Monitor has compiled numerous claim scenarios into an easily searchable database. Use the search box below to filter claim scenarios. For claim overview sheets see Resources.

Claim scenarios are for informational purposes only, do not constitute legal advice and are not a confirmation or acceptance of coverage under any policy.

Wrongful Termination/Retaliation

The claimant filed a lawsuit against his former employer, a construction company. According to the lawsuit, the claimant had filed for workers’ compensation benefits because of a work-related injury. His employer then informed him that light duty jobs were available. The claimant disputed his ability to return to work on light duty. The suit alleged the construction company subsequently wrongfully terminated the claimant’s employment in retaliation for seeking workers’ compensation benefits. The verdict was in favor of the insured. Defense costs were more than $120,000.

Related Coverages: Employment Practices Liability

Tax Claim

A CPA performed tax preparation services for a difficult client for a couple of years. After the client failed to comply with the CPA’s multiple requests for records, the CPA sent a letter to the client terminating the engagement. This allowed the client more than 30 days to retain a new tax preparer for his 2009 taxes. Now the CPA has found himself embroiled in litigation because of this former client. Apparently, the client had not filed his 2009 tax return in a timely manner and he alleged that it was the CPA’s fault for failing to file an extension for him. The claim settled for $130,000.

Related Industries: Accounting

Wrongful Termination/Retaliation

A nonprofit organization insured by Monitor was