Executive Liability Solutions Employment Practices Claims Examples
Claimant, a commission-only salesperson, was terminated when he refused to agree to certain contract changes; he then agreed to the changes and returned to work. However, according to the insured he consistently found ways to improperly inflate his compensation, and after years of trying to get him to play by the rules, the insured’s CEO finally “got sick of him” and terminated him again about two years later. Claimant subsequently brought a lawsuit alleging various claims including whistleblower retaliation, wrongful termination, breach of contract, and defamation, and related claims. Settlement efforts were consistently rejected by claimant, and the case was taken to trial where the insured prevailed. Claimant appealed, and the appellate court ordered a new trial on the whistleblower claim, while allowing the rest of the judgment in the insured’s favor to stand. Plaintiff appealed again to the state supreme court, which affirmed the lower appellate court’s ruling. Shortly before the new trial was set to begin, plaintiff essentially abandoned the case, walking away from his claims. By that time, over $2.2 million in defense expenses had been paid to the insured’s selected defense counsel.
A class action lawsuit was filed against a local restaurant on behalf of the store’s assistant managers. The lawsuit alleged that the restaurant misclassified the assistant managers as exempt under federal and state labor laws and did not pay them properly for overtime hours. The assistant managers claimed they often worked more than 50 hours per week. They said even though their title contained the word “manager,” the majority of the work did not include management duties. The assistant managers stated they should have been classified as non-exempt and entitled to overtime. The court agreed and the local restaurant had to pay more than $500,000 to settle the case. Defense costs totaled $80,000.
Two servers at the insured’s well-known, fine-dining restaurant sent demand letters to the insured alleging that one of the insured’s sous chefs engaged in severe harassment, discrimination and retaliation, and created a hostile work environment on the basis of gender, sexual orientation, and religion. Subsequent pre-litigation investigation revealed that this sous chef had been counseled previously for his objectionable behavior, and sent to sensitivity and anger management training, but his behavior had not stopped, creating liability exposure for the restaurant. In light of the significant exposure and in order to avoid adverse publicity, additional potential claims, and significant legal fees (both plaintiff and defense), a pre-suit mediation was arranged where the two matters were settled for a total of $580,000. Minimal defense expenses were incurred due to the early resolution.
The insured, a popular restaurant in San Francisco, was sued by an individual from Arizona who claimed that he was legally blind and that the insured’s website was did not meet ADA standards for accessibility for the visually impaired. Coverage for the insured’s defense expenses was available under their policy, and defense counsel with expertise in this area was retained at competitive panel rates, who assisted the insured in determining that certain modifications to the website were necessary in order to bring it into ADA compliance. Defense counsel also assisted in negotiating a favorable settlement with the plaintiff. The matter was quickly resolved within the insured’s deductible, and without the need for any significant litigation. Note that such lawsuits have skyrocketed in the past year. One recent study reports a 181% increase in such lawsuits in 2018 over 2017.
Nonprofit Employment Practices Liability Claims Examples
An EEOC charge was brought against an insured dedicated to bringing justice to underprivileged people in need of legal aid via the use of technology. The claimant was a former temporary employee whom alleged age discrimination and retaliation arising from the insured’s failure to offer her a permanent position. While the insured denied the allegations, the parties agreed to participate in the EEOC’s early mediation program. After taking time and cost factors into account, the case settled for $42,000 before significant defense expenses were incurred.
A museum and its board chair were sued by the insured’s former executive director, who alleged disability discrimination, failure to accommodate, intentional infliction of emotional distress, constructive discharge, and other related claims. The plaintiff’s inflammatory allegations included he had a heart attack at work due to stressful and dangerous working conditions which the insured refused to remedy. The insured denied the allegations and the court dismissed some of the claims. A settlement was reached on the remaining claims. The insurer paid both the $28,000 defense expense and the $145,000 settlement.
