Resources for Hurricane Ida

Alan Rubin , John E. Heintz, and Jared Zola







In the aftermath of Hurricane Ida’s historic landfall on the Gulf Coast, and the subsequent destruction in several states in the south and along the Eastern seaboard, damage to life and property is still being assessed.

Hundreds of thousands of Louisiana residents are still without power, hampering rescue and recovery and endangering the health and welfare of the local population, including hospitals crowded with COVID-19 patients.

New York City subway and rail systems have been halted due to flooding, and public transportation and infrastructure has been impacted up and down the East Coast. Tornado damage and record flooding have been reported in Virginia, Maryland, Pennsylvania, New Jersey, Delaware, New York and New England.

Blank Rome’s interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has developed the following resources for those in the path of the storm, or with business interests in the affected regions, which we encourage you to share with your contacts via e-mail and/or social media:

Please share this information with anyone who has been impacted by the storm. These resources and many more can be found at our website at blankrome.com/SWERT. Our team stands ready to provide assistance on FEMA and insurance issues to individuals and businesses who are preparing for, or are impacted by, this events.

For additional information, please contact:

Alan Rubin, Co-Chair, Severe Weather Emergency Recovery Team
John E. Heintz, Co-Chair, Severe Weather Emergency Recovery Team
Jared Zola, Severe Weather Emergency Recovery Team

DEI Claims in Higher Education: Why Control over the Claims Resolution Process Matters and What Universities Need to Know to Maximize Their Influence over the Outcome

Natasha Romagnoli and Anna K. Milunas

When more than just university dollars are at stake, understanding and maximizing control over the claims resolution process in advance is essential for higher education policyholders.

Diversity, equity, and inclusion (“DEI”) have always been controversial topics at colleges and universities, but the last several years have seen DEI debates amplified to the greatest degree as more educational institutions take open and affirmative steps toward addressing discrimination and intolerance on campus.

At a time when issues of racial injustice and implicit bias are so much in the forefront of the national conscious, even nascent allegations of student or employee discrimination (or reverse discrimination) can subject institutions to instantaneous and major public relations (“PR”) crises that come at a great cost to a university’s reputation, which is paramount to its continued success.

Negative PR, however, is not the only thing schools must contend with in this new environment. Claims that universities and colleges have violated federal or state anti-discrimination laws, or failed to adhere to their own anti-discrimination or DEI policies, are now more than ever resulting in formal lawsuits, in addition to complaints filed with state anti-discrimination commissions and other similar oversight bodies.

Consider Smith College, for example, where a former employee plans to sue the school—in addition to filing a claim with the Massachusetts Commission Against Discrimination, for creating a “racially hostile workplace” after Smith mandated anti-bias training for its white employees in the aftermath of an alleged July 2018 racial profiling complaint by a student. Or a community college in San Diego, where five current and former Black employees are suing for a “palpable climate of anti-Blackness at Southwestern College.” DePaul University was sued twice in six months by Black professors for alleged discrimination in the form of “irregularities,” “increased scrutiny,” and “microaggressions” in the tenure track evaluation process that violated DePaul’s anti-discrimination policies. A former employee of Cal State University, Northridge also filed a lawsuit against the university for discrimination, harassment, retaliation, and failure to accommodate a disability. Further, in May 2020, U.S. District Court Judge Indira Talwani permitted a breach of contract and section 1981 claim by a former student disciplined by Harvard University for sexual assault to move forward against the university on grounds that the university racially discriminated against the student in its handling of a Title IX complaint.

These claims come at a significant cost to educational institutions—not only in terms of immediate crisis management response and defense costs—but in settlements, which are often expensive, multifaceted, and even at times, unconventional. The University of Iowa, for example, reportedly agreed to pay a former field hockey coach and her partner a total of $6.5 million to settle two discrimination lawsuits. New York University recently reached a settlement that reportedly involved an agreement to effectuate new anti-discrimination policies and training, in addition to maintaining records of discrimination complaints and the university’s response to them.

To read our full client alert, please click here.

Eyes Wide Open: The Quest for Arbitrator Impartiality in the Wake of Halliburton

Robert P. Jacobs

Jacobs_Robert_03491_Headshot_4C_Print_frameOn November 27, 2020, the day after Thanksgiving was celebrated in the United States, the United Kingdom Supreme Court issued a long-awaited decision in Halliburton Company v. Chubb Bermuda Insurance Ltd., a decision that has been characterized as bringing clarity to an arbitrator’s duty of disclosure where the arbitrator has received multiple appointments by the same party in different arbitrations involving the same subject matter. From the policyholder’s perspective, however, the decision brought neither clarity nor a reassuring result.

