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Showing 11 posts in D&O.

Can You “Negligently” Fire Someone?

Insurance Claim Form - REJECTEDThe answer to that question, at least according to the Ninth Circuit Court of Appeals, is “no.” 

It seems straightforward, but getting to that “no” requires a little bit of an understanding of insurance – in this case, directors’ and officers’ (“D&O”) insurance.  A D&O policy was at issue in this case, Forest Meadows Owners Assoc. v. State Farm Ins. Co., in which the policyholder – a condominium association – was sued by an employee it had fired, and sought coverage from its insurer.   Read More ›

Employment Disputes And Insurance Are Among Our Favorite Things

Times SquareWhen the dog bites

When the bee stings

When I'm feeling sad

I simply remember my favorite things

And then I don't feel so bad.

Just from looking at the lyrics, your mind will automatically add in the tune.  Rodgers & Hammerstein wrote it, Mary Martin, Julie Andrews, and even Carrie Underwood have performed it: the classic song “My Favorite Things” from The Sound of Music (which for mysterious reasons is now associated with Christmas, even though the musical isn’t about Christmas at all). 

But I bet few people know how I interpret the song.  I’m an insurance coverage lawyer – so my favorite things aren’t brown paper packages tied up with string or schnitzel or bright copper kettles.  My favorite things (or, at least, the things I use every day) include principles that – if some thought is given to them before a claim comes about, or in presenting the claim when it happens – can help executives and the companies that hire and fire them have access to the right insurance for the disputes that develop between them.  So, in that spirit, this post looks at some of those executive-employment-related insurance issues that we’ve reviewed throughout this year. They’re all things that business leaders should think on as they consider a company’s insurance strategy.  You could think of it as a cream-colored pony with an insurance treatise on its back.  But I’ll make it much more appealing than some book – more like a crisp apple streudel.   Read More ›

Even When “Loss” Is Defined, Insurance Policy Interpretation For Executive Agreement Claims Can Still Be Tricky

What’s a “loss?”  And, no, I don’t mean something our beloved Washington Nationals have racked up in equal number to their wins this season. 

I’m talking about a loss as defined in an insurance policy – or, as the word is used in most insurance policies that apply to employment-related claims, a capitalized “Loss.”  Believe it or not, even when this term is specifically defined in an insurance contract, it can still cause confusion.   Read More ›

Executives: Beware of Dodd-Frank Compensation Clawbacks

ClawbackThe Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) required every public company to disclose its incentive-based compensation and to adopt a policy to recover from current and former executives, in the event of a restatement, any such compensation that would not have been awarded under the restated financial statements.  As a result of the Act, many public companies in America have adopted new compensation “clawback” policies, even though the SEC has yet to promulgate regulations as required by the statute and there is no effective date for implementing these requirements. Read More ›

EPLI: If You Hire Or Manage People And You Don’t Know What That Stands For, You ‎Should Probably Read This: Part 1‎

InsuranceThere are things we’re all supposed to do before a catastrophe occurs, to help prevent that catastrophe or minimize the harm from it.  This list would include changing the batteries in your smoke detectors, or making sure your car is kept in good repair, or seeing the dentist every so often for a thorough teeth cleaning. 

If you are an executive or a business owner with any role in hiring or managing others, I’m about to add one more suggestion to that list: check to figure out if you have insurance for employment-related allegations for which you may, in some circumstances, be held personally liable.  Read More ›

EPLI: If You Hire Or Manage People And You Don’t Know What That Stands For, You ‎Should Probably Read This, Part 2‎

EPLIIn Part One of this series, we looked at insurance for employment-related claims against business owners and managers.  Specifically, we looked at employment practices liability insurance (“EPLI”), and I suggested you find out if your company has this coverage – which, if you’re doing any of the hiring, firing, or supervising, is something you should know.      

Assuming your company (or entity – employment-related claims hit not-for-profits as well) has EPLI, then you need to ask some more questions to really understand what it covers and how it will work.  And the time to consider this is before you may potentially have a claim for coverage under it.  Read More ›

It's A Wonderful Life...Or It Will Be If George And Uncle Billy Can Get Their Legal Fees Paid, Part 2

Holiday WreathFrom the script for It’s A Wonderful Life (1946):

                        GOWER

                        Hope you enjoy it.

               George suddenly sees the old cigar lighter on the counter.

               He closes his eyes and makes a wish.

                                    GEORGE

                        Oh... Oh. Wish I had a million

                        dollars.

               As he snaps the lighter the flame springs up.

                                    GEORGE

                        Hot dog!

Can George’s wish for a million dollars (or more) actually be granted, when he and Uncle Billy may need it the most?  Read More ›

Does a Company Have to Advance Legal Fees for a Former Officer Who Was Criminally Charged (Twice) with Stealing the Company's Trade Secrets?

We previewed this question on Monday, in our first of three posts (see here, too) about the lawsuit recently filed by former Goldman Sachs vice president Sergey Aleynikov, who beat back a federal prosecution and is now fighting state criminal charges for allegedly stealing the investment bank’s "secret sauce" computer code. Aleynikov seeks a court order directing the investment bank to not only indemnify him for the attorneys’ fees that he incurred in the now-concluded federal case (the subject of Monday’s post), but also advance his attorneys’ fees as the ongoing state case (the subject of today’s post) proceeds.

Indemnification and advancement are similar but distinct concepts. They both involve a company paying (or reimbursing) the legal fees of a current or former officer or director pursuant to a state law, a company bylaw or a contract, but they differ with respect to the timing of payments and the conditions that must be met before payment begins. Read More ›

Does a Company Have to Pay for the Defense of a Former Officer Who Was Criminally Charged (Twice) with Stealing the Company's Trade Secrets?

HTML CodeThat’s the question presented by a recent lawsuit filed by Sergei Aleynikov, a computer programmer who was a Vice President at Goldman Sachs responsible for code relating to Goldman’s high frequency trading business (more on “HFT” here) before he left to work for a hedge fund – allegedly bringing Goldman’s “secret sauce” code with him.  We’ve observed before that contractual rights to indemnification can sometimes lead to head-scratching results, but, depending on the outcome, this case may take the cake.  Plus, it nicely illustrates key concepts about indemnification (our focus today) and advancement (our focus later this week). Read More ›

Bill submitted to Congress to regulate coverage of "clawback" claims for bank employees

I need to start off with a confession: my name is Bill and I’m an insurance lawyer.  (“Welcome, Bill”).  I’m going to be writing about insurance as it applies to employment-related disputes.  Even though you may think insurance is a very dry subject, I promise to make it as interesting as I can – although there will be no dancing green lizards in any of these posts.  And, if you work for (or defend) a company that can face suits by employees, you may find these posts to be interesting food for thought when it comes to protecting your corporate bottom line from those suits.  (As always, though, whether an individual dispute is insured or not is a very fact-specific inquiry that depends on the language of the policy and the facts at issue – your mileage may vary, as they say). Read More ›