Fifth Circuit Affirms Application of Securities Exclusion [Alert]

Rafael Rivera discusses Gleason v. Markel American Insurance Company and the importance of the wording of securities exclusions in D&O policies.

Eleventh Circuit Holds No Obligation to Cover Defense Costs from DOJ Antitrust Investigation

Rafael Rivera, Jr discusses the Circuit Court's decision in Crowley and how it may impact whether government investigations trigger coverage under D&O policies and, if so, at what point during an investigation.

Eighth Circuit Finds Notice Within Policy Period Still Violated Claims Made Policy’s Notice Provision [Global Insurance Alert]

The decision is noteworthy because the court joined a limited number of other courts that have held that when an insured fails to provide notice “as soon as practicable” as required under a “claims made” insurance policy, the insurer may avoid coverage

Insuring Against Social Engineering Attacks [Risk Management]

Elan Kandel and Alexander Selarnick, of Cozen O'Connor's Global Insurance department, co-authored an article for Risk Management titled "Insuring Against Social Engineering Attacks."

Texas Supreme Court Broadly Defines Successor When Enforcing the Insured v. Insured Exclusion [Global Insurance Alert]

Greg Hudson discusses the Texas Supreme Court decision that the language of the insured v. insured exclusion also includes any claim where a party has stepped into the shoes of an insured.

The Eighth Circuit Applies Insured vs. Insured Exclusion to Non-Insured Co-Plaintiffs [Global Insurance Alert]

Jonathan Toren discusses a recent Eighth Circuit ruling that an Insured vs. Insured exclusion applied to an insured director’s entire lawsuit, even though other non-insured shareholders were also plaintiffs in the suit.

Washington Supreme Court Expands Physicians’ Duty to Third-Parties [Global Insurance Alert]

Terri Sutton discusses the Washington Supreme Court decision in Volk v. DeMeerleer, which it expanded the duty of physicians to protect third-parties who might be victims of violence.

Seventh Circuit Eases ERISA Plaintiffs’ Pleading Burden Against Private Company Plan Fiduciaries [Global Insurance Alert]

Angelo G. Savino and Alexander Selarnick discuss the Seventh Circuit's decision in Allen v. GreatBanc Trust Co and its ramifications for ERISA plan fiduciaries and their insurers.

Shaping the Law [Best's Review]

Richard Mason of the Global Insurance Department authors this Insight Regulatory/Law column on the Restatement of the Law of Liability Insurance.

Allocation Clause Held Enforceable in a Duty To Defend D&O Policy [Global Insurance Alert]

Angelo Savino and Nicholas Bamman discuss a federal court decision in Louisiana providing a rare analysis of the interplay between a duty to defend in a D&O policy and the allocation clause in that same policy.

Prejudice Not Required in New Jersey To Deny Coverage for Late Notice Under a Claims Made Policy

Richard C. Mason and Kristie M. Abel discuss a recent decision by the Supreme Court of New Jersey that declared an insurance company was not required to show it suffered prejudice before disclaiming coverage on the basis of the insured's failure to give timely notice of the claim under a Directors and Officers claims made policy.

Eleventh Circuit Holds No Duty to Defend Directors Serving in Mixed Capacities [Global Insurance Alert]

Looking to the fact allegations in the complaint against the insureds, the court found that but for the individual actions as trustees there would be no claim against any insured entity.

Supreme Court Expands Scope of Fiduciary Liability [Global Insurance Alert]

In Tibble v. Edison International, the Supreme Court ruled that trustees of ERISA plans owe a continuing duty to monitor trust investments on a regular basis and remove those that become imprudent.

Georgia Supreme Court: Insured Cannot Sue for Settlement Amount or Bad Faith Absent Insurer’s “Consent to Settle” [FC&S Legal]

The Georgia Supreme Court unanimously held that when an insured fails to seek its insurer’s consent to settle a claim, the insured cannot pursue litigation against its insurer to recover settlement amounts paid by the insured without its insurer’s consent or for bad faith refusal to settle.