Here are the facts:

This matter concerned an arbitrator well known in the London insurance coverage arena, Kenneth Rokison QC. The case arose out of the Deepwater Horizon disaster in the Gulf of Mexico, which spawned (at least) three separate insurance coverage arbitrations.

Arbitration 1 was between Halliburton and Chubb. Halliburton had settled the claims against it and sought coverage from Chubb under the Bermuda Form policy that it had sold to Halliburton. Chubb denied the claim on the premise that the settlement was not reasonable. Mr. Rokison was appointed by the English High Court to chair that panel.

Arbitration 2 was between Transocean and Chubb. Transocean was the owner of the Deepwater Horizon drilling rig. It also had settled the claims against it and Chubb also rejected its claim for coverage. Chubb appointed Mr. Rokison to that arbitration.

Arbitration 3 was between Transocean and another insurer. That insurer also appointed Mr. Rokison to that panel. Continue reading “Eyes Wide Open: The Quest for Arbitrator Impartiality in the Wake of Halliburton

What’s Next with D&O and COVID-19 Coverage?

Allison Zamani

The principal focus in considering insurance coverage for COVID-19-related losses and liabilities has, thus far, primarily concerned business interruption coverage. But there are many other types of coverage that could come into play as businesses recover. Among the various other types of insurance coverage that could be implicated is Directors & Officers (“D&O”) liability insurance.

In the simplest terms, D&O insurance is meant to protect a company’s directors and officers from claims alleging that a mistake, bad judgment, or other malfeasance in operating a business has caused the business to suffer some form of loss or to incur some form of liability. These various circumstances are embodied in the definitions of what D&O policies refer to as “Wrongful Acts.” A typical “Wrongful Acts” definition includes the breach of a duty, neglect, error, misstatement, misleading statement, omission, or act of a director and/or officer of a company. Securities litigation and, to a more limited extent, regulatory investigations are the classic types of claims that arise from conduct typically encompassed within a “Wrongful Act” definition. There are generally three parts to a D&O policy, called Side A, B, and C coverage. Side A coverage is for “Wrongful Acts” committed by directors and/or officers that the company does not or cannot indemnify. Side B coverage exists to reimburse the company for indemnity payments the company makes on behalf of directors and/or officers for their “Wrongful Acts.” Finally, Side C coverage insures the company itself when it is sued. For public companies, Side C coverage is typically triggered only by securities claims. Privately held companies may be covered for a broader range of claims involving the “Wrongful Acts” of directors and officers. D&O Insurance covers not only indemnity payments but also defense costs, i.e. the costs necessary to respond to any litigation or investigation.

As far as COVID-19 is concerned, decisions that companies have made in order to operate under these difficult circumstances may be called into question as things return to “normal.” For example, companies have had to respond to the challenges of the pandemic and to issue public statements about that response. These actions could potentially prompt securities litigation (direct and derivative securities claims) and class actions to the extent that companies and/or a company’s directors and officers have allegedly failed to respond adequately or have made false statements to shareholders and/or the public. Similarly, a company’s financial reports may come under scrutiny, particularly if the company suffered a substantial loss as a result of COVID-19.

Continue reading “What’s Next with D&O and COVID-19 Coverage?”

Under Pressure to Diversify: Availability of D&O Coverage for Corporate Diversity Claims

Natasha Romagnoli and Hannah K. Ahn

With the recent rise in novel diversity lawsuits, which have targeted some of the leading companies across the country, and are sure to be a hot topic of litigation this year and beyond, policyholders are highly encouraged to review their existing directors and officers (“D&O”) insurance policies to ensure that they have adequate protection in place to cover diversity claims.

If you are one of the more than 100 million people who watched the Super Bowl, you noticed that companies are starting to be more vocal about the importance of diversity. With ads featuring all Black actors and more modern families, companies are celebrating inclusion and promising to join the fight to end systemic racism. The NFL itself is a prime example of this change in messaging. Years after Colin Kaepernick faced backlash for kneeling to protest inequality, the NFL ran its own ad this year that highlighted its pledge to spend $250 million to end racism.

Talk of diversity and inclusion has been growing—and growing more insistent—starting with the first Black Lives Matter protests in 2013 and building to last year’s protests following the murder of George Floyd, who died while being forcibly detained by Minneapolis police. Despite their messages of support for diversity and inclusion, however, many companies have struggled to promote diversity in their own ranks, especially with respect to their boards of directors and C-suite executives. But consumers and investors alike are now pressuring companies to meaningfully respond to their demands for internal change. Of late, this includes shareholder derivative lawsuits that use federal securities law not only to target the company’s lack of success in diversifying, but also to challenge the commitment of the company’s directors and officers to enact change. These novel “diversity lawsuits” open a new realm of potential liability, in addition to forcing companies to consider how to promote diversity in their ranks and respond to internal and customer demands for change.

