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In a much-watched case, the Delaware Supreme Court has held that Delaware law governs a dispute regarding insurance coverage for a federal securities class action under D&O policies issued in California to a California company, where the company was incorporated in Delaware.  RSUI Indemnity Company v. Murdock, 2021 WL 803867 (Del. March 4, 2021).  The Court also held that a breach of the duty of loyalty based on fraudulent conduct is insurable under Delaware law and the policies’ profit/fraud exclusion did not apply.

Continue Reading Delaware Supreme Court Applies Delaware Law in D&O Coverage Dispute Involving California Company Incorporated in Delaware

In a win for Wiley’s client, the United States District Court for the District of Massachusetts, applying Massachusetts law, granted the insurer’s motion to dismiss, finding that business losses related to the COVID-19 pandemic could not trigger coverage under a commercial property insurance policy.  SAS Int’l, Ltd. v. General Star Indem. Co., No. 20-11864-RGS (D. Mass. Feb. 19, 2021).  Specifically, the court held that the insured failed to allege “direct physical loss of or damage to” property.  Notably, it was the first federal court in Massachusetts to render a substantive decision on the issue, which has led to more than fifteen hundred similar coverage actions in Massachusetts and states nationwide.

Continue Reading Pandemic-Related Losses Not “Direct Physical Loss of or Damage to Property” And Do Not Trigger Coverage Under Commercial Property Policy

A new presidential administration always brings changes that impact a broad spectrum of industries.  And the Biden Administration figures to be no exception.  There have been numerous thoughtful articles about how President Biden’s administration could reshape federal agencies’ priorities and impact various industries.  One such article, by my Wiley colleague Duane Pozza, focuses on the FTC.  Duane identified five areas that a Biden FTC is likely to prioritize.  Duane’s whole article is interesting in its own right, but one point jumps out that will almost certainly impact the D&O insurance world—an increase in seeking individual liability for directors and officers.

Continue Reading Changes at the FTC Could Increase D&O Exposure

The United States Court of Appeals for the Eighth Circuit, applying Minnesota law, affirmed a trial court’s decision that the prior acts exclusion in a directors and officers liability policy barred coverage for shareholder suits arising out of on an insured’s failure to disclose related-party transactions to the SEC before going public. Tile Shop Holdings, Inc. v. Allied World Nat’l Assurance Co., 2020 WL 7133358 (8th Cir. Dec. 7, 2020). The court concluded that the shareholder suits alleged Wrongful Acts that took place prior to the retroactive date or alleged acts that were the same or related to Wrongful Acts that occurred before that date.

Continue Reading Prior Acts Exclusion Bars Coverage for Shareholder Suits Based on Failure to Disclose Related-Party Transactions to SEC

A California court ruled that a forum selection provision in a Delaware company’s registration statement requiring that certain securities litigation be brought solely in federal court was enforceable.  Wong v. Restoration Robotics, Inc., Case No. 18CIV02609 (Cal. Sup. Ct., San Mateo County, Sept. 1, 2020).  The California court’s ruling could signal the beginning of a broader trend, started in Delaware, that would be helpful to securities defendants, and, in turn, to insurance carriers.

Continue Reading California Court Enforces Federal Forum Selection Provision For 1933 Act Claims