Transcript Director & Officers Liability Issues, Trends and Loss Control

Director & Officers Liability
Issues, Trends and Loss Control
Types of Claims Typically Filed Against D&O’s
 Wrongful Termination
 “At will” provision may eliminate these claims.
 Sexual Harassment and Discrimination (age, sex, race, disability, etc.)
 Civil Rights Violation
 Retaliatory Acts – such as a transfer to a physically arduous, less
desirable job or a 37 day suspension without pay
 Breach of Contract (employment or other)
 Breach of Fiduciary Duty
Actual Claims Filed Against Golf Clubs
Alleged discrimination arising out of men’s grills/lounges.
Less Golf Time for women due to course dedicated to men’s
tournaments.
Defamation or alleged lack of due process arising out of
disciplinary actions taken against members when they
overindulge and misbehave at club parties.
Alleged harassment of employees of the club when they are
working club functions where members may be inclined to take
inappropriate social liberties.
General employment practice claims filed by employees.
Golf Club Claims, Continued
 Many of the claims are linked to the food/beverage service aspect
of club, such as bus boys, waiters/waitresses and bartenders.
 The backgrounds/education levels of the employees are
sometimes very diverse.
 The work environments typically range from high stress to an
almost social atmosphere. The former can lead to flaring tempers
and impromptu reprimands. The latter to sometimes off-color
humor or sexual overtones.
 Because the employees generally work in close physical
proximity to one another, there are often many witnesses to the
alleged EPL acts, which can be good or bad.
 Claims made against the board involving membership issues,
such as disgruntled parties who were refused membership; club
members who disapprove of the board letting in too many
members, the wrong kind of members, etc. Damages are often
difficult to assess in such situations.
Why are D&O’s Sued?
 The accused is a Director or Officer
 Officer is the supervisor of the claimant
 Officer is the supervisor of the accused
 Officer is the decision maker in the dispute
 Inaction on the part of the Director/Officer
 Director/Officer developed the employment
practice /company procedure
 Director/Officer approved the employment
practice/company procedure
The Complaint
Historically vs. Today
 Plaintiff sues employer
 Plaintiff sues employer
 for Wrongful Termination
 and D’s and O’s
 for Breach of Contract
 and supervisors/mgrs.
 for Civil Rights violation
 and co-employees
• for multiple wrongful
acts based on federal
statute and state law
2004
Bases Alleged in EEOC Suits Filed
 Sex Discrimination
185
52.4%
 Retaliation
144
37.9%
 Race
58
15.3%
 Disability
45
11.8%
 Age
45
11.8%
 National Origin
37
9.7%
 Religion
16
4.2%
 Equal Pay
5
1.3%
*Source: EEOC Accomplishments Report for Fiscal Year 2004 (www.eeoc.gov)
2004 EEOC Resolutions By Statute
 Title VII

264 Counts
Civil Rights Act – passed 1964
 ADA

38 Counts
10.9%
American with Disabilities Act – passed 1990
 ADEA

76.1%
28 Counts
8.1%
Age Discrimination Employment Act – passed 1967
 *Concurrent
*under
17 Counts
more than one statute
4.9%
2004 Monetary Relief By Statute
 Title VII
$157.9 Million
93.9%
 ADA
$ 5.4 Million
3.2%
 ADEA
$ 2.5 Million
8.1%
 *Concurrent
$ 2.3 Million
1.4%
under more than one statute
*
In 2004, the Office of General Counsel resolved a total of 347 merit lawsuits,
Yielding $168,098,895 in monetary relief.
The Claims Process
 Review of facts and/or Complaint
 Review of Policy and/or coverage issues
 Correspondence/investigation
 Assignment of Counsel
 Response to plaintiff attorney/investigative agency
 Evaluation and mediation process
Potential Litigants
Plaintiffs
Defendants
Job Applicants
Interviewers
Current/Former Employees
Human Resources
Terminating Employees
Supervisors & Managers
Customers
Board of Directors
Co-workers
Independent contractors
Common Allegations
Discrimination
Failure to Promote/Hire
 National Origin
 Hostile Work Environment
 Race
 Harassment
 Religion
 Breach of Implied Contract
 Sex
 Negligent Hiring or
Supervision
 Sexual Preference
 Age
Damages: What the Claimants Want
 Back Pay
 Front Pay
 Lost benefits and seniority
 Compensatory damages
 Punitive damages
 Attorneys fees and costs
Assessing Case Value
 Damning internal investigation or faculty committee findings
 Other complaints against same accused
 Multiple claimants or corroborating witnesses
 About the claimant
 Hign earner/Professional?
 Demeanor/Credibility?
 Still Employed?
 Sympathetic?
 Contract Employee?
 Length of employment
Assessing Case Value Con’t...
 Prior pattern of same conduct
 Documented evaluations
 Publicized Policy against discrimination, harassment, etc.
 Internal complaint procedures
 Written employment contracts
 Loss or partial loss of motion for summary judgement
 Wake up call when you are dead set on defending
 Reputation of the judge, and reputation and experience of claimant’s counsel
 Claimant’s counsel has a lot of time/$ on the case
 Attorney fees are recoverable
Assessing Case Value Con’t...