While there have only been a handful of diversity lawsuits filed as of today’s date, the allegations against some of the best known names in business, like Facebook, Oracle, and Monster Beverages, could easily apply to other publicly-traded companies across the country. The individual details vary from case to case, but the common charge against the directors and officers of the sued companies is that they breached their fiduciary duties and violated Section 14(a) of the federal Securities Exchange Act by failing to include diverse directors on their boards and in their senior executive ranks, while at the same time touting their commitment to diversity, equality, and inclusion in the company’s proxy statements and other corporate publications. Corporate counsel can forget about their old playbook for dealing with employee discrimination complaints or outside groups threatening a boycott. This is new legal terrain being staked out by stakeholders in companies (in some cases, institutional investors) and the class action lawyers representing them.

To read our full client alert, please click here.

This client alert was reprinted in Wolters Kluwer Legal & Regulatory Solutions U.S. in April 2021.

Winter Storm Resources

Alan Rubin, Linda Kornfeld, and John E. Heintz







In the wake of two major winter storms and continuing frigid temperatures across much of the Lower 48, states of emergency have been declared for Texas, Oklahoma, and Louisiana, and state governments across the southeast United States are operating under their own emergency declarations.

These events are forcing evacuations to emergency shelters, and first responders are overwhelmed across several states. The storms’ impacts will be widespread in the days and weeks to come, including challenges involving property damage, business interruption, and travel disruption for a large part of the country.

As power is restored, it will be important to contact the Federal Emergency Management Agency (“FEMA”) and other state and local resources for assistance. In Texas, experts say the storms that left millions without power and water this week are expected to generate the most insurance claims stemming from a single event in state history.

Blank Rome’s interdisciplinary Severe Weather Emergency Recovery Team (“SWERT”) has developed the following resources for those affected by the storms, or with business interests in the affected regions, which we encourage you to share with your contacts via e-mail and/or social media:

Please share this information with anyone who has been impacted by the storms. These resources and many more can be found at our website at blankrome.com/SWERT. Our team stands ready to provide assistance on FEMA and insurance issues to individuals and businesses who are preparing for, or are impacted by, these events.

For additional information, please contact:

Alan Rubin, Principal, Blank Rome Government Relations
Linda Kornfeld, Partner and Vice Chair, Insurance Recovery Practice
John E. Heintz, Partner, Insurance Recovery Practice

Benchmark Litigation 2021 Recognizes Blank Rome Attorneys and Practices

Blank Rome LLP is pleased to announce that our practice groups and attorneys received the following high-level rankings and recognitions in Benchmark Litigation 2021

Practice Group Rankings

For the third year in a row, our Insurance Recovery practice group, which was named Benchmark Litigation’s 2020 Insurance Firm of the Year, was ranked Tier 1 nationally. This year, the group was also among three select firms notably ranked Tier 1 for Insurance in California.

In addition, our Firm was recommended for Dispute Resolution in the District of Columbia and Pennsylvania, and our Labor & Employment practice group was recommended in New Jersey and Pennsylvania.

Individual Attorney Rankings

Insurance Recovery

California

    • Mary Craig Calkins 
      • California – Litigation Star
      • Local Litigation Star

    • Linda Kornfeld 
      • National Practice Area Star
      • California – Litigation Star
      • Local Litigation Star
      • Top 250 Women in Litigation

New York

Washington, D.C.

    • Kyle P. Brinkman
      • 40 & Under Hot List – Northeast

    • John A. Gibbons – Insurance, Product Liability, and Recall
      • Local Litigation Star

    • John E. Heintz 
      • Local Litigation Star
      • National Practice Area Star

    • James R. Murray – Insurance, Product Liability, and Recall
      • Local Litigation Star
      • National Practice Area Star

    • Omid Safa 
      • 40 & Under Hot List – Northeast

Continue reading “Benchmark Litigation 2021 Recognizes Blank Rome Attorneys and Practices”

Top 10 Tips for Insurance Policyholders (Fall 2020)

John A. Gibbons

1. Assess the policies you have and reassess the policies you should buy in the future.

2020 has brought a host of unwelcome events: pandemics, fires, floods, cyberattacks, financial failures, etc. An insurance program tailored to the risks and business opportunities of your specific company can provide for recovery during dark times, and specialized insurance products can help you safely expand your business. It is time to consider how tailored your current program is, and how you can better align insurance assets to your business in the future.

2. Use indemnities and additional insured status to expand your insurance assets.

Everyday business for many companies involves the use of terms and conditions; sales or services orders; and leases that address indemnification, minimum insurance requirements, and additional insured status. A well-thought-out use of additional insured status can allow you to leverage the insurance assets and insurance premiums of counterparties.

