Last week, a California federal judge held that a D&O liability insurer must advance subpoena-related defense costs on behalf of two former biotech directors and officers after the insurer could not provide conclusive evidence that the subpoenas alleged actual wrongdoing by the individuals after the company’s merger, as required to trigger the policy’s “Change in Control” exclusion. See AmTrust Int’l Underwriters DAC, Plaintiff, v. 180 Life Sciences Corp., et al., N.D. Cal. No. 22-CV-03844-BLF, 2024 WL 557724 (N.D. Cal. Feb. 12, 2024). The decision highlights the interplay of two significant D&O coverage issues—government investigations and M&A transactions—and underscores why policyholders must pay close attention to how their liability insurance policies may be impacted by a merger, acquisition, asset sale or similar deal.Continue Reading Government Investigations and M&A Transactions: Recent California Case Highlights Potential D&O Coverage Gaps

Companies face significant exposure from privacy related claims. An increasing number of these claims result from efforts at the state level to regulate use of personal data. One key focus is Illinois’ Biometric Information Privacy Act (“BIPA”), but as lawmakers in other states continue to introduce legislation aimed at regulating the use of biometric data, more court decisions may muddy the waters regarding what conduct may be covered under a general liability policy.Continue Reading Illinois Court Says 7th Circuit Fumbled Illinois Law in BIPA Decision

The Hawaii Supreme Court emphatically rejected insurer efforts to seek reimbursement of defense costs absent a provision in the policy providing for such reimbursement in St. Paul Fire & Marine Insurance Company v. Bodell Construction Company, No. SCCQ-22-0000658, 2023 WL 7517083, (Haw. Nov. 14, 2023). The state high court’s well-reasoned decision rests on bedrock law regarding insurance policy construction and application, follows the nationwide trend of courts compelling insurers to satisfy their contractual obligations in full, and should carry great weight as other jurisdictions continue to debate the same issue.Continue Reading Hawaii Supreme Court Says Aloha to Insurers Trying to Recoup Defense Costs From Policyholders

The Fifth Circuit recently reaffirmed that an insurer’s duty to indemnify hinges on the facts determined in the underlying case, not the allegations. Thus, as confirmed by the Fifth Circuit’s July 31, 2023 decision in Liberty Mut. Fire Ins. Co. v. Copart of Conn., Inc., No. 21-10938, 2023 WL 4862793 (5th Cir. July 31, 2023), an adverse duty-to-defend decision may not foreclose a liability insurer’s indemnity obligations.Continue Reading Fifth Circuit: Policyholders Can Still Salvage Adverse Duty To Defend Rulings

Whether an insurer has a right to reimburse defense costs after a finding that it has no duty to defend remains an open question in Georgia. However, in Continental Casualty Co., et al. v. Winder Laboratories, LLC, et al., Case No. 21-11758 (11th Cir. Jul. 13, 2023), the Eleventh Circuit Court of Appeals has weighed in with its prediction on the likely answer. Persuaded by the logic of other jurisdictions that, “wide-ranging reimbursement is necessarily inappropriate in a system—like Georgia’s—that is predicated on a broad duty to defend and a more limited duty to indemnify,” the Eleventh Circuit predicted that, “the Supreme Court of Georgia would follow that logic to adopt a ‘no recoupment’ rule to protect its insurance system.”  Continue Reading Eleventh Circuit Rejects Implicit Right to Reimbursement of Defense Costs Under Georgia Law

When is a catch-all provision too broad? When “a plain-text reading of that provision would swallow a substantial portion of the coverage that the policy otherwise explicitly purports to provide,” according to the Seventh Circuit Court of Appeals. Citizens Insurance Co. of America v. Wynndalco Enterprises LLC, Case No. 22-2313.
Continue Reading “Catch-All” Can’t Catch ‘Em All: Seventh Circuit Finds Coverage for a BIPA Claim Despite Catch-All Provision in Policy’s Statutory Violation Exclusion

The Fifth Circuit recently held that Blue Bell Creameries’ commercial general liability (CGL) insurers do not have a duty to defend the ice cream company in a shareholder lawsuit, which arose from a Listeria outbreak. The decision underscores the importance of coordination of different coverages and policies across insurance programs, as well as the potential perils policyholders may face if forced to seek recovery for certain losses under non-traditional policies.Continue Reading The Scoop On The Fifth Circuit’s Ruling Against Blue Bell Ice Cream

On April 11, 2023, Maryland Governor Wes Moore signed into law the Child Victims Act of 2023, allowing Maryland to join the growing number of states to rejuvenate previously time-barred lawsuits by victims of child sexual abuse against public school boards, government entities and private institutions. The Act also increases the statutory cap on civil damages for child sexual abuse—damages against public school boards and government entities are capped at $890,000 per incident, while per-incident damages against private institutions, including independent schools, are capped at $1.5 million. Maryland follows other states, like California and New York, which paved a path for abuse victims to bring previously time-barred claims based on alleged abuse that occurred decades earlier. Maryland is the first state, however, to pass this type of statute with a lookback period of infinite duration—meaning there is no limit for how long ago the alleged abuse occurred, and the statutes of limitation for lawsuits based on future acts of abuse are eliminated. Other states, such as New York and New Jersey, created limited lookback periods (one or two years), during which survivors were able to file previously time-barred claims.  Continue Reading Rejuvenation of Abuse Claims Sparks a Need to Evaluate Historical Liability Coverage

In ExxonMobil Corp. v. Natl. Union Fire Ins. Co. of Pittsburgh, PA, the Texas Supreme Court held that an insurance policy did not incorporate the payout limits of an underlying service agreement and thus the insured was entitled to the higher limits under the insurance policy. 2023 WL 2939596, at *1 (Tex. Apr. 14, 2023).Continue Reading Insurance Coverage Under Umbrella Policy Extends Beyond Requirements of Service Contract

PFAS Regulation

Per- and polyfluoroalkyl Substances (“PFAS”) are a class of substances that have increasingly become the target of federal and state regulation in everything from drinking water, groundwater, site contamination, waste, air emissions, firefighting foam, personal care products, food and food packaging, and now consumer and commercial products. PFAS are widely-used chemicals that have the unique ability to repel both oil and water, which led to their application in many products including items such as stain and water-repellent fabric, chemical-and oil-resistant coatings, food packaging materials, plastics, firefighting foam, solar panels and many others. The carbon-fluorine bond is the strongest in nature, making these compounds highly persistent in the environment.Continue Reading PFAS Regulation and Insurance Coverage Implications