 Mediator’s recommendation significantly exceeds current
thinking on case value
 Defense counsel is telling you to settle
 Agency finding of probable cause (or EEOC “A” or “B” charge
rating)
 Rating the alleged behavior
 Sexual contact or just verbal
 Frequency? - one time occurrence or repeated offenses
 Related crime matter
Profile of a “Bad” Claim
(Features of a Potentially Costly Suit)
 Egregious or Outrageous Behavior
 Professional Level Plaintiff
 Class Action or Potential Class Action
 History of Repeated and Reported Incidents
 Lack of Published Policy & Procedure
 Inadequate or no civil management training
 Ignored policy or procedure
 Plaintiff in protected class
 Multiple Allegations, Plaintiffs, Defendants
 Poor, if any, documentation
Prevention of Employment Liability Losses
 Establish & implement
 management training
 employee awareness
 manuals
 interview procedures
 complaint procedures
Controlling Employment Litigation
 Oversee internal complaints through resolution
 Retain decision-making in litigation
 Remain sensitive to rights of accused
 Establish committees for special tasks (i.e.. Downsizing)
 Offset Losses (ie. Insurance )
Recommendations for Employment Law
Training
 Sexual Harassment
 Types of harassment ( hostile environment and quid pro quo)
 How to respond to formal and informal complaints of
harassment, including the role of the supervisor and manager
 Maintaining appropriate confidentiality
 Non-retaliation
Employment Training (Con’t)
 Equal Employment Opportunity
 Define & describe protected classes ( disability, age, race, etc.)
 EEO issues in hiring and interviewing
 Non-discriminatory discipline & discharge
 Selection for training & other job benefits
 Reasonable accommodation issues
Employment Training (Con’t)
 Wrongful Discharge & Wrongful
Demotion
 At will employment
 Types of claims including breach of contract,
public policy, negligent hiring & supervision
 Performance evaluations
 Discipline & discharge
 Training & other job benefits
 Documentation of performance issues
Interplay Between the ADA, FMLA and
Worker’s Compensation
 Must understand:
 Who is protected individual under the ADA & FMLA
 When you can make medical inquires or request medical examinations
and how this relates to worker’s compensation claims
 When you have a duty to make a reasonable accommodation for a person
with a disability related to occupational injuries
 When you have a duty to grant leave under the ADA
 Job modification or reassignment and leaves of absence
Activities, which if mishandled by management,
often lead to liability
 Ill-considered e-mail messages
 Failure to document misconduct and performance problems
 Inappropriate complimentary evaluations
 Failure to follow company policies and procedures
 Talking with others about why an employee was discharged.
Activities, which if mishandled by
management, often lead to liability
 Failure to communicate problems to Human Resources Dept.
 Uncontrolled letters of reference
 Failure to treat like cases alike
 Showing favoritism
 Failure to obtain advice when a situation arises that is not covered
by company policy
QUESTIONS?
Non-Profit Director & Officers
Liability Overview
PARTS OF A D & O POLICY
 Definitions
 Insuring Agreement
 Conditions
 Exclusions
POLICY DECLARATIONS PAGE
 Named Insured
 Policy Period
 Limit Of Liability
 Retention
 Premium
 Retro Active Date
 Endorsements
WHAT’S A GOOD RISK ?
 Good Loss History
 Good Employment Procedures
 Low Turnover Rate
 Diverse Sources of Revenue
 Positive Fund Balance
 In Operation 3+ Years
 Steady Revenue
 Nature of Operation / Type of Services Provided
 Experience of Directors and Officers
MERIT SUITS FILED 1995 TO 2004
MERIT SUITS RESOLVED
Monetary Relief – 1995 through 2004
Golf and Country Club
Coverage
DEFINITION OF GOLF COURSE
 Golf Course meaning tees, cut fairways, greens, practice driving ranges,
bunkers, cut and maintained roughs and other cut and maintained
playing surfaces.
 Golf Course means a tract of land containing at least 9, but not more than
18, separate holes of golf.
 Greens, tees, fairways, and rough means: the outdoor grounds at the
described locations that are specifically designed and maintained for the
game of golf.
 Golf Course means tees, fairways, putting surfaces, practice driving
ranges and other playing surfaces used to play golf.
 Golf Course means greens, rough areas, sand bunkers, fairways, tee
boxes, out of bounds areas, driving ranges.
 Lawns coverage – greens, tees and cut fairways.
