EPL CORNER

LATE NOTICE PRECLUDES COVERAGE FOR EEOC CHARGE UNDER EPL POLICY

PMTD Rests., LLC v. Houston Cas. Co., No. 1:20cv04191 (N.D. Ga. Sept. 15, 2021)

A restaurant group received a Notice of Charge of Discrimination from the U.S. Equal Opportunity Commission (“EEOC”) in which an employee claimed racial discrimination and retaliation. 

The restaurant group failed to report the EEOC notice to its employment practices liability (“EPL”) insurer before the policy term in which it was received ended. Subsequently, the restaurant group received a second Notice of Charge filed by the same employee alleging he was retaliated against for filing the first EEOC Charge. Several months later, the employee filed suit, at which point the restaurant group notified its EPL insurer of the matter.


Coverage litigation ensued after the insurer denied coverage on the grounds that the EEOC Charges and the lawsuit constituted a single claim first made at the time the initial EEOC Charge was received, but which was not reported under the policy that was then in force. The restaurant group argued that the filing of a Notice of Charge of Discrimination or a formal investigation order with the EEOC was not a “claim” under the policy.


The court disagreed with the insured’s contention, finding the EPL policy’s definition of “claim” included Charges filed with the EEOC. The court also held, however, that the two EEOC charges involved separate “claims” and were not part of the same “insured event.” According to the court, the two claims were based on distinct wrongs and the insured could not even have known about the second EEOC Charge during the initial policy period. As such, the first Charge was not a covered claim because it was not timely noticed; however, the second Charge was a separate claim, which was reported during the correct policy period.

 

The Takeway

Timely and accurate noticing of claims under claims-made-and-reported policies is vital to securing coverage and avoiding litigation.

SETTLEMENT REACHED IN ERISA CLASS ACTION 

Allegretti, et al. v. Walgreen Co. et al., No. 1:19cv05392 (N.D. Ill. 2021)

A class action suit was filed against an employer, alleging the company’s profit-sharing retirement plan contained underperforming funds, and that the company had failed to alternate to better-performing options in violation of its fiduciary duties. 

The employer argued the funds it picked were conservative and inexpensive compared to other options, and noted the plaintiff employees failed point to any shortcomings in how the employer picked the investments and oversaw the plan. The court disagreed with the employer, however, when it found the employees had “met the notice-pleading requirements” in alleging “a prudent fiduciary would have acted differently,” and permitted discovery to move forward. 


Following extensive discovery, a mediation session, and months of negotiation, the class of plan participants recently announced they reached a deal with the defendants, which included the company, its board of directors, the retirement plan committee of the 401(k) plan, and the trustees of the retirement plan trust. If approved, the settlement will create a $13.75 million fund. 

 

RIDE SHARE DRIVERS MUST ARBITRATE EMPLOYEE STATUS CLAIMS

Cunningham, et al. v. Lyft Inc., et al., No. 20-1373 (1st Cir. Nov. 5, 2021)

This matter arose after a group of drivers brought suit alleging a large ride sharing company misclassified them as independent contractors rather than employees. 

The ride share company sought to move the matter to arbitration, but a lower court denied the attempt, finding that because many drivers take customers to and from the airport, they qualify as transportation workers engaged in interstate commerce and were therefore exempt from arbitration.


On appeal, the First Circuit recently reversed the lower court’s ruling, holding the drivers must privately arbitrate their claims. According to the appellate panel, because the company is not contracted with the airport, airlines, or a railway company to provide ride share services, simply taking customers to and from the airport did not qualify the drivers’ work as interstate commerce, as outlined in the U.S. Supreme Court’s ruling in United States v. Yellow Cab Co. Instead, the drivers are “among a class of workers engaged primarily in local intrastate transportation, some of whom infrequently find themselves crossing state lines, and are thus fundamentally unlike seamen and railroad employees when it comes to their engagement in interstate commerce,” the court noted.