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For businesses, board members, and executives facing the very real possibility of securities law and other business-related claims, Directors & Officers (D&O) liability policies are an important element of their coverage package. Securities law and other D&O claims are continuing to increase in both size and amount. Securities class actions in particular can impose tremendous costs on corporations and their directors and officers.
Persons who serve as a fiduciaries of employee benefit plans also may face claims by plan beneficiaries or regulators, making fiduciary liability policies another important source of protection. Shareholder class actions that follow in the wake of stock price declines frequently are accompanied by ERISA class-actions by employees whose retirement plans were heavily invested in company stock.
Many businesses also purchase Errors & Omissions (E&O) policies to cover liability risks associated with professional and other services provided to third parties.
Through counseling, negotiation, and litigation, Covington lawyers have developed substantial experience in the forms and wording of these policies and the issues that commonly arise thereunder.
Representative Matters
- Representation of Adelphia Communications in litigation over D&O coverage and rescission claims.
- Representation of Merck & Co., Inc. in connection with claims for D&O coverage for shareholder lawsuits related to Vioxx.
- Representation of Fortune 500 company in litigation over coverage under a media errors and omissions liability policy for unfair business practices and false advertising claims.
- Representation of Morgan Stanley in a New York lawsuit filed by Lloyd's disputing coverage under a financial institutions professional liability insurance policy.
- Representation of Owens Corning in litigation with its D&O carrier, in which we obtained an appellate decision affirming a favorable judgment and fee-shifting award. Owens Corning v. National Union Fire Ins. Co., 257 F.3d 484 (6th Cir. 2001).
- We regularly advise clients in the D&O renewal process, alerting them to key distinctions between policies offered by different insurers and how the D&O program interacts with their other liability coverages.
- We also help clients at the claim stage by advising, negotiating and, if necessary, litigating over such questions as advancement of defense costs, whether and how defense costs may be allocated between covered and uncovered claims or parties, cooperation clause issues, the applicability of policy exclusions, and bad faith.
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