GOLF COURSE LIMITS
 $1,000,000
 $2,000,000
 $100,000
 $50,000 Each Green, $250,000 Occurrence, $500,000 Annual
Aggregate
 $250,000
 $50,000
 Limit shown in the Declarations page
GOLF COURSE - TREES, SHRUBS & PLANTS
 $50,000 Any one tree, shrub or plant
 $25,000 occurrence/$2,500 per tree, shrub or plant
 $75,000 occurrence/$2,500 per tree, shrub or plant
 $100,000 Aggregate per occurrence/up to $3,000 per tree
 $500,000 Annual Aggregate/$250,000 per occurrence/$25,000
each tree, shrub or plant/$50,000 each green
 $10,000 per occurrence
 $1,000 each tree, shrub or plant
 $50,000 any one occurrence
GOLF COURSE - DEBRIS REMOVAL
COVERAGE
 $250,000 Annual Aggregate
 $150,000 Tree Removal Sublimit
 $50,000
 $50,000 Any one occurrence
 $250,000 Any one occurrence
 $25,000
 $10,000
Golf Course – Covered Perils
 Fire, Smoke
 Lightning
 Smoke
 Explosion
 Riot or Civil Commotion
 Aircraft, Vehicles
 V&MM
 Wind/Hail if covered in the Property
 Collapse, Sinkhole collapse, Volcanic Action
 Ice
Country Club
Property Coverage
Form
Coverage
Extensions
Most Golf
Programs
Enhancement
Endorsements
Accounts Receivable
$50,000
Arson Reward
$5,000
Automated External
Defibrillators
Not Provided
Back-up of Sewers
and Drains
$25,000
Brand and Label
$2,500
Building Alterations
$100,000
Building Glass
Included
Business Income and
Extra Expense
$25,000
Your Carrier
Coverage
Extensions
Most Golf Programs
Business Personal
Property
Within 1000 Feet
Claims Expenses
$25,000
Club Professional
Replacement
Expenses
Not Covered
Communication
Towers, Antennas or
Satellite Dishes,
including their Leadin Wiring, Masts and
Guy Wires
Not Covered
Computer Upgrade
Not Covered
Computer Virus
Extraction Expense
Not Covered
Consequential
Damage to covered
Not Covered
Your Carrier
Coverage
Extensions
Most Golf Programs
Contract Penalty
Clause
$25,000
Electronic Data
Processing
Equipment and
Media
$50,000
Emergency Real
Estate Consulting
Fee
Not Covered
Emergency Vacating
Expense
Not Covered
Employee
Dishonesty
Available
EQSL
Not Covered
Errant Golf Ball
Property Damage
Not Covered
Your Carrier
Coverage
Extensions
Most Golf Programs
Expediting Expenses
Not Covered
Fines for False
Alarms
Not Covered
Fine Arts
$25,000
Fire Department
Service Charge – No
Deductible
$10,000 (Emergency
Service Charge
Fire Protection
System – Recharge
or Refill
$2,000 to $5,000
Fire Protective
Devices
Furs
Garages / Storage
$10,000
$2,500 to $5,000
Not Provided
Your Carrier
Coverage
Extensions
Hole-in-One
Reimbursement
Expense
Most Golf Programs
$250 Occurrence /
$2,000 Aggregate
Identity Theft
Expense
Not Provided
Inventory or
Appraisal
$25,000
Kidnap / Ransom
Not Provided
Lease Cancellation
Moving Expenses
Not Provided
Lost Key / Lock
Replacement
$5,000
Machinery and
Equipment
Not Provided
Your Carrier
Coverage
Extensions
Most Golf Programs
Newly Acquired
Business Personal
Property
$1,000,000 / 180
Days
Newly Acquired or
Constructed
Buildings
$2,000,000 / 180
Days
Off Premises Utility
Failure
$50,000 Utility
Services
Ordinance or Law
$250,000
Outdoor Property /
Debris Removal
Coverages
$50,000
Outdoor Trees,
Shrubs and Plants
$25,000 / $2,500 per
Tree
Your Carrier
Coverage
Extensions
Pairs, Sets or Parts
Personal Effects
Personal Effects –
Spouses
Personal Property of
Members and
Guests in your CCC
Most Golf Programs
Not Stated
$25,000
Not Covered
$5,000 per person /
$50,000 per
occurrence
Property of Others
$10,000
Pollutant Clean Up
and Removal (each
separate 12 month
period)
$25,000
Power Interruption
Available
Your Carrier
Coverage
Extensions
Most Golf Programs
Precious Metals
$5,000
Preservation of
Property
$25,000
Property in Transit,
on Exhibition or in
Custody of
Salespersons
$25,000
Property Off
Premises
$25,000
Reward
Reimbursement
$5,000
Spoilage
$25,000
Temporary Meeting
Space
Not Covered
Your Carrier
Coverage
Extensions
Most Golf Programs
Theft of Dataline
Services
$5,000
Theft of Fur
Garments
$5,000
Theft of Jewelry
$5,000
Theft of Precious
Metals
$5,000
Valuable Papers and
Records – Cost of
Research
$50,000
Worldwide Coverage
– Limited to Certain
Areas for Property
Not Included
Workplace Violence
Not Included
Your Carrier
HOW TO ANALYZE GOLF COURSE
COVERAGE
Golf Course Coverage can be confusing
 Have your agent complete the comparison sheet
 Check the definition of Golf Course
 Check the limit of insurance for the Golf Course
 Check the limit of insurance for Trees, Shrubs & Plants
 Check the limit of insurance for Debris Removal
 Check to see if there is a limit per golf hole
 Check the covered perils for the Golf Course
 Are the limits “per occurrence”, “Aggregate per loss”, “Annual
Aggregate”
QUESTIONS?