Superior Court’s ruling, discussed in our November 9, 2015 blog post, that the insurers were obligated to indemnify Connex Railroad for the settlements.
Drug-maker Pfizer and one of its excess insurers, North River, are in the middle of a contentious dispute regarding the proper forum for their coverage dispute over directors and officers liability insurance following both parties’ race to the courthouse to file competing lawsuits in 2015. Pfizer argues that its own preferred forum of Delaware (where Pfizer is incorporated) is correct, while North River counters that New York (where Pfizer’s headquarters and its broker are located) is the proper forum. The dispute, which involves competing motions in Delaware and New York courts, highlights the importance of both the timing and location of forum selection in litigating insurance coverage disputes.
The Federal Financial Institutions Examination Council (“FFIEC”), a U.S. governmental body comprised of banking regulators, recently issued guidance to financial institutions directing them to consider implementing dedicated cyber insurance programs to offset financial losses resulting from cyber incidents. Financial institutions face a number of potentially crippling risks arising from cyber incidents, including financial, operational, legal, compliance, strategic, and reputational risks resulting from fraud, data loss, or disruption of service. While cyber insurance can mitigate these risks, it is not required by financial regulators, and thus many financial institutions may not have obtained such insurance specifically designed to cover their cyber risks. Nonetheless, the FFIEC now is urging financial institutions to include dedicated cyber insurance as part of a multi-faceted cyber risk management strategy and not to rely solely on traditional insurance. In addition, the FFIEC is recommending that financial institutions have their outside advisors review their potential cyber insurance coverage to ensure that it will cover the relevant risks.
Hunton Andrews Kurth LLP insurance recovery partners, Lorelie Masters and Lawrence J. Bracken II, received rankings in the 2018 Chambers and Partners USA attorney rankings. Lorie received “Band 2” recognition in the Policyholder Insurance category for both the District of Columbia and Nationwide regions, while Larry received “Band 4” recognition in the General Commercial Litigation category among Georgia attorneys. Both designations are the product of the outstanding results Lorie and Larry have achieved in their respective fields, and are indicative of the level of expertise both bring to the insurance recovery practice at Hunton Andrews Kurth, LLP.
May 25, 2018 should be a day circled on many company calendars. On that day, the European Union’s long-awaited Global Data Protection Regulation (“GDPR”) will go into effect. It is crucial for U.S. companies to prepare for the GDPR, as they, too, will be required to comply with a new set of data privacy rules if they are handling data from EU-based customers, suppliers, or affiliates. As long as you collect personal or behavioral data from someone in the EU, you must comply with the GDPR.
On April 13, 2018, the Superior Court of New Jersey, Appellate Division, affirmed a trial court decision finding that a bill of sale intended to include the transfer of insurance rights and finding that such transfer did not violate an anti-assignment clause. Cooper Industries, LLC, Plaintiff-Respondent, v. Columbia Casualty Company And One Beacon America Insurance Company, Defendants-Appellants, and Employers Insurance Of Wausau, Allstate Insurance Company, Lexington Insurance Company And Westchester Fire Insurance Company, 2018 WL 1770260,(N.J. Super. A.D., 2018). In May 1986, Cooper Industries merged several entities and transferred assets to a “new” McGraw-Edison Company through a bill of sale. Eighteen years later, on November 30, 2004, Cooper Industries merged the new McGraw-Edison company into itself. In 2009, the Environmental Protection Agency determined that Cooper Industries was responsible for generating and disposing of hazardous substances due to McGraw-Edison’s actions taken years earlier. Cooper Industries sought coverage under the commercial general liability policies McGraw-Edison had in place at the time of the environmental and pollution-related occurrences.
On April 20, 2018, the Eleventh Circuit affirmed an Alabama district court decision finding that an “absolute pollution exclusion” did not bar coverage for environmental property damage and injuries from a sewage leak. Evanston Ins. Co. v. J&J Cable Constr., LLC, No. 17-11188, 2018 WL 1887459, (11th Cir. Apr. 20, 2018).
Super Lawyers, a rating service of lawyers from more than 70 practice areas, has named Hunton Insurance Partner Lorie Masters on its Washington, DC 2018 Top 100 and Top 50 Women’s lists. Super Lawyers’ competitive selection process includes independent research, peer nominations and peer evaluations. The list recognizes attorneys who have attained a high-degree of peer recognition and professional achievement. Congratulations Lorie!
To follow up on our post last week recapping a recent Ninth Circuit decision regarding coverage for losses from a social engineering scheme, federal appellate courts continue to examine the coverage available for such losses. As Law360 highlighted, and as we previously reported (here, here, here, and here), appeals are pending in the Second, Sixth, and Eleventh circuits. These cases, some of which involve lower court findings of coverage while others do not, show that coverage for social engineering scams remains hotly contested, which means policyholders must carefully consider such coverage when purchasing insurance. While more and more insurers have introduced endorsements designed to specifically address social engineering schemes, as Hunton attorney Patrick McDermott recently pointed out in a separate Law360 piece, one issue policyholders ought to consider is “whether an endorsement providing coverage for losses resulting from social engineering schemes actually narrows the coverage available for those losses.”
On April 17, 2018, the Ninth Circuit affirmed a district court decision finding that an exclusion barred coverage for a $700,000 loss resulting from a social engineering scheme. Aqua Star (USA) Corp. v. Travelers Cas. & Surety Co. of Am., No. 16-35614 (9th Cir. Apr. 17, 2018). The scheme involved fraudsters who, while posing as employees, directed other employees to change account information for a customer. The employees changed the account information and sent four payments to the fraudsters.