A topic that has been discussed here previously has been the dual claims filed by plaintiffs’ lawyers under ERISA and securities laws. Marc Mayerson in his blog, Insurance Scrawl, discusses a very interesting case–Federal Ins. Co. v. Raytheon Co. (1st Cir. Oct. 21, 2005)–which focuses on the topic of insurance coverage for such dual claims. Excerpt from “When ERISA Suits Tagalong to D&O Claims the Fiduciary-Liability Coverage Might Not:
The United States Court of Appeals for the First Circuit recently had the opportunity to address coverage for a tagalong ERISA claim that was made four years after a securities-law class action was filed. In a very troubling opinion, the court ruled that no coverage was available for the ERISA class action because the gravamen of the complaint echoed the allegations in the earlier securities class action. The basis of the court’s ruling was not that the policyholder had failed to disclose the early securities-law class action, but rather that a generic prior-and-pending litigation exclusion barred coverage.
The case serves as a reminder to employers and fiduciaries as to the importance of having such policies reviewed by legal counsel prior to purchase of the policy.