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Disgorge This: The Restitution Defense Meets the Duty to Defend
The restitution defense to insurance coverage proceeds from a simple and logical premise. If I steal money from you and am forced to return it, there is no loss for my insurer to reimburse because I never had a right to the money in the first place. I cannot insure against the risk of having to return stolen property. Life is rarely so simple, however, and insurers have asserted the restitution defense ' with varying degrees of success ' in a broad range of situations, some having little connection to the original premise. What if my payment to you includes both the money I stole and other items? What if I acquired your money innocently? What if I spent your money already and cannot repay it, so I assign to you my rights under the insurance policy? Or what if I exaggerated the value of my company's stock, which you then purchased from a third party without conferring a direct benefit on me?
The restitution defense declares that a claim for restitution or disgorgement is uninsurable as a matter of law. Nevertheless, the precise contours of the restitution defense remain unclear, in part, because of ambiguous terminology. Many courts articulate the defense as applying to the recovery of “ill-gotten gains” ' which could apply not only to stolen property, but also to personal injury caused by a corporation's unwillingness to incur the costs of adequate safety precautions. A merchant who exaggerates the quality or value of his products may be said to reap “ill-gotten gains.” The same could be true of an entrepreneur who “borrows” another's idea and develops it into a profitable enterprise. Plaintiffs typically allege that the defendant had a profit or cost-savings motive for his wrongful conduct, but that does not necessarily mean that the relief sought is restitutionary. Moreover, as difficult as it may be to determine whether a damages award represents the return of “ill-gotten gains” and for that reason is not subject to indemnification, that difficulty grows when determining whether the insurer owes a duty to defend or to reimburse defense costs associated with a claim for restitution.
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.
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.
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.