Erin L. Webb
A federal court of appeals and the Nuclear Regulatory Commission (NRC) recently made advances toward a national disposal site for spent nuclear fuel. My recent Law360 column analyzes the potential impact of an eventual spent nuclear fuel disposal site on insurance coverage for nuclear plant owners. Shipping spent nuclear fuel offsite for disposal presents very different risks from those associated with storing the spent fuel onsite, which is the situation at many nuclear power plants today.
The D.C. Circuit recently held that the U.S. government may not collect any more fees from nuclear plant owners under the Nuclear Waste Policy Act until it finalizes a disposal solution for spent fuel. Nat’l Ass’n of Regulatory Util. Comm’rs v. U.S. Dep’t of Energy, Nos. 11-1066, 11-1068, 2013 WL 6064021 (D.C. Cir. Nov. 19, 2013). Additionally, the NRC directed its staff last month to “complete and issue the Safety Evaluation Report” on the U.S. Department of Energy’s (DOE) application for consideration of the Yucca Mountain site as a disposal facility. In the Matter of U.S. Dep’t of Energy (High-Level Waste Repository), No. 63-001, __ N.R.C.___, slip op. at 23 (Nov. 18, 2013). Continue reading “Disposal Site for Spent Nuclear Fuel Could Change the Insurance Picture for Nuclear Plant Owners”
Insurance-related issues are a critical aspect of any merger or acquisition and should be addressed early in the deal process. The insurance-related issues that may arise in deal contexts are too many to address here, but companies entering a potential deal should keep the following considerations in mind.
Evaluate liabilities, exposures, and insurance program. Evaluating a target company’s insurance program frequently sheds light on the company’s overall operations and quality of the company being purchased. A target company that presents a poor insurance risk relative to its loss history may also be a poor business risk. Accordingly, a party to a potential deal will be well-served to evaluate the target company’s operations to determine current liabilities and exposure to loss, and thoroughly examine the target company’s insurance portfolio to determine if existing insurance is likely to cover the liabilities. The analysis may also inform decisions regarding the need for future insurance purchases to fill any gaps in coverage for potential loss exposures. To conduct these evaluations and examinations, the company and its insurance coverage counsel should obtain the target company’s current and historical insurance policies, any coverage charts that may exist, pleadings from any litigation in which the target is involved, and loss history reports. Also, if possible, interviewing the target company’s internal legal and risk management teams and outside insurance coverage counsel frequently provides an efficient means to obtaining key information and answering questions. Continue reading “Insurance Implications for M&A Deals”
In a September 24, 2013 ruling, the New Jersey Supreme Court addressed whether liability insurers covering a long-tail environmental contamination loss may seek contribution from the New Jersey Property-Liability Insurance Guaranty Association (“NJPLIGA”) for the Carter-Wallace shares of insolvent insurers. Perhaps most important to insureds, the court rejected the position that the insured bears the burden of the insolvent insurer’s Carter-Wallace allocated payment obligation to the extent NJPLIGA was not required to pay. Instead, the payment burden rests solely with solvent insurers on the risk.
Farmers Mutual Fire Insurance Co. v. New Jersey Property-Liability Insurance Guaranty Assoc. involved two insurers (Farmers Mutual and Newark Insurance Co.) that insured properties that suffered soil and groundwater contamination caused by underground storage tank leaks. Farmers Mutual paid all of the remediation costs and, after Newark was deemed insolvent in 2007, sued NJPLIGA for contribution seeking to recover Newark’s Carter-Wallace share of the remediation costs. Continue reading “N.J. Supremes: Insureds Are Not Obligated to Pay an Insolvent Insurer’s Carter-Wallace Allocated Payment Obligation Before Accessing NJPLIGA’s Statutory Benefits”
James S. Carter
Is your company about to embark on an advertising campaign? Insurers offer a wide variety of specialized insurance coverage for advertising risks. The marketing materials associated with such coverage often suggest that the coverage is broad. Advertising policies, however, often contain non-standard and untested language that might contain subtle nuances that could give rise to coverage disputes.
In one recent case, a coverage dispute turned on the placement of a mere comma in a seemingly broadly written provision granting coverage for advertising-related claims. See ACE European Group, Ltd. v. Abercrombie & Fitch, 2013 U.S. Dist. LEXIS 131269, Case No. 2:12-CV-1214, Case No. 2:11-CV-1114 (S.D. Ohio Sept. 13, 2013). Abercrombie & Fitch sought coverage under a “Safeonline Advertisers and Internet Liability Policy” for several consumer class actions alleging that Abercrombie had misled consumers about a nationwide gift card promotion. Continue reading “Advertising Insurance Policies: Advertiser Beware”
Colleges and universities are frequently subject to claims from spectators who are injured while watching sporting events. These suits may lead to significant settlements or judgments against the college or university. At a minimum, the school can incur litigation costs in defending itself. Schools should keep in mind that their comprehensive general liability insurance (CGL) policies may pay some or all of those costs. The coverage provided by CGL policies is broad enough that it should trigger the CGL insurers’ obligations under the policies. These obligations may include paying for any settlements or judgments up to the policies’ limits, as well as paying for defense costs. Continue reading “Spectator Injuries and CGL Insurance Policies for Colleges and Universities”
James S. Carter
The “advertising injury” coverage in commercial liability insurance policies typically extends to lawsuits alleging product disparagement. But is there coverage if your company’s advertisement does not specifically mention a competitor’s product by name? A recent judicial decision suggests that the answer is yes.
JAR Laboratories LLC v. Great American E&S Insurance Co., 2013 U.S. Dist. LEXIS 67516 (N.D. Ill. May 10, 2013), addressed whether an insurance company had a duty to defend its policyholder, the manufacturer of an over-the-counter pain relief patch, against a lawsuit brought by a distributor of a prescription pain relief patch. The issue turned on whether the allegations in the distributor’s complaint fell within the scope of the policy’s coverage for “personal and advertising injuries” resulting from the publication of material that “disparages a person’s or organization’s goods, products, or services.” Id. at *12 (quotation marks omitted). Continue reading “Seeking Insurance Coverage for a Product Disparagement Claim”
On Tuesday, in deciding J.P. Morgan Securities, Inc., et al. v. Vigilant Insurance Company, et al., the New York Court of Appeals handed down a victory for policyholders seeking insurance coverage for liabilities arising from Securities & Exchange Commission (SEC) claims, particularly broker-dealers and clearing firms. Frequently, the SEC resolves such claims by way of a consent order (e.g., an “Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions”), which requires a policyholder to pay certain amounts as “disgorgement.” Insurers typically refuse to cover disgorgement remedies, contending that public policy prohibits insurance recovery for the return of so-called “ill-gotten gains.”
But not all “disgorgement” is created equal. In J.P. Morgan, the Court of Appeals clarified that mere labels used in an SEC consent order will not determine a policyholder’s rights under an insurance policy. Using the court’s analysis, the insurer must examine the nature of the disgorgement payment to determine whether it represents revenue that the policyholder pocketed or improper profits acquired by third parties. If the disgorged monies are not the policyholder’s own revenue, then the company will not be unjustly enriched by recouping insurance proceeds and may obtain coverage for its loss. This is particularly good news for financial companies with potential liability to the SEC for allegedly ill-gotten profits that ultimately end up in third parties’ pockets, such as hedge fund customers. Continue reading “New York’s Highest Court Clarifies That “Disgorgement” Losses May Be Insurable”