The False Claims Act and Professional Liability Insurance Policies [PLUS Journal]

Throughout the past decade, the federal False Claims Act has imposed billions of dollars in penalties upon corporations.

Georgia Supreme Court: Insured Cannot Sue for Settlement Amount or Bad Faith Absent Insurer’s “Consent to Settle” [Global Insurance]

On April 20, 2015, the Georgia Supreme Court unanimously held that when an insured fails to seek its insurer’s consent to settle a claim, the insured cannot pursue litigation against its insurer to recover settlement amounts paid by the insured without its insurer’s consent or for bad faith refusal to settle.

Colorado: No Prejudice Required to Enforce Date-Certain Notice Requirements in Claims-Made Policies [Global Insurance Alert]

In Colorado, under the notice-prejudice rule, an insured who gives late notice of a claim to his or her liability insurer does not lose coverage benefits unless the insurer proves that the late notice prejudiced its interests. Friedland v. Travelers Indem. Co., 105 P.3d 639, 643 (Colo. 2005). On February 17, 2015, in response to certified question of law from the 10th Circuit Court of Appeals, the Colorado Supreme Court held that the notice-prejudice rule does not apply to date-certain notice requirements in claims-made policies. Craft v. Philadelphia Indem. Ins. Co., Case No. 14SA43. Rather, date-certain notice requirements will be enforced as written.

Deep Cover [Best's Review]

Adam Stein of the Global Insurance Department discusses private equity funds in the article titled Deep Cover in Best's Review. Limited partner investors in private equity funds and other “passive” institutional investors are being sued in growing numbers, a trend that can be expected to continue as courts in many jurisdictions continue to entertain such suits.

Eighth Circuit Deems Legal Threats a “Claim;” Regulation Requiring Prejudice Inapplicable [Global Insurance Alert]

On January 9, 2015, the U.S. Court of Appeals for the 8th Circuit handed down Philadelphia Consolidated Holdings Corp. v. LSI-Lowery Systems, Inc., which decided whether a technology company’s claim was covered under its professional liability policy. In LSI-Lowery, the court decided three issues of current importance for “claims made” policies. First, emails showing an expectation the insured would be sued meant that a “claim” had been made even though damages were not expressly demanded. Second, when it was made, the claim involved a “wrongful act,” even though it related to breach of a contract (an excluded circumstance). Third, a regulation mandating a finding of prejudice in order to prevail on “late notice” did not apply because there was no coverage under the policy in the first instance.

Texas Court Construes Professional Liability Policy to Require Defense of Law Firm in Fee Dispute [Global Insurance Alert]

In Shamoun & Norman, LLP v. Ironshore Indemnity, Inc., Cause No. 3:14-1340, In the U.S. District Court, Northern District of Texas, the federal district court construed a professional liability policy issued by Ironshore to require a defense of the law firm policyholder in a fee dispute, despite an absence of allegations that the insured law firm negligently provided any legal service.

Third Circuit Upholds Defense Cost Reimbursement Clause in Professional Liability Policy [Global Insurance Alert]

On October 10, 2014, the 3rd Circuit Court of Appeals decided Camico Mutual Ins. Co. v. Heffler, Radetich & Saitta, LLP, where it enforced a policy clause providing for repayment to the insurer of defense costs, and confirmed that a 2010 Pennsylvania Supreme Court decision had not invalidated such clauses. The court also determined the insured’s employee was performing “professional services” as defined in the policy notwithstanding the employee’s fraudulent conduct.

“Uncollectibility” Is An Affirmative Defense To Legal Malpractice Claims in Washington [Global Insurance Alert]

The Washington Supreme Court addressed two issues of first impression regarding legal malpractice claims in Schmidt v. Coogan, No. 88460-9, (October 9, 2014) and held: (1) that “uncollectibility” is an affirmative defense to a claim of legal malpractice, and (2) emotional distress damages are not available in a legal malpractice claim based upon a lawyer’s failure to timely file a lawsuit.

