Multiple Claims Arising from Employee’s Termination Deemed Related

An Illinois federal court has held that multiple claims arising from the termination of a single employee arose from the same “Interrelated Wrongful Acts” and were deemed a single claim made at the time of the first such claim.  Twin City Fire Ins. Co. v. Permatron Corp., 2018 WL 1565599 (N.D. Ill. Mar. 30, 2018).

Following her termination, an employee filed a charge of discrimination with the EEOC alleging wrongful termination.  In September 2014, the charge was provided to the employer.  The employee filed a lawsuit in June 2015 alleging claims of discrimination and retaliatory discharge.  Subsequently, in November 2015, the employee filed an additional charge with the EEOC of retaliation regarding an alleged refusal by the employer to answer questions from prospective future employers about the employee.  And, in January 2016, the employee filed another charge with the EEOC again alleging that the employer refused to answer questions from prospective future employers about the employee.

The employer held two consecutive claims-made employment practices liability policies for the periods of March 17, 2014 to March 17, 2015 and from March 17, 2015 to March 17, 2016.  Although the first policy at issue required that all claims be reported within 180 days, the insured did not report the initial charge of discrimination until July 2015.  The insurer took the position that the claims were deemed a single claim made during the first policy period.  As the insured employer did not timely report that claim, the insurer denied coverage for all claims under both policies.

In the ensuing coverage litigation, the court granted the insurer’s motion for summary judgment, holding that the claims were all deemed made during the period of the first policy but not reported in accordance with the terms of that policy.  The policy at issue deemed “[a]ll claims based upon, arising from or in any way related to the same Wrongful Act or Interrelated Wrongful Acts” to be a single “Claim.”  “Interrelated Wrongful Acts” were defined as “Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, goal, motive, methodology, or cause or series of causally connected facts, circumstances, situations, events, transactions, goals, motives, methodologies, or causes.”  The court found this language to be “quite broad,” and found that all claims “ha[d] a common nexus in that they all arise from [the employee’s]” termination.  As the insured failed to notify the insurer of the original EEOC charge, the court held that the claims were not both first made and reported in the same policy period and were therefore not covered under either policy.

Wiley Executive Summary

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