Employment Practices Liabilities

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The U.S. Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization and its progeny have sparked confusion and uncertainty for individuals, medical providers, and employers with respect to the consequences of providing, seeking, or facilitating abortion care. Moreover, for both medical providers and employers, questions arose as to whether and how liability insurance might help alleviate these risks.

Now that a year has passed since the Dobbs decision, it is worth revisiting the liability landscape, as well as the question of how insurance coverage might play a role in providing relief with respect to the ongoing risk of litigation.

Background

The Dobbs decision, which held that access to abortion care is no longer a constitutionally protected right, raised a host of questions as to whether medical providers and employers might face civil or criminal liability for facilitating access to abortions, particularly in states that responded by enacting a panoply of restrictions in response to Dobbs. This uncertainty was heightened by inevitable litigation concerning the viability of the new statutes and has led to widespread confusion in many states. This confusion has been exacerbated by the Centers for Medicare & Medicaid Services (“CMS”), which initiated investigations into hospitals in Missouri and Kansas, asserting that they were in violation of the law by failing to offer necessary, life-saving abortion services.Continue Reading One year after Dobbs: Are medical providers and employers still at risk for lawsuits stemming from abortion access, and should they consider the role of liability coverage?

The landscape of biometric privacy litigation already has changed dramatically in 2023. Last month, the Illinois Supreme Court ruled in Tims v. Black Horse Carriers, Inc., 2023 IL 127801, that claims for violations of the Illinois Biometric Information Privacy Act (BIPA) (which allows individuals to sue companies directly for the wrongful collection or disclosure of their biometric data) are subject to a five-year statute of limitations. Later that month, in Cothron v. White Castle System, Inc., 2023 IL 128004, the court ruled that a BIPA violation accrues each time an individual’s data is improperly collected or shared, not merely the first time. Taken together, these rulings significantly broaden the scope of claims facing companies that have violated BIPA and the damages flowing from such violations.

In recognition of the dystopian risks presented by the rampant, unlawful sharing of biometric data, several more states are jumping on Illinois’ bandwagon, attempting to pass BIPA-like laws. According to Bloomberg, legislation proposed in nine other states also would grant a private right of action to individuals whose biometric data was wrongly collected or shared.

Despite the growing threat of civil litigation related to the mishandling of biometric data, there is a silver lining for corporate policyholders: the opportunity to obtain insurance coverage for biometric privacy liability has never been greater.Continue Reading Key considerations for policyholders after landmark biometric privacy decisions reshape insurance landscape

Although the policyholder bar has previously had success obtaining coverage for Biometric Information Privacy Act (BIPA) litigation under an employment practices liability (EPL) policy, insurers recently notched a win by convincing a court to deny EPL coverage for an employee-based BIPA class action.  In Church Mutual Insurance Company v. Prairie Village Supportive Living, LLC, the insured’s former employee brought a class action alleging the insured unlawfully collected, used, and disseminated employee biometric identifiers (fingerprints) in violation of BIPA, and the insured sought coverage from its insurer under its general liability (GL) and EPL policies.  No. 21 C 3752, 2022 U.S. Dist. LEXIS 143495 (N.D. Ill. Aug. 11, 2022).  Based on a unique combination of policy provisions not previously addressed in BIPA coverage litigation, the court declined to find coverage under either policy.  Rather than be discouraged from pursuing coverage for BIPA class actions involving employee biometrics, however, there are some important lessons policyholders can glean from this opinion.

The unique terms of the insured’s EPL policy precluded coverage under all policies

The combination of policy terms at issue in Church Mutual was quite unique and does not appear to be typical of those found in most insureds’ policies.  As an initial matter, although the insured had purchased both GL and EPL coverage, the EPL coverage form stated:  “Except for the insurance provided by this coverage form, the policy to which this coverage form is attached does not apply to any claim or ‘suit’ seeking damages arising out of any ‘wrongful employment practice.’”  Right off the bat, therefore, the insured was limited to seeking EPL coverage because it did not dispute that it was seeking coverage for a “wrongful employment practice” as defined in its EPL policy.  Any coverage that may have existed under the insured’s GL policy was irrelevant.

After limiting its analysis to whether EPL coverage existed, the court then focused on an exclusion in the EPL policy entitled “Violation of Laws Applicable to Employers.” Pursuant to that exclusion, the policy precluded coverage for, in relevant part:

“Any claim based on, attributable to, or arising out of any violation of any insured’s responsibilities or duties required by any other federal, state, or local statutes, rules, or regulations, and any rules or regulations promulgated therefor or amendments thereto. However this exclusion does not apply to: Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the Equal Pay Act, the Pregnancy Discrimination Act of 1978, the Immigration Reform and Control Act of 1986, the Family and Medical Leave Act of 1993, and the Genetic Information Nondiscrimination Act of 2008 or to any rules or regulations promulgated under any of the foregoing and amendments thereto or any similar provisions of any federal, state, or local law.”Continue Reading Court’s denial of employment liability coverage for Biometric Information Privacy Act litigation should not discourage policyholders

In West Bend Mutual Insurance Co. v. Krishna Schaumburg Tan, Inc., 2021 IL 125978, the Supreme Court of Illinois held that coverage existed for a class action alleging violations of the Illinois Biometric Information Privacy Act (BIPA) under the terms of a general liability policy. Although a win for the policyholder bar, the precedential value of Krishna was arguably limited by the fact that the underlying class action targeted the insured’s use of customer biometrics. Where the use of employee biometrics is at issue instead, policyholders are likely to face unique coverage issues left open by Krishna, such as the applicability of certain exclusions that bar coverage for injuries arising out of the employment relationship. This blog post provides a brief overview of the employment-related practices (ERP) exclusion and explains why it should not apply to preclude coverage for employment-based BIPA class actions.

Employment-related practices exclusions

The ERP exclusion is a common provision in commercial general liability policies. As it is usually drafted, the exclusion bars coverage for bodily injury or personal and advertising injury to a person arising out of any of the following:

  • Refusal to employ that person
  • Termination of that person’s employment
  • Employment-related practices, policies, acts or omissions, such as coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, or discrimination directed at that person

In coverage disputes arising out of employment-based BIPA class actions, the issue will be whether the conduct at issue is an employment-related practice that falls within the third prong of the exclusion.

Case law analyzing employment-related practices exclusions

Several courts that have analyzed the scope of the ERP exclusion have concluded that it should be interpreted narrowly. For instance, in Peterborough Oil Co. v. Great American Insurance Co., after the insured fired an employee for theft and pressed charges, the employee sued the insured for malicious prosecution and intentional infliction of emotional distress. 397 F. Supp. 2d 230, 234 (D. Mass. 2005). The insured tendered the lawsuit under its commercial general liability policy, and the insurer denied coverage in reliance on the policy’s ERP exclusion. Id. at 235. The insured filed a coverage action and argued that the exclusion did not apply. Id.Continue Reading Employment-related practices exclusions and Biometric Information Privacy Act litigation

Purchasing insurance for a cannabusiness can feel like a daunting task, but it does not have to be one.

In addition to grappling with many of the same issues and questions that any business confronts when seeking insurance, a cannabusiness encounters certain additional, unique challenges due to the industry in which it operates. That is no reason to panic, however. And, it is certainly no reason to avoid purchasing insurance.

There are a number of steps that a cannabusiness – or, really, any business – can take to maximize the likelihood that the insurance-procurement process will be smooth and successful. In particular, when purchasing insurance, a cannabusiness should consider the following 10 steps: Continue Reading Ten important steps a cannabusiness should consider when purchasing insurance