Death Rattle For Unfinished Business Claims? [Law360]

In an article published in Law360, Angelo Savino and Julie Albright of the Global Insurance Department discuss unfinished business claims. In a departure from Jewel v. Boxer, the decisions in the cases of Thelen LLP and Heller Ehrman LLP reflect a shift in the manner by which courts treat trustees’ claims for post-dissolution fees, say Angelo Savino and Julie Moeller Albright of Cozen O'Connor.

The Impact of Halliburton on Directors and Officers Insurance [Global Insurance Alert]

Over the past year, directors and officers have been anticipating the Supreme Court’s ruling in Halliburton Co. et al. v. Erica John Fund, Inc., No. 13-317. In its recent 9-0 decision, the Supreme Court retained the fraud-on-the-market presumption of reliance adopted more than 25 years ago in Basic, Inc. v. Levinson, yet also held that defendants may rebut the presumption at the class certification stage. 573 U S. ___ (Slip Op. June 23, 2014) (Roberts, C.J.). This ruling signals that securities fraud class actions will continue unabated for the foreseeable future. Justice Ginsburg concurred in a separate opinion, joined by Justice Breyer and Justice Sotomayor. Justice Thomas also concurred in a separate opinion, joined by Justice Alito and Justice Scalia.

Supreme Court Rejects Presumption of Prudence for ESOP Fiduciaries [Global Insurance Alert]

On June 25, 2014, the Supreme Court of the United States, in Fifth Third Bancorp v. Dudenhoffer, declared that no “presumption of prudence” applied to fiduciaries of “employee stock ownership plans” (ESOPs). In rejecting the defense-friendly standard, the high court noted that ESOP fiduciaries are subject to the same duty of prudence as any other ERISA fiduciary except that ESOP fiduciaries are not liable for losses that stem from a failure to diversify. The decision is also noteworthy in that it set forth guidelines for lower courts to follow at the motion to dismiss stage that will impact how plaintiffs are able to satisfy pleading requirements in cases against ESOP fiduciaries.

Taking Charge [Best's Review]

Andrew Tobin and Paul Dowsey of the Global Insurance Department, write about effective claims controls in facultative reinsurance in an article titled "Taking Charge" in Best's Review. Facultative business can give rise to conflicts between reinsurers and cedents in the handling of claims, particularly if the cedent is concerned with reputational risk and has no meaningful exposure.

The Second Circuit Confirms the SEC’s Ability to Settle Without Requiring Admissions of Wrongdoing [Global Insurance Alert]

On June 4, 2014, the U.S. Court of Appeals for the 2nd Circuit reversed Judge Rakoff’s opinion in SEC v. Citigroup Global Markets Inc., holding that the judge had abused his discretion by applying an incorrect legal standard in analyzing the consent decree and setting a trial date. In doing so, the Circuit Court emphasized that a District Court must defer to the SEC’s discretion with respect to structuring consent judgments.

The Potential Liabilities and Insurance Coverage Implications of Solar Panels [Claims Journal]

Samantha Evans discusses The Potential Liabilities and Insurance Coverage Implications of Solar Panels in Claims Journal. Samantha writes, “Solar panels are quickly becoming a fixture in our everyday lives. Whether driving down a country road or the busiest highway, you will see solar panels dotting the roofs of commercial buildings and residential homes alike. Comprised of photovoltaic cells, solar panels harness and convert the sun’s energy into usable electricity otherwise generated by the use of oil, coal and “dirtier” fossil fuels. Solar panels offer an attractive, alternative “green” source of energy for eco-conscious individuals and businesses.” To read the whole article, click here.

Chen v. Howard-Anderson: A Study in the Standards of Review and of D&O Conduct in the Merger Context [Global Insurance Alert]

Litigation over challenges to corporate mergers has swelled in recent years, exposing directors, officers and their D&O insurers to large amounts of defense costs and potentially great liability. The Delaware Chancery Court recently issued an opinion analyzing and explaining the various standards by which courts review challenges to director decision-making in the merger context, which provides a thorough summary for all interested parties.

