From event-driven litigation to government investigations, 2020 has brought a variety of directors’ and officers’ liability exposures arising from the COVID-19 pandemic. Looking toward the new year, we expect that robust D&O insurance programs will remain of critical importance for companies and their officers and directors in 2021 and beyond.

Continue Reading UK Bill to Create Stricter Reign Over Acquisitions Implicating D&O Insurance

The Nasdaq stock market has filed a proposal with the US Securities and Exchange Commission requesting permission to enforce new rules aimed at advancing diversity among board members of Nasdaq-listed companies and increasing disclosure of diversity statistics. Investors and shareholders have devoted significant attention (and several lawsuits) in recent years to addressing environmental, social, and governance (“ESG”) issues at the board level. Nasdaq’s proposal would bring diversity to the forefront of the boardroom, as well as present new compliance obligations and possible D&O exposures to companies subject to the proposed listing requirements.

Continue Reading Nasdaq Board Diversity Proposal Highlights Importance of ESG Issues, Increased D&O Risks

The US Securities and Exchange Commission has levied $125,000 in civil penalties on Cheesecake Factory as part of a settlement to resolve the agency’s allegations that the company made materially misleading statements to investors about the impact of the COVID-19 pandemic on its business. While this is the first such case reported by the SEC, it is only one in a string of recent third-party liabilities companies have faced that implicate directors’ and officers’ liability insurance coverage.

Continue Reading Cheesecake Factory’s SEC Fines Are Latest D&O Liability to Stem from COVID-19 Pandemic

A D.C. federal judge recently held that an insurer could be responsible to a TV station for more than $25 million in an underlying malpractice suit where the insurer failed to send timely notice preserving its rights under the policy in violation of a Virginia statute.

Continue Reading Insurer Can’t Mute TV Station’s Recovery for $25 Million Malpractice Claim

A federal judge has denied an insurance company’s motion to dismiss the claims of another insurer seeking reimbursement and contribution for the $15 million it paid to settle underlying claims arising from a product recall.

Continue Reading Recall and Recoup: Georgia Court Denies Insurer’s Early Motion to Escape Contribution Claim Arising from $51 Million Product Recall Coverage Dispute

As reported in a recent Hunton Andrews Kurth client alert, Mitigating FCRA Risks in the COVID-19 World (Oct. 23, 2020), consumer litigation claims related to the Fair Credit Reporting Act (FCRA) doubled in the years leading up to the COVID-19 pandemic. After a slight decrease in FCRA filings due to court closures and other COVID-19 restrictions, claims will likely resume their previous upward trajectory. In fact, the Consumer Financial Protection Bureau (CFPB) has already seen an uptick in consumer complaints, many of which mention COVID-19 specific keywords.

Continue Reading Mitigating FCRA Risk Through Insurance

As has been widely reported, insurance companies have been inundated with claims arising from the novel coronavirus and are locked into contentious coverage battles regarding the scope of coverage afforded for such claims under various policy forms. Courts have begun issuing decisions both for and against policyholders attempting recovery for COVID-19-related losses, and the legal battles resolving those questions will likely take months or even years to play out.

Continue Reading Insurers Raise D&O Premiums, Restrict Coverage, and Reportedly Leverage Pandemic to Boost Long-Term Profitability

A New York appeals court recently granted partial summary judgment in favor of the insureds, finding that excess directors and officers insurers, Westchester Fire Insurance Co., Aspen American Insurance Co. and RSUI Indemnity Co., must advance the defense costs for former executives of the insured entity. The decision is the most recent victory for policyholders in connection with D&O insurance claims asserted in the wake of alleged securities violations and accounting fraud at related real estate investment firms, which have resulted in millions of insurance recoveries for the company and its officers and directors (as previously reported here and here).

Continue Reading New York Appellate Court Confirms Insurers Must Advance Defense Costs Under D&O Policies

A hotel operator defeated an insurer’s motion to dismiss its suit alleging that the insurer wrongfully denied coverage and acted in bad faith by denying the hotel’s $1.9 million claim arising from an employee’s fraudulent scheme diverting commissions to fictitious travel agencies. The court held that the hotel operator had suffered an “insurable loss” and rejected the insurer’s argument that the claim was barred under the policy’s suit limitations provision.

Continue Reading Court Rejects Insurer’s Attempt to Dismiss Hotel’s $1.9 Million Crime Losses

A group of Las Vegas-based restaurants recently filed a class action lawsuit to recover business interruption damages against their insurer. The Egg Works chain alleged that U.S. Specialty wrongly denied their claims for financial losses stemming from the Nevada governor’s closure of non-essential businesses during the COVID-19 pandemic. The governor’s orders limited the restaurants to takeout and delivery service only.

Continue Reading Restaurant Chain Seeks to Recover COVID-19 Losses Under Food Contamination Theory