This week, SEC Chairman Jay Clayton issued a statement on Initial Coin Offerings (ICO) addressing the legality, fairness, and risks associated with those offerings. Although the agency’s bulletin was one of many recent public statements by federal agencies on ICOs and cryptocurrencies generally, this new warning highlights additional issues and concerns with the ICO phenomenon that are particularly relevant to insurance coverage.

Continue Reading

In a recent brief filed in the Sixth Circuit, American Tooling Center, Inc. argued that the appellate court should reverse the district court’s decision finding no insurance coverage for $800,000 that American Tooling lost after a fraudster’s email tricked an employee into wiring that amount to the fraudster. As we previously reported here, the district court found the insurance policy did not apply because it concluded that American Tooling did not suffer a “direct loss” that was “directly caused by computer fraud,” as required for coverage under the policy. The district count pointed to “intervening events” like the verification of production milestones, authorization of the transfers, and initiating the transfers without verifying the bank account information and found that those events precluded a “finding of ‘direct’ loss ‘directly caused’ by the use of any computer.”

Continue Reading

With Brexit approaching in March 2019, uncertainty remains over whether Britain and Brussels will reach an agreement to ensure that UK insurers can continue to pay out on policies after Britain leaves the European Union.  The uncertainty tied to Brexit serves as a broader warning to policyholders about the potential pitfalls that can occur when

A California state court recently rejected an excess insurer’s attempt at an early exit from litigation over whether it owes coverage for cyber liabilities. In that case (previously summarized here), the policyholder, Cottage Health, suffered a data breach resulting in the disclosure of patients’ private medical information. Subject to a reservation of rights, Cottage Health’s primary insurer, Columbia Casualty, paid millions of dollars to help respond to the data breach and to defend and settle a class action lawsuit filed against Cottage Health. Cottage Health’s excess insurer was Lloyd’s.

Continue Reading

In Universal Cable Productions LLC, et al. v. Atlantic Specialty Insurance Co., No. 2:16-cv-04435 (C.D. Cal. Oct. 6, 2017), the United States District Court for the Central District of California held that a “war” exclusion barred insurance coverage for losses arising from NBCUniversal’s decision to postpone and relocate production of its action-thriller miniseries Dig, due to an armed conflict between Israel and Hamas.  During the conflict, Hamas and other militant groups fired over 4,000 rockets and mortar shells into Israel, forcing NBCU to halt filming in Jerusalem and move production to Croatia and New Mexico.


Continue Reading

A recent decision highlights the need for businesses to carefully consider the applicability of insurance coverage across borders. In this case, the owners of an Idaho restaurant traveled to Thailand for business related to the restaurant. While in Thailand, thieves stole uniforms and decorations from the owners, who then submitted an insurance claim. The insurer denied the claim because the policy only covered property within the “coverage territory,” which was limited to the U.S., its territories, and Canada.

Continue Reading

On August 29, 2017, my colleagues Lawrence J. Bracken, Michael Levine, and Geoffrey Fehling published an article in Law360 discussing the Ninth Circuit’s recent decision rejecting coverage for the Los Angeles Lakers’ director’s and officer’s (D&O) insurance claim arising from a fan’s class action lawsuit under the Telephone Consumer Protection Act (TCPA), based on a broadly-worded invasion of privacy exclusion in the Lakers’ D&O insurance policy. A split Ninth Circuit panel held that “[b]ecause a TCPA claim is inherently an invasion of privacy claim, [the insurer] correctly concluded that [the claimant]’s TCPA claims fell under the Policy’s broad exclusionary clause.” The full article is available here.

Continue Reading