3. Ensure that you get the full benefits of your liability and property insurances.

Insurance policies provide many coverages, policy limits, and extensions that may not be readily apparent, and all of which may provide substantial financial assistance in the event of a loss. In addition, specialized forms of insurance, additional riders, or policy wording upgrades can better tailor policies to your specific business attributes. Use the renewal season to explore your options.

4. Avoid “conventional wisdom” about what is or is not covered.

With insurance, words matter! In fact, the wording determines the outcome. Do not accept statements about what others think a policy does or should cover. For example, claims for intentional wrongdoing and punitive damages often are covered by liability policies. Likewise, losses from your supply chain may be covered under your property policies. Non-payments of debts and breaches of contractual promises are covered under various forms of policies. Let the words lead you to coverage.

5. Give notice once you know of a loss or claim.

Typically, notice should be given soon after a loss, claim, or lawsuit, but remember that a delay in giving notice will not necessarily result in the loss of coverage. Consider the potentially applicable insurance assets that may apply and give notice.

6. Insist your insurers fully investigate claims.

Insurers have a duty to investigate claims thoroughly and must look for facts that support coverage.

7. Watch what you say.

Communications with an insurer or an insurance broker regarding a lawsuit against you or a loss are not necessarily privileged.

8. Don’t take “no” for an answer.

A reservation of rights is almost always the start of the insurance claim process, and a denial should not dissuade you from pursuing your rights. Even if coverage is not obvious at first, it may be there, if you look in the right places.

9. Document, document, document your claim.

Whether it is a first-party loss or a liability suit against you, write to your insurer and document your submission of information and materials. Require your insurer to respond in writing and to explain its position. A well-documented chain of correspondence narrows disputes, helps to limit shifting of insurer positions, or helps to make such shifting very apparent if your claim proceeds to formal enforcement measures.

10. Insist that your insurers honor their duties.

In the liability context insurers frequently owe broad duties to defend with independent, conflict-free counsel, even if uncovered claims dominate the lawsuit against you. In property insurance contexts, insurers have duties to help you on an expedited emergency basis to protect your interests immediately after a loss. It is important to hold insurers to their duties to protect you immediately upon assertion of liability or after a loss—delay only benefits insurers.

 

California Corner: Insurer’s Failure to Immediately Commence Defense Waives California Civil Code Section 2860 Rate Limitations for Independent Counsel

Julia K. Holt

California courts strictly enforce an insurer’s duty to immediately commence defending its insured. The insurer’s delay in doing so, even if the delay is short, constitutes a breach of this important duty. In fact, California imposes a 40-day time limit for an insurer to provide its written coverage position under the Prompt, Fair and Equitable Settlement of Claims requirements stated in Title 10 of the California Code of Regulations at Section 2695.7.

A breach in this regard results in a waiver of any claimed right of the insurer to control the defense of its insured. This includes a waiver of the insurer’s ability to seek to impose any Civil Code Section 2860 rate limitations for independent counsel. See Travelers Indem. Co. of Connecticut v. Centex Homes, No. 11-CV-03638-SC, 2015 WL 5836947, at *5 (N.D. Cal. Oct. 7, 2015), objections overruled, No. 11-CV-03638-SC, 2015 WL 6164429 (N.D. Cal. Oct. 8, 2015). In Centex Homes, the Court found “that Travelers breached its duty to defend by failing to provide Centex with a defense at least 30 days after the complaints were filed in the [noticed] actions . . . [and therefore] Travelers also lost its right to control Centex’s defense.” Id. Continue reading “California Corner: Insurer’s Failure to Immediately Commence Defense Waives California Civil Code Section 2860 Rate Limitations for Independent Counsel”

COVID-19 Coverage Litigation Update: Will Your Claim Be Batched with Others for Resolution?

Robert N. Lane* and Linda Kornfeld

Part 1

So far, traditional first-party property insurers have taken hardline “no coverage” positions for COVID-19 business interruption claims. As a result, policyholders nationwide (and even around the world) have been left to contemplate whether to press their coverage claims through litigation, or stay on the sidelines and watch as others develop the issues. Those policyholders already in coverage litigation or considering filing suit should be aware of the debate between policyholders and their insurers regarding how to manage the coverage suits that have been filed in many different courts in many different states around the country. To be sure, there are currently nearly 700 lawsuits pending in federal and state courts nationwide (most of which thus far involve small businesses) seeking rulings regarding whether business interruption losses associated with COVID19 are covered by traditional first-party property policies. Of those 700 cases, almost 200 of them are identified as putative class actions. Continue reading “COVID-19 Coverage Litigation Update: Will Your Claim Be Batched with Others for Resolution?”