General Liability Policies

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On January 15, 2019, the Ninth Circuit certified the following question to the California Supreme Court:

Does a commercial liability policy that covers “personal injury,” defined as “injury… arising out of… [o]ral or written publication… of material that violates a person’s rights of privacy,” trigger the insurer’s duty to defend the insured against a claim that the insured violated the Telephone Consumer Protection Act by sending unsolicited text message advertisement that did not reveal any private information?
Yahoo! Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa., No. 17-16452, D.C. No. 5:17-cv-0447-NC.

Yahoo! sought coverage under its general liability policies issued by National Union for a number of putative class actions alleging that it violated the TCPA by transmitting unsolicited text message advertisements to putative class members. National Union denied coverage and Yahoo! sued for breach of contract. The Northern District granted National Union’s motion to dismiss and Yahoo! appealed that order to the Ninth Circuit.Continue Reading Ninth Circuit Asks the California Supreme Court to Interpret the Scope of Personal Injury Coverage

In an unpublished decision, the Ninth Circuit affirmed the Central District of California’s interpretation of the related acts provision in a professional liability policy, holding that related acts reported in a prior policy period were not excluded from coverage in a subsequent period because that policy defined “Policy Period” to mean only the current policy period, not any policy period. Attorneys Insurance Mutual Risk Retention Group, Inc. v. Liberty Surplus Ins. Co., No. 17-55597 (9th Cir., Feb. 15, 2019). As a result, the related acts clause, which incorporated this term, could not be read to aggregate claims first made under prior policy periods with those made in the current period. The case reinforces the importance of reviewing the particular language of an insurance policy rather than relying on case law interpreting similar language. Small differences in policy language can lead to significant changes in the available coverage.
Continue Reading Claims-Made Policy Note: Policy’s Use of Defined Terms May Expand or Limit Coverage Under Related Acts Provision

In November, Tyler wrote about insurance issues raised by both the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act, which goes into effect on January 1, 2020. California’s governor Jerry Brown signed two other cyber-related laws in September, which will also go into effect on January 1, 2020 – Assembly Bill 1906 and Senate Bill 327, which address security concerns relating to devices that are capable of connecting to the internet – the so-called Internet of Things or “IoT”. See California Civil Code 1798.91.04(a) et seq.

The bills largely mirror each other and, put very simply, require manufacturers of devices that are capable of being connected to the internet to equip them with “reasonable” security features that are both appropriate to the device and require a user to generate a new means of authentication before access is granted to the device for the first time. Technologists are debating whether the laws are good or bad, and if good, whether they go far enough. Regardless, the law will become effective and manufacturers of IoT devices will have to comply with them. The law does not provide for a private right of action; it permits the state’s Attorney General to enforce its provisions.

The new California law applies to all connected devices sold or offered for sale in California. Because California is such a large market, this likely means that all such devices sold in North America and Europe will comply with California’s regulations, and older, less secure devices will be diverted to countries with fewer regulations.Continue Reading Are You Covered for California’s New IoT Laws?

I recently participated in a panel at the Association of Business Trial Lawyers Annual Meeting – “Bad News Delivered: The Board Meeting and Crisis Management.”  Among other topics, the panel discussed the role of insurance counsel in crisis management, and addressed the following questions:

Who Is The Client? 

When meeting with a board in a time of crisis, it is critical to identify whether your client is the company or the board.  And if it is the company, the board must understand that while they are the decision-makers for your client, they themselves are not your clients.

Depending on whom you represent, your advice and strategy may differ.  Although acting on behalf of the company and bound by fiduciary duties and the duty of loyalty, in a time of crisis board members may be concerned about how the company’s insurance can be used to protect their interests, as opposed to the company’s.  If counsel is representing the company, the strategy may focus on preserving the coverage to settle a nasty case, fund burdensome defense or investigation costs, or protect individuals who are critical to the company’s on-going business strategies.  And if the company is in bankruptcy, the debtor in possession or trustee may want to preserve the assets for claims against the estate, as opposed to lower priority indemnity claims or non-indemnifiable claims against individual insureds such as board members.