A social service agency, which serves as a clearinghouse for a broad range of volunteer opportunities, was sued by a former employee for wrongful termination. During her employment, the plaintiff suffered a mental breakdown and was involuntarily committed following a diagnosis of bi-polar disorder. She was unable to provide the necessary medical clearances needed to return to work, and after significant dialogue her employment was eventually terminated. The claimant alleged that she was illegally terminated because of her actual or perceived disability. Prior to a suit being filed, the parties agreed to an informal investigation and evaluation process, culminating in a pre-suit mediation. At mediation a settlement was reached in the amount of $125,000, and defense expenses of $32,000 were also paid.
A principal of an insured charter school was dismissed after an inadequate response to the inappropriate restraint of a student by a teacher. He also had a history of complaints of misconduct by his female colleagues, which were supported by the Vice Principal. After conducting an investigation, the school’s Board of Directors called for a Vote of No Confidence in response and he was terminated. The former principal sued, alleging defamation and wrongful termination. Case settled via informal negotiations for $60,000 and approximately $15,000 was incurred on defense expenses.
An insured nonprofit organization sponsored a 2-day educational event and a social gathering the night before the start of the event. A guest alleged that she was groped and verbally harassed at the social gathering by a vendor of the insured. The guest reported the incident the following morning and investigation was immediately launched. The vendor was asked to leave the event. The guest later hired a nationally-known attorney who specializes in aggressively representing women and people of color in harassment and discrimination claims. The guest and her attorney allege that the insured is responsible for the conduct of its vendor, and have made a pre-suit settlement demand in the amount of $1 million. The matter remains pending; should suit be filed it is anticipated that legal fees to defend the case will exceed $100,000.
Nonprofit Directors & Officers Claims Examples
A former caretaker of a small historical society museum sued to recover hundreds of artifacts he claimed were originally his and that he simply lent to the organization. Plaintiff lived on the museum grounds for 15 years, and was dismissed when the board allegedly discovered significant acts of misconduct; the dispute was highly personal and contentious. Many of the listed items either did not exist, or the museum also claimed ownership, stating they were never his in the first place; the non-disputed artifacts were returned near the beginning of the case. Although no indemnity coverage was available for this matter, which mainly involved injunctive relief, defense expenses paid exceeded over $80,000.
An insured golf club was accused of gender discrimination. The spouse of a former club member claimed that the club’s former “men only” policy regarding weekend golf tee times was discriminatory against women. While the country club did have a new policy already implemented prioritizing members vs non-members, rather than gender, the claimant claimed the old policy still had a discriminatory impact because it resulted in the overall membership being approximately 90% male. Although on the surface this claim appeared to be defensible, the negative publicity surrounding the former policy presented a difficult litigation environment. After taking this into account a settlement was achieved in the amount of $40,000; approximately $410,000 in defense costs were also paid.
A religious organization was sued for breach of contract and unjust enrichment. The claimant allegedly donated $300,000 for the construction of a new place of worship on land the organization already owned. The claimant stated that the insured decided against building and used the funds for another purpose. In actuality, the insured was facing an unfriendly and unyielding city who continuously put up roadblocks, causing delays and extra costs, and for this reason the construction plans were abandoned. Ultimately a settlement was reached wherein the donated funds were returned; $445,000 was paid in defense costs for this highly contentious dispute.
Insured is a private club. Claimant, the spouse of a member, started a social media campaign claiming that certain of the insured’s policies were discriminatory against women. She also took out a radio ad to air her allegations, and the story was picked up by local print media. The dispute escalated when the couple was expelled from the club for conduct which was detrimental to the club and the other members. Claimant filed suit, alleging defamation, discrimination, retaliation, and fraud. The matter ultimately settled for $50,000; defense costs of $17,000 were paid as well.
Lawyers Professional Liability Claims Examples
The insured failed to timely file an action arising from a motor vehicle accident, resulting in the loss of the bodily injury claim. The insured was sued for malpractice. The case went to trial and the jury came back with a verdict for the plaintiff. A portion of the multi-million dollar damages award was appealed to the state supreme court who ultimately reduced the award by over $3 million. Defense costs in excess of $1 million were paid to see the matter to resolution.