D&O Carrier Allowed to Recoup Defense and Indemnity Costs After Employees Plead Guilty to Misconduct [Global Insurance Alert]

In Protection Strategies, Inc. v. Starr Indemnity & Liability Co., the U.S. District Court for the Eastern District of Virginia allowed an insurer to recoup more than $670,000 in costs paid for the insured first to respond to government subpoenas and then for the insured and its key employees to defend themselves against claims for governmental fraud and conspiracy.

Time-based Defenses Under E&O Policies [Webinar]

Claims Made and Reported Requirements, Retro Dates, Prior Knowledge and Prior/Pending Exclusions

Event Horizon [Best's Review]

Angelo G. Savino, a shareholder in the Global Insurance Department, authored an article titled Event Horizon featured in the April 2014 issue of [Best’s Review]. In the article Angelo discusses the Haliburton v. Erica P. John Fund Supreme Court case and other factors that could have major impact on the D&O space in 2014.

PlayStation Problems: No Defense in Sony’s Cyberattack Suits [Global Insurance Alert]

On February 21, 2014, a New York state trial court judge ruled that Zurich American Insurance Company has no duty to defend the Sony Corporation in lawsuits relating to a 2011 cyberattack on its PlayStation network. This decision is among the first in the country to address coverage issues for large scale data security breaches. Judge Jeffrey Oing rendered an immediate decision after hearing oral argument, recognizing the issue’s importance and the likelihood of an appeal.

The Reference Handbook on the Commercial General Liability Policy [ABA Publishing]

Jonathan Toren of the Global Insurance Department is co-author of Chapter 14, “Deductibles and Self-Insured Retentions,” in The Reference Handbook on the Commercial General Liability Policy, Second Edition. In the commercial insurance industry, the commercial general liability (CGL) policy is the most common form of liability insurance purchased by both public and private sectors throughout the United States and, as a result, is arguably the most litigated insurance product in the marketplace. This book is a survey of the current developments and issues that can arise from a liability policy.

The New York Court of Appeals Vacates its Decision and Rejects “Coverage by Estoppel” [Global Insurance Alert]

The New York Court of Appeals rarely hears reargument of its decisions, let alone reverses itself. On February 18, 2014, the Court of Appeals did just that.

Sixth Circuit Limits Scope of “Disgorgement” Provision in E&O Policy [Global Insurance Alert]

In a cutting-edge decision, the federal 6th Circuit Court of Appeals has ruled that an exclusion barring coverage for an insured’s liability for “disgorgement” of “remuneration” or “advantage” is limited to “acquiring” funds as opposed to “retaining” funds. William Beaumont Hospital v. Federal Ins. Co., No. 13-1468, 2014 WL 185388 (6th Cir. Jan. 16, 2014). The Beaumont decision is the first of its kind and, if followed by other courts, narrowly circumscribes the scope of disgorgement exclusions that are typically included in errors and omissions and directors and officers liability policies.

Conn. High Court Clarifies Aggregate Limit and Number of SIRs Under Professional Liability Policy [Global Insurance Alert]

On January 28, 2014, the Supreme Court of Connecticut, in Lexington Ins. Co. v. Lexington Healthcare Group, Inc., 311 Conn. 29, addressed three issues that define the extent of coverage available under a medical professional liability policy. The court concluded that each claimant triggered a separate limit; an aggregate limit for professional lines claims applied; and a retention for each medical incident applied.

Court Invalidates Exception to Tolling Provision for Medical Malpractice Cases Brought by Minors [Global Insurance Alert]

In Schroeder v. Weighall, the Washington Supreme Court invalidated another portion of Washington’s medical malpractice reform legislation. Specifically, the court invalidated RCW 4.16.190(2), which had eliminated the tolling of the statute of limitations for medical malpractice claims brought by those who alleged malpractice in their care as minors. The court held that the statute violated Article I, Section 12 of the Washington State Constitution, and reversed the trial court’s summary judgment order dismissing Jaryd Schroeder’s medical malpractice action.

