Allegations Concerning Wage Fixing in Violation of the Sherman Act Do Not Fall Within Professional Liability Coverage for “Counseling” Services

Applying Colorado law, the United States District Court for the District of Colorado has held that allegations of collusion to fix wages in violation of the Sherman Antitrust Act do not fall within the scope of professional liability coverage for “counseling” services because “counseling” does not include an alleged agreement to fix wages.  Colony Ins. Co. v. Expert Group Int’l Inc., 2017 WL 2131368 (D. Colo. May 17, 2017).

The insureds, au pair placement agencies, were sued for allegedly maintaining au pair wages at artificially low rates.  The underlying complaint asserted numerous counts, including antitrust violation, negligent misrepresentation, and breach of fiduciary duty.  The insureds maintained professional liability policies designed primarily for health care companies and health care professionals.  The professional liability insuring agreement in each policy provided coverage for wrongful acts occurring in the conduct of the insured’s “professional services.”  The insurer sought a declaratory judgement that coverage was unavailable under the policies because the professional liability insuring agreement was not triggered by the antitrust count and various policy exclusions applied to bar coverage for the other counts.

The court held that the antitrust count did not fall within the scope of the professional liability insuring agreement.  Of the types of professional services included in the insuring agreement, the insureds performed only “counseling” services by providing information and advice to au pairs and host families.  Because “counseling” services did not include the insureds’ alleged agreement to fix wages, coverage was not triggered.  Accordingly, the insurer did not have a duty to defend the insured sued only under the antitrust count.

The court determined, however, that the counts for negligent misrepresentation and breach of fiduciary duty fell within the scope of the professional liability insuring agreement.  The court reasoned that there was a duty to defend because the counts alleged that the insureds provided erroneous advice and information, which constituted “counseling.”  The court then rejected the insurer’s argument that various policy exclusions applied to bar coverage, and held that the insurer had a duty to defend the remaining insureds.