If counsel is representing an individual, he or she may have the luxury of an indemnification from the company – assuming the company is able to fulfill it.  If not, counsel may need to invoke Side A or other provisions in the policy to preserve the policy limits for the individual directors or officers, and access to much-needed defense costs.
Continue Reading Insurance in a Time of Crisis: Role of Insurance Counsel in Crisis Management

A federal district court in Florida has ruled that a claim against a policyholder arising out of a hacker’s theft of confidential credit card information was not covered under a commercial general liability (CGL) policy.  St. Paul Fire & Marine Ins. Co. v. Rosen Millennium, Inc., M.D. Fla. Case No. 17-cv-540 (Sept. 28, 2018).  This is not the first such decision.  Courts have held similarly in Innovak Int’l, Inc. v. Hanover Ins. Co., 280 F.Supp.3d 1340, 1347-1348 (M.D. Fla. 2017) and Zurich American Ins. Co. v. Sony Corp. of America,  2014 WL 3253541, 2014 N.Y. Misc. LEXIS 5141 at *71 (N.Y. Sup. Ct. Feb. 21, 2014).

While we disagree with these courts’ reasoning, policyholders concerned about data breach liability should take note of these decisions and consider buying more reliable insurance protection for this risk.
Continue Reading Florida Court Finds No CGL Coverage for Data Breach Claim

Defense counsel often assume that an insurer has a “duty” to fund any settlement opportunity their client wants to accept. The legal requirements under California law for triggering an insurer’s duty to settle are far more nuanced.  For non-insurance practitioners, this is often a confounding and confusing topic!  The fact is, an insurer doesn’t have…

While experts debate how quickly autonomous vehicles (AVs) will take over our roads, there is little doubt they will be a fixture in the next decade. Fully self-driving vehicles are predicted to substantially reduce the accident rate, given the dominant role of human error in most crashes today.

But there still will be accidents. And…

I recently participated in a negotiation with an insurer who had denied coverage for an underlying errors and omissions claim in the mid-seven figures. The insurer’s counsel and I exchanged stern letters, each explaining why our respective client’s position was absolutely correct, and the other’s absolutely wrong. The client’s broker arranged a meeting with principals and counsel on both sides. At the meeting, the insurer’s counsel and I debated our respective positions once more. Neither of us conceded any possibility that the other could be right. After 25 minutes, my client put a stop to the debate competition and, aided by the broker, moved into negotiations with the insurer’s principal.

The opening offer and demand were miles apart. But within an hour, the case settled, to the clear satisfaction of both sides. With no mediator. No wrangling about which mediator to select. No waiting three months to get a date on the mediator’s calendar. No mediation briefs or reply briefs. No waste of non-refundable mediator’s fees. No shuttle diplomacy, bracketing or mediator’s proposals. No mediator reserving jurisdiction to hammer out disputed settlement terms. It felt almost too easy.

Are lawyers too dependent on mediators to settle their cases? Whether you answer that question yes or no, there are many situations where a neutral can resolve a case where party negotiations would fail. This is particularly true in a “three-way” mediation, where the defendant’s insurer is participating but is reserving rights, denying coverage, or rejecting defense counsel’s settlement recommendations. These mediations present unique challenges that require a skilled mediator and savvy defense and coverage counsel.
Continue Reading A Policyholder Perspective on the Unique Challenges of a Three-Way Mediation

John OrrFarella’s Insurance Recovery Group lawyers regularly collaborate with and learn from different players and functions within the insurance industry. To provide more value to our readers, we have reached out to a series of insurance brokers to create the Insurance Broker Series Q&A.

Our latest installment is with John M. Orr, Managing Principal – West Region Financial Lines Practice Leader with Integro Insurance Brokers.
Continue Reading Insurance Broker Series: John Orr, Integro Insurance Brokers

image: Are you Covered?Insurance recovery partner Tyler Gerking and I have co-authored an article examining two recent cases from separate California state courts that we feel correctly interpret the phrase “that particular part” as it applies to certain CGL policy exclusions, and apply it in its intended narrow sense. The rulings in Pulte Home Corp. v. American Safety…