Washington Appellate Court Holds That Below-Limits Settlement Fails to Trigger Excess Policies [Global Insurance Alert]

On November 12, 2013, in Quellos Group LLC v. Federal Insurance Company, the Washington Court of Appeals affirmed summary judgment in favor of two excess professional liability insurers because the excess policies “require[d] exhaustion of the underlying liability limits by actual payment by the insurer before excess coverage is triggered ...” even though the insured “filled the gap” by paying the difference between the value of the settlement with the primary carrier and the primary policy's limits. This holding represents the latest in a growing line of cases finding that an insured cannot settle with an underlying insurer for less than policy limits, absorb the difference between the settlement value and the limits, and then trigger excess coverage.

Washington Bars Insurers from Maintaining Legal Malpractice Suit Against Policyholder Defense Counsel [Global Insurance Alert]

In Stewart Title Guar. Co. v. Sterling Savings Bank, et al., Wash. No. 87087-0 (October 3, 2013), the Washington Supreme Court held that a nonclient insurer may not pursue a malpractice claim against appointed defense counsel for failure to assert defenses favorable to the insurer, unless the insurer could show it was an intended beneficiary of the legal services provided by appointed defense counsel. The court reasoned that neither an alignment of interest between an insurer and policyholder nor appointed counsel’s duty to inform the carrier regarding case activity, equated to a duty of care owed by appointed defense counsel to the appointing insurer. The court declined to reach the parties’ equitable subrogation arguments that formed the basis of the actual legal malpractice claim.

S.D.N.Y. Disqualifies Securities Class Action Plaintiffs’ Expert and Denies Class Certification [Global Insurance Alert]

Recently, in IBEW Local 90 Pension Fund v. Deutsche Bank AG, No. 11-cv-4209, 2013 U.S. Dist. LEXIS 155136 (S.D.N.Y. Oct. 29, 2013), District Judge Kathleen Forrest declined to certify a class of securities plaintiffs and granted the defendant, Deutsche Bank’s (DB), Daubert motion to exclude all testimony of the plaintiffs’ market efficiency and damages expert. This relatively rare ruling is significant for securities defendants and their D&O insurers. As the court observed, because the vast majority of securities cases settle once a class is certified, class certification has come to mark a “crucial inflection point in securities litigation.” The case highlights a significant hurdle that securities plaintiffs may face at the class certification stage. Moreover, the decision illustrates how foreign issuers in a post-Morrison environment may be further insulated from U.S. liability even as to that portion of their securities traded on a domestic exchange.

Goldman Ordered to Advance Defense Fees for Former Employee Accused of Stealing Computer Codes [Global Insurance Alert]

On October 16, 2013, the U.S. District Court for the District of New Jersey, in Aleynikov v. The Goldman Sachs Group, Inc., found that a former vice president and computer programmer was an “officer” of Goldman Sachs & Co., Inc. (GSCo), and therefore eligible for advancement of legal fees and expenses for his ongoing defense in a New York state criminal case, even though the criminal action concerned the theft of confidential GSCo property. The decision provides an interesting lesson in the differences between indemnification and advancement and who may be considered an officer for purposes of awarding indemnity and advancement.

NY Insurers Breaching Duty to Defend May Lose Defenses to Indemnification [Property Casualty360]

Melissa Brill of the Global Insurance Department writes this article titled NY Insurers Breaching Duty to Defend May Lose Defenses to Indemnification in Property Casualty360 that focuses on the K2 decision,

Pa Court Holds Coverage is Barred Under Professional Liability Policy for False Claim Act Lawsuit Costs [Global Insurance Alert]

On July 16, 2013, the Pennsylvania Court of Common Pleas (Philadelphia County) granted summary judgment to ACE American Insurance Company, upholding its denial of an insurance claim arising from False Claims Act litigation against AmerisourceBergen Co. Richard Mason of Cozen O’Connor was lead counsel for ACE American Insurance Company.

Policyholders Bag Big Victories in the First Half of 2013 [Law360]

Law 360 reports that policyholders have chalked up major wins at the New York Court of Appeals and the Illinois Supreme Court this year, clinching rulings that widen coverage for defense costs, statutory damages and disgorgement losses, while excess insurers are cheering the Second Circuit for shielding their policies from being triggered early.

