So I’ve decided a Linkedin post is a good way to be yet another blogger- before I move this over to my soon to be launched website at www.fishercg.com… So lets see what is newsworthy today:
D&O Insurers and exec’s beware, Pepper-Hamilton is reporting that “new Attorney General Loretta Lynch (has issued e.d fjf) … a memorandum to federal prosecutors and investigators dated September 9, 2015 (the Yates Memo), Deputy Attorney General Sally Quillian Yates has made clear that the DOJ now intends to focus on targeting individuals who are responsible for corporate wrongdoing and will force corporations themselves to identify culpable individuals in order to obtain “any” credit for cooperation. The DOJ’s policy announcement follows the SEC’s recently announced focus on pursuing corporate officers and directors” .
Even more interesting is a post from Cooley, LLP headlining “Do Stock Options Affect Consumer Safety” ? D&O Insurers beware indeed!
That’s an interesting thought ! OS far many deaths have occurred from known defective Ignition Switches, Pharmacy Compounders, not to mention illnesses over time from Formaldehyde, asbestos , Cola Ash pollution and the like. The Cooley folks note that “Yes, according to a new study, “Throwing Caution to the Wind: The Effect of C.E.O. Stock Option Pay on the Incidence of Product Safety Problems,” from the University of Notre Dame, as reported in this NYT column by Gretchen Morgenson. The study showed a correlation between a high proportion of stock options relative to total CEO pay and the incidence of serious product recalls.
The reason for this result, so the argument goes, is that stock options fuel excessive risk-taking behavior among executives: according to the study authors, their “‘results are consistent with prior research showing that option-heavy pay arrangements engender aggressive risk-taking by CEOs, who stand to benefit greatly from future increases in share prices but lose nothing if share prices fall.’ The researchers theorized that higher levels of stock option pay would cause CEOs to favor aggressiveness over thoroughness in their decisions, a consequence of which would be a higher likelihood of mistakes in the design, production and distribution of products. [According to one of the study authors, this] isn’t to say that CEO options are always the culprit when product recalls occur, but our findings suggest that recalls can potentially be an unintended consequence of using options to motivate risk-taking in CEOs….’”
The study examined the pay packages of 386 chief executives at companies with sales and assets of at least $10 million in two regulated industries over the period from 2004 through 2011
More on D&O, Locke, Lord, LLP notes “Allocation Of Covered And Uncovered Claims: Recent Decisions On Burden Shifting And Pre-Approval Requirements”.
These fine folks noted : “Ongoing efforts by insurers to recover amounts paid for uninsured losses after settlement or judgment have resulted in extensive litigation over allocation issues. Conflicting opinions have arisen over which party bears the burden of establishing which portion of a settlement or judgment is attributable to covered vs. uncovered losses.
The majority view finds the burden of proof lies with the policyholder to allocate between covered and uncovered claims.1 However, courts will consider the facts and circumstances of each case to determine whether the burden should be shifted to the insurer.2 Of particular importance is whether one party controls the pertinent information and litigation and/or is in a superior position to know about looming allocation issues.3 Recent decisions have considered these factors in determining the burden holder: (i) whether the right to allocate was set forth in a reservation of rights letter;4 (ii) whether the policyholder was provided notice in writing of the need to allocate any potential settlement or judgment; (iii) whether the policyholder was advised of any potential divergent interests; (iv) whether the policyholder had knowledge of the import of allocating any potential settlement or the need to request a special verdict form that provides for allocation; (v) whether the insurer was actively involved in the settlement process; or (vi) whether the insurer took pro-active steps for the use of a special verdict form at trial.”
And if this isn’t enough on D&O this fine day, Foley & Lardner LLP reports that there is more to worry about for D&O AND GL providers:
“Business is booming for plaintiffs’ attorneys wielding the Telephone Consumer Protection Act (TCPA). The TCPA restricts unsolicited telemarketing by fax, voice calls and text messages. Violations can trigger liability of at least $500 for each fax, text or call. The prospect of lucrative recoveries has proven to be attractive, with the volume of TCPA class actions steadily rising for almost a decade. Settlements often run in the millions or multi-millions of dollars. In fact, plaintiffs’ attorneys have broken recordsfor TCPA settlements the past two years in a row (securing settlements of $32 million from Bank of America in 2013, and a staggering $75.5 million from Capital One and three debt collectors in 2014).
TCPA class action lawsuits pose a substantial risk to just about any business with a marketing budget. Many businesses have sought insurance coverage for TCPA claims under their commercial general liability (CGL) policies, but have met with only mixed success. While some courts have found coverage for TCPA claims under CGL policies, CGL insurers have increasingly added explicit TCPA exclusions to their policies, cutting off that source of coverage.
Some TCPA defendants have turned to their Directors and Officers (D&O) policies in an effort to find coverage. D&O policies cover officers, directors and often the corporation itself for “wrongful acts,” subject to various coverage exclusions.”
Does that peak some interest ?
On an EPLI note– seems some States are wising up to ”Economic Slavery” where Non-competes may be concerned : one Employee attorney noting that :
“11th Circuit Rules Courts Must Consider Hardship to Employee in Deciding on Florida Non-compete Injunction”
How this turns out will be of interest to EPLI providers:
“Florida’s non-compete statute is, no doubt, harsh on employees and extremely favorable to employers. However, the 11th Circuit Court of Appeals just made it a bit less harsh.
The Court ruled that, although Florida law bans the courts from considering hardship on the employee in determining whether or not to enforce a non-compete agreement, Courts must balance the hardships between employer and employee in determining whether injunction is an appropriate remedy. An injunction is, in the case of non-compete agreements, basically an order that you must stop working for your new employer, stop contacting customers of the former employer, or otherwise directing you to cut it out, whatever it thinks you’re doing wrong.
The reason this is important is because most employees are facing an army of lawyers and a former employer with a substantial amount of dollars to use against them, and once the judge orders them out of a job they are fighting with no ability to pay a lawyer. It’s a loss due to lack of money rather than due to lack of legal defenses.
This ruling means that a Court should balance the financial hardship on the employee in determining whether to yank their job away. The alternative remedy to the employer would be to prove money damages, and most employers can’t prove that the former employee working for a competitor cost them a dime. That’s because non-competes are being used as weapons to suppress wages and prevent competition more often than for any legitimate interest. …
Yes – Bad Facts make bad law for sure!
See more at (http://employeeatty.blogspot.com/2015/09/11th-circuit-rules-courts-must-consider.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ScrewYouGuysImGoingHome+%28Screw+You+Guys%2C+I%27m+Going+Home%29
Finally-another EPLI mess here something special just for you Underwriting masochists :
Anthony Oncidi of the Proskaur firm favors us with a mid-year summary of the frolic going on in an article titled :
California Employment Law Notes – September 2015
There is way to much to cite here, os if have the time- check it out at :
We will see you soon !