A longstanding client of the insured firm sought legal counsel in a business dispute over an agricultural interest. The representation occurred over a number of years, until the client terminated the insured due to undisclosed conflicts of interests. Specifically, the insured attorney did not disclose that he had an ownership interest in three of the opposing party’s businesses. The client sued the insured firm alleging breach of fiduciary duty and legal malpractice and seeking in excess of $30 million in damages. A settlement was eventually negotiated in excess of $1 million but significantly less than the claimed damages. More than $600,000 in defense costs were incurred.
The insured attorney prepared a sale contract for a commercial property being sold by his client, the seller. The contract contained a vague provision about discounts to the sale price for rents received. The buyer argued that the provision reduced the price of the property by more than $1 million. The interpretation of that fifteen-word provision was litigated up to the state supreme court. Defense costs and indemnity payments exceeded $800,000.
An insured firm was retained by an insurance carrier to represent a contractor in a building defect case. The insured’s representation got off to a rocky start when the client representative appeared for his deposition slurring his speech and smelling of alcohol. The client difficulties continued from there. As the case was nearing resolution, the client (without the insured’s counsel) wrote a letter to opposing counsel admitting fault for the defect in question. The carrier instructed the insured to withdraw from representation and the insured complied. The insured followed the proper procedure to withdraw and the court granted its motion to withdraw. That did not stop the client from filing suit against the insured alleging that the insured’s withdrawal was improper. The insured’s defense counsel prepared a letter to the plaintiff detailing why the malpractice claim was meritless, and the suit was subsequently dismissed.
Accountants Professional Liability Claims Examples
Insured CPA was retained to prepare tax returns for an individual client and an entity owned by that client. The insured did not have all the information necessary to complete the returns, so they sought and received an extension to file. When the new filing deadline arrived, the insured still did not have the information necessary to complete the returns. Rather than filing estimated returns for the client at that time, the insured waited several months until they were provided the necessary information. The IRS imposed a penalty against the client who then made a claim against the insured for the amount of the penalty plus attorney fees expended by the client to get the penalties abated. The defense and indemnity costs exceeded $250,000.
Insured CPA firm was retained to perform bookkeeping services and prepare tax returns for a client. One of the insured’s employees also worked part time as a bookkeeper for this client. In that capacity, she was given access to the client’s credit cards, bank accounts and checking accounts with little to no supervision. The employee ultimately embezzled over $1 million from the client over the course of several years. The client made a claim against the insured related to the employee’s theft for, amongst other things, negligent hiring, negligent supervision, professional negligence and breach of contract. The Plaintiff demanded over $1 million from the insured, but the matter resolved for under $300,000.
Insured accountant had a UK client who earned income in the US. The insured prepared the client’s U.S. tax returns from 2003 to 2015. In 2016, the client’s UK returns were audited, and the UK accounting firm the claimant retained to assist took the position that there were errors with some of the U.S. returns. The alleged errors included reporting income that was exempt, failing to report income that should have been reported, and failing to treat certain income as foreign sourced. The claimed damages were loss of U.S. tax refund for certain tax years, fees paid to the other firm to correct the alleged errors, interest and disgorgement of fees. The matter was settled without litigation.
Insured accountant prepared a new business entity client’s 2016 income tax returns, but allegedly failed to file documents with the state that would have qualified the entity for exemptions to the state’s franchise and excise tax. Because the entity had a loss in 2016, the client did not notice the issue. The following year, the client retained a different accounting firm, who asked the client for information in order to file a renewal exemption, and discovered that the exemption application had not been filed. The failure to qualify for the exemptions in that year resulted in the client paying a state tax of approximately $350,000, and demanding reimbursement from the insured. The matter was settled, and combined defense and indemnity costs came to $250,000.
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