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Coverage for 'Restitution' Claims, Public Policy Notwithstanding
Insurance carriers frequently argue that when insureds face claims for “disgorgement” or “restitution,” they need not defend or indemnify under a wide-range of liability policies. Carriers argue that, at least in California, public policy bars coverage for such claims including claims alleging failure to pay employees overtime, failure to pay taxes and penalties, and, in the intellectual property area, for disgorgement of “ill-gotten gains” or payment of a defendant's profits as a measure of damages. Insurance carriers advance this argument under various policies, including commercial general liability (CGL), directors and officers (D&O), employment practices liability (EPL), and errors and omissions (E&O) policies.
The carriers' argument typically is premised on the California Supreme Court's decision in Bank of the West v. Superior Court, 2 Cal. 4th 1254, 833 P.2d 545, 10 Cal. Rptr. 2d 538 (1992). There, the court addressed the question of coverage under a policy for restitution ordered under the Unfair Business Practices Act. However, the policy involved in Bank of the West was a CGL policy. It provided narrower coverage than is provided by other policies, such as D&O, EPL, and E&O policies. It obligated the insurance carrier to indemnify the insured only for payments of “damages,” while other policies may obligate a carrier to pay for the “total amount” that the insured is obligated to pay, including damages, judgments, settlements, defense costs, and attorneys' fees. Therefore, the Bank of the West holding actually is very limited ' when a policy covers only “damages” and the claim against the insured is one where “damages” are not available, then the policy does not provide coverage. That holding should not preclude coverage under broader policies or as to theories of liability for which damages may be recovered.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.