Director & Officers Director & Officers LiabilityLiability

Issues, Trends and Loss Issues, Trends and Loss ControlControl

Types of Claims Typically Filed Against Types of Claims Typically Filed Against D&O’sD&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 ClubsActual 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, ContinuedGolf 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?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 The Complaint Historically vs. TodayHistorically vs. Today

Plaintiff sues employer

for Wrongful Termination

for Breach of Contract

for Civil Rights violation

Plaintiff sues employer

and D’s and O’s

and supervisors/mgrs.

and co-employees

• for multiple wrongful acts based on federal statute and state law

20042004Bases Alleged in EEOC Suits Filed 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 Statute2004 EEOC Resolutions By Statute

Title VII 264 Counts 76.1%

Civil Rights Act – passed 1964

ADA 38 Counts 10.9%

American with Disabilities Act – passed 1990

ADEA 28 Counts 8.1%

Age Discrimination Employment Act – passed 1967

*Concurrent 17 Counts 4.9%

*under more than one statute

2004 Monetary Relief By Statute2004 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 ProcessThe 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 LitigantsPotential Litigants

Plaintiffs

Job Applicants

Current/Former Employees

Terminating Employees

Customers

Co-workers

Independent contractors

Defendants

Interviewers

Human Resources

Supervisors & Managers

Board of Directors

Common AllegationsCommon Allegations

Discrimination

National Origin

Race

Religion

Sex

Sexual Preference

Age

Failure to Promote/Hire

Hostile Work Environment

Harassment

Breach of Implied Contract

Negligent Hiring or Supervision

Damages: What the Claimants WantDamages: What the Claimants Want

Back Pay

Front Pay

Lost benefits and seniority

Compensatory damages

Punitive damages

Attorneys fees and costs

Assessing Case ValueAssessing 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...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...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” ClaimProfile of a “Bad” Claim(Features of a Potentially Costly Suit)(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 Prevention of Employment Liability LossesLosses

Establish & implement

management training

employee awareness

manuals

interview procedures

complaint procedures

Controlling Employment LitigationControlling 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 Recommendations for Employment Law TrainingLaw 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)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)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 Interplay Between the ADA, FMLA and Worker’s CompensationWorker’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 Activities, which if mishandled by management, often lead to liabilitymanagement, 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 Activities, which if mishandled by management, often lead to liabilitymanagement, 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 & Non-Profit Director & Officers Liability OverviewOfficers Liability Overview

PARTS OF A D & O POLICYPARTS OF A D & O POLICY

Definitions

Insuring Agreement

Conditions

Exclusions

POLICY DECLARATIONS PAGEPOLICY DECLARATIONS PAGE

Named Insured

Policy Period

Limit Of Liability

Retention

Premium

Retro Active Date

Endorsements

WHAT’S A GOOD RISK ?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 2004MERIT SUITS FILED 1995 TO 2004

MERIT SUITS RESOLVEDMERIT SUITS RESOLVED

Monetary Relief – 1995 through Monetary Relief – 1995 through 20042004

Golf and Country Club Coverage

DEFINITION OF GOLF COURSEDEFINITION 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 LIMITSGOLF 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 & GOLF COURSE - TREES, SHRUBS & PLANTS 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 GOLF COURSE - DEBRIS REMOVAL COVERAGECOVERAGE

$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 PerilsGolf 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

Your Carrier

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

Coverage Extensions

Most Golf Programs

Your Carrier

Business Personal Property

Within 1000 Feet

Claims Expenses $25,000

Club Professional Replacement Expenses

Not Covered

Communication Towers, Antennas or Satellite Dishes, including their Lead-in Wiring, Masts and Guy Wires

Not Covered

Computer Upgrade Not Covered

Computer Virus Extraction Expense

Not Covered

Consequential Damage to covered BPP

Not Covered

Coverage Extensions

Most Golf Programs Your Carrier

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 Coverage

Not Covered

Expanded Premises Boundary

Included

Coverage Extensions

Most Golf Programs Your Carrier

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

$10,000

Furs $2,500 to $5,000

Garages / Storage Sheds

Not Provided

Golf Course $1,000,000

Coverage Extensions

Most Golf Programs Your Carrier

Hole-in-One Reimbursement Expense

$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

Money and Securities

Not Provided

Coverage Extensions

Most Golf Programs Your Carrier

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

Outdoor Signs $10,000

Coverage Extensions

Most Golf Programs Your Carrier

Pairs, Sets or Parts Not Stated

Personal Effects $25,000

Personal Effects – Spouses

Not Covered

Personal Property of Members and Guests in your CCC

$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

Coverage Extensions

Most Golf Programs Your Carrier

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 Reimbursement

Not Covered

Terrorist Travel Reimbursement

Not Covered

Coverage Extensions

Most Golf Programs Your Carrier

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 Counseling

Not Included

HOW TO ANALYZE GOLF COURSE HOW TO ANALYZE GOLF COURSE COVERAGECOVERAGE

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?