New York Court of Appeals Allows Coverage for Disgorgement Paid to SEC [Global Insurance Alert]

On June 11, 2013, the New York Court of Appeals, in J.P. Morgan Securities, Inc., et al. v. Vigilant Insurance Company, et al., reinstated a declaratory judgment action against D&O Liability insurers, reasoning that an SEC order requiring Bear Stearns & Co., Inc. (Bear Stearns) to pay $160 million in disgorgement did not conclusively establish that the payment was uninsurable.

Sexual Misconduct “During” Law Enforcement Activities Does Not “Arise Out of” Law Enforcement Activities [Global Insurance Alert]

In a recent case before the U.S. District Court for the Central District of Illinois, the court held that jail employees were not entitled to coverage for sexual molestation of an inmate under the law enforcement coverage part of the jail’s liability insurance policy. In so holding, the court declined to apply an expansive interpretation to the policy’s “arising out of” language.

Second Circuit Restricts Zeig to First-Party Context, Requiring Actual Payment of Underlying Limits [Global Insurance Alert]

The U.S. Court of Appeals for the 2nd Circuit recently eliminated the foundation for policyholders’ arguments in favor of “functional exhaustion.” In Ali v. Federal Insurance Co., No. 11-5000-cv (2d Cir. June 4, 2013), the 2nd Circuit held that functional exhaustion as permitted in the 1928 decision in Zeig v. Massachusetts Bonding & Ins. Co., 23 F.2d 665 (2d Cir. 1928) does not apply to excess liability policies.

Second Circuit Further Curtails Duty of Prudence Claims in Saint Vincent Catholic Medical Centers v. Morgan Stanley [Global Insurance Alert]

The 2nd Circuit's decision affirmed the Southern District of New York’s dismissal of Saint Vincent’s claims and addressed the pleading standards for allegations of breach of fiduciary duty with respect to management of an ERISA plan.

Fewer Filings, Bigger Risks [Best's Review]

Angelo Savino, chair of the professional liability practice in Global Insurance, published an article in Best's Review addressing the issue of claims having decreased but D&O insurers face a potentially volatile underwriting landscape. To read the complete article click here.

Seventh Circuit Decision in Koransky Bouwer Enforces Professional Liability Reporting Requirements [Professional Liability Alert]

Earlier this month the 7th Circuit affirmed a district court order that held an insurer properly denied coverage to the insured law firm based on its failure to comply with the reporting requirements under its claims-made professional liability policy.

News Corp.'s $139M Deal May Make For Pricier D&O Coverage [Law 360]

Angelo Savino, chair of the professional liability practice in Global Insurance, was quoted in Law 360’s article, “News Corp.’s $139M Deal May Make for Pricier D&O Coverage.” The article by Bibeka Shrestha discusses the record-breaking settlement by News Corp which has its insurers picking up the tab for the $139 million settlement that ends shareholder derivative litigation over its phone hacking scandal, likely sending other carriers scrambling to rethink the pricing and design of their directors and officers policies. Click here to read the full article and Angelo’s comments.

Service of Subpoenas on Syracuse University Seeking Evidence of Sexual Molestation is a “Claim” Giving Rise to Covered Defense Costs According to New York State Court [Professional Liability Alert]

In Syracuse University v. National Union Fire Insurance of Pittsburgh, PA, No. 2012EF 63 (Sup. Ct., Onondaga County, January 29, 2013), the New York Supreme Court, County of Onondaga, held that an insured’s costs incurred in responding to subpoenas issued by state and federal agencies, were covered (as defense costs) as “Claims” made under a not-for-profit individual and organization insurance policy issued by National Union. The case arose out of allegations that a Syracuse assistant basketball coach, Bernie Fine, had sexually abused two former participants in Syracuse University’s basketball program over a period of years while serving in his capacity as the University’s assistant basketball coach.1 The court held that issuance of the subpoenas constituted a “Claim” as defined in the policy.

Gabelli v. SEC: The Supreme Court Limits the Statute of Limitations for SEC Actions [Professional Liability Alert]

In a recent unanimous decision, the U.S. Supreme Court held that the Securities Exchange Commission (SEC) has five years from the date when an alleged fraud begins – not from the date when the SEC uncovers the fraud – to bring an action seeking penalties. It is likely this decision will have a large-scale impact, including an impact on D&O insurers, by spurring the SEC to complete its investigations and bring enforcement actions sooner rather than later.

The Material Impact of the Amgen Decision on D&O Insurance [Professional Liability Alert]

In Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds, No. 11-1085 (Slip Op. Feb. 27, 2013), the U.S. Supreme Court, in a 6-3 majority opinion (Ginsburg, J.), affirmed the U.S. Court of Appeals for the 9th Circuit’s ruling that a securities class action plaintiff need not prove materiality of alleged misrepresentations or misleading omissions as a prerequisite to class certification under Fed. R. Civ. P. 23. Justices Kennedy, Scalia, and Thomas dissented. Justice Alito concurred with the majority but added a separate and important note (discussed below). The Court’s decision lowers the bar for investors seeking to obtain class certification, which has significant implications for D&O insurers, companies, their Directors and Officers (Ds and Os), and securities fraud plaintiffs alike. The Court’s ruling in Amgen also settles a split among the 2nd, 3rd, 7th, and 9th Circuits. Although the ruling is clearly favorable to securities fraud class action plaintiffs, the four concurring and dissenting justices appear willing to entertain arguments over the continued validity of the fraud-on-the-market presumption, which could drastically alter the landscape for securities class actions.

Is Honesty Always the Best Policy? Illinois Appellate Court Holds Attorney's Ethical Obligations Trump Professional Liability Policy Term [Professional Liability Alert]

In a case of first impression, the Illinois Appellate Court considered whether a professional liability insurer can deny a defense to its insured, an attorney who admits he erred in providing legal services. Ill. State Bar Assoc. Mut. Ins. Co. v. Greenfield & Assocs., P.C., No. 1-11-0337, 2012 Ill. App. LEXIS 921 (Ill. Ct. App. Nov. 9, 2012). The court held the insurer had a duty to defend its insured against a legal malpractice claim. The court rejected the insurer’s reliance on the prohibition against admitting liability in its Voluntary Payments condition.

Below-Limits Settlements and the Coverage Obligations of Excess Insurers-The Diminshed Reach of Zeig [Professionals', Officers' and Directors' Liability Committee Newsletter]

New York Court Enforces Legal Malpractice Policy’s Business Pursuit and Business Enterprise Exclusions [Global Insurance Alert]

In Abrams, Fensterman, Fensterman, Eisman, Greenberg, Formato & Eininger, LLP v. Underwriters of Lloyds, London, no. CV11-665, 2013 U.S. Dist. LEXIS 1204 (E.D. N.Y. January 2, 2013), the District Court for the Eastern District of New York upheld a legal liability insurer’s denial of coverage to a law firm. The court agreed with the insurer that although two complaints filed against the law firm and its partners alleged professional malpractice, the policy’s business pursuit exclusion and business enterprise exclusion applied.

Sixth Circuit Confirms that Cybercrime is Crime... and Finds Coverage [Global Insurance Alert]

Sixth Circuit Confirms that Cybercrime is Crime... and Finds Coverage - Global Insurance Alert - On August 28, 2012, the 6th Circuit Court of Appeals handed down a groundbreaking decision that sent shock waves through the world of cyber-risk insurance.

Petersen v. Columbia Casualty Company: A Case Study in the Differences Between the Duty to Advance and the Duty to Defend [Global Insurance Alert]

Petersen v. Columbia Casualty Company: A Case Study in the Differences Between the Duty to Advance and the Duty to Defend - Global Insurance Alert - On August 21, 2012, in Petersen v. Columbia Casualty Company, et al., No. SACV-12-00183, U.S. District Judge James V. Selna held that a professional liability insurance policy, which provided that the insurer had a duty to advance defense expenses, should not be interpreted under the standards that govern policies containing the broader “duty to defend.”

The Broad Scope of Contractual Liability Exclusions in D&O Policies [Global Insurance Alert]

The Broad Scope of Contractual Liability Exclusions in D&O Policies - Global Insurance Alert - On August 17, 2012, the U.S. District Court for the Middle District of Pennsylvania, in Federal Insurance Co. v. KDW Restructuring & Liquidation Services LLC et al., Case No. 3:07-cv-01357, held that Federal Insurance Company does not have a duty to defend or to indemnify its insured, Uni-Marts, LLC, under a D&O policy for claims arising out of Uni-Marts’ alleged misrepresentations and omissions to gas station purchasers.

Exhaustion Implications for Multi-Policy Settlements [Global Insurance Alert]

Exhaustion Implications for Multi-Policy Settlements - Global Insurance Alert - In JP Morgan Chase & Co. v. Indian Harbor Ins. Co., 2012 N.Y. App. Div. LEXIS 4627 (N.Y. App. Div. June 12, 2012), the Appellate Division of the New York Supreme Court, applying Illinois law, affirmed the lower court’s grant of summary judgment in favor of certain upper-level excess insurers, agreeing that the insured failed to prove that certain underlying policies had been properly exhausted.

The Potential Implications of the JOBS Act on D&O Coverage [Global Insurance Alert]

The Potential Implications of the JOBS Act on D&O Coverage - Global Insurance Alert - On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act, better known as the JOBS Act. The JOBS Act is intended to help smaller and new companies raise capital, and, to accomplish this goal, institutes fundamental changes to existing securities laws in the areas of fundraising and emerging growth companies (EGCs).

Maximus Opinion Permits Functional Exhaustion of Underlying Insurance [Global Insurance Alert]

Maximus Opinion Permits Functional Exhaustion of Underlying Insurance - Global Insurance Alert - Excess insurers should carefully note both trends in the law, and particular policy language, that may potentially influence whether their policyholders can exhaust underlying policies without actually receiving payment of the full underlying limits. In its recent opinion in Maximus, Inc. v. Twin City Fire Insurance Company, No. 11-CV-1231, the U.S. District Court for the Western District of Virginia determined that an ambiguously worded follow-form excess policy permitted this result.

Confidentiality Agreements and Standstill Provisions; the Delaware Chancery Court Broadly Construes Confidentiality Agreements and Enjoins a Hostile Bid Despite the Absence of Standstill Provisions Relating to Stock Transactions [Global Insurance Alert]

Confidentiality Agreements and Standstill Provisions; the Delaware Chancery Court Broadly Construes Confidentiality Agreements and Enjoins a Hostile Bid Despite the Absence of Standstill Provisions Relating to Stock Transactions - Global Insurance Alert - In a significant recent decision, Martin Marietta Materials, Inc. v. Vulcan Materials Company, the Delaware Chancery Court reiterated the preference of Delaware courts to enforce confidentiality agreements and to construe them broadly as a matter of public policy.

Washington Court Holds that a Corporate Officer's Breach of Contract is Not a Covered 'Loss' from a 'Wrongful Act' Under a D&O Policy [Global Insurance Alert]

Washington Court Holds that a Corporate Officer's Breach of Contract is Not a Covered 'Loss' from a 'Wrongful Act' Under a D&O Policy - Global Insurance Alert - In a recent case, Sauter v. Houston Cas. Co., No. 66809-9-1, (May 14, 2012), a Washington appeals court analyzed a type of policy not often considered by Washington courts – a director and officer (D&O) policy.

When It Comes to Data Breaches: Show Me The Injury [Global Insurance Alert!]

When It Comes to Data Breaches: Show Me The Injury - Global Insurance Alert! - Two recent decisions, one by Oregon's highest court and the other by the 1st Circuit Court of Appeals, reveal a growing trend finding legitimacy in claims asserted by plaintiffs whose personal information has been stolen or compromised only if such information is actually used by a third-party to cause harm or perpetuate identity theft

Richard Mason Quoted in Law360 on Impending PA Supreme Court Case Impacting Policyholders

The Pennsylvania Supreme Court is expected to decide a case that could impact policyholders' ability to settle litigation without their insurers' consent, while courts statewide hear disputes over coverage for faulty workmanship claims