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- Yet Another Reason Why D&O Insurance Is Critical
- The Inbox – Netflix and the stream scheme
- The Face That Launched A $50 Million Lawsuit
- Disgruntled Employee’s Alleged Parting Shot Leads to Federal Indictment
- You’re In the Zone… Of A Massive Punitive Damages Verdict for a Pregnant Manager
- The Inbox - Love Me Tinder
- Fired for Taking the Fifth: Part 1 – The Private Sector Employee
- Can A Whistleblower Break the “Law” to Blow the Whistle?
- Complaint Provides Further Details About Former CFO’s Defamation Suit Against Walgreen
- This Year’s Scariest Posts on Executive Disputes
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The AmLaw Daily
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Screw You Guys, I’m Going Home: What You Need To Know Before You Scream “I Quit,” Get Fired, Or Decide to Sue the Bastards
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Showing 14 posts in D&O.
Corporate directors and officers may think indemnification provisions are sufficient to protect them from claims asserted against them by shareholders or regulators. However, if a director or officer chooses to rely solely on indemnification in bylaws or contracts, and ignores the availability of directors & officers (“D&O”) liability insurance, he or she could be making a significant mistake. In particular, a D&O policy can offer these individuals more reliable protection in times of financial distress. When corporations are plagued by regulatory or other legal problems, they may also suffer from financial setbacks, eventually leading to bankruptcy proceedings. The manner in which a bankrupt corporation has provided for the payment of fees and expenses for its directors and officers may be critical to the individuals affected.
Under section 502(e) of the Bankruptcy Code, a claim for indemnification is subordinated to the class of claims in which the underlying claim is placed. This means that, to the extent that the directors and officers are jointly liable with the corporation to a third party on an adverse claim, they will not receive any distribution on their resulting indemnification claim unless, and until, all of the claims of the class in which the underlying obligation is placed have been paid in full. This provision is intended to provide for equality of distributions in favor of all similarly situated creditors: if the underlying claim receives payments from both the corporation and the director and officer defendants and then the defendants receive payment on account of any contributions they made on the claim, that claim will have received a higher rate of distribution at the expense of other creditors. Read More ›
The Supreme Court of Washington’s recent decision in Failla v. FixtureOne Corporation is noteworthy on two levels.
First, it involved the surprising claim by a salesperson, Kristine Failla, that the CEO of her employer (FixtureOne) was personally liable for failing to pay her sales commissions. Typically, if an employee had a claim for unpaid commissions, you’d expect the employee to assert that claim against her company, not the chief. But under the wage laws of the state of Washington, an employee has a cause of action against “[a]ny employer or officer, vice principal or agent of any employer ... who ... [w]ilfully and with intent to deprive the employee of any part of his or her wages, [pays] any employee a lower wage than the wage such employer is obligated to pay such employee by any statute, ordinance, or contract.” Read More ›
Government Investigations: The Treacherous Path to Obtaining (and Keeping!) Defense Costs Paid Under D&O Policies
For my first foray into blog-writing, allow me to tell a cautionary tale intersecting two of my favorite topics: defending companies and individuals in government investigations and Directors and Officers (D&O) Liability Coverage. As a contract junkie who enjoys reading, interpreting, and arguing contract language, parsing through various interrelated D&O policy provisions to glean favorable language for my white collar clients offers hours of amusement (lest ye be worried about me, I do have other hobbies). D&O policies can be effectively used to defray defense costs incurred due to a government investigation. The trick is keeping the money.
The recent suit between Protection Strategies, Inc. (PSI) and Starr Indemnity & Liability Co. in the Eastern District of Virginia, case 1:13-cv-00763-LO-IDD, illustrates how difficult keeping the money can be. PSI is an Arlington, Va.-based defense contractor. In January 2012, PSI received a subpoena from the NASA Office of the Inspector General and a search warrant issued by the United States District Court for the Eastern District of Virginia. On February 1, 2012, the NASA OIG executed the search warrant at PSI’s headquarters. In addition to the company itself, several of PSI’s current and former officers were informed that they were also targets of the NASA OIG investigation. PSI retained Dickstein Shapiro to represent it and hired separate counsel to represent the individual targets and other company employees. Read More ›
The 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 ›
When 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 ›
The 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 2
In 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 ›
EPLI: If You Hire Or Manage People And You Don’t Know What That Stands For, You Should Probably Read This: Part 1
There 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 ›
It's A Wonderful Life...Or It Will Be If George And Uncle Billy Can Get Their Legal Fees Paid, Part 2
From the script for It’s A Wonderful Life (1946):
Hope you enjoy it.
George suddenly sees the old cigar lighter on the counter.
He closes his eyes and makes a wish.
Oh... Oh. Wish I had a million
As he snaps the lighter the flame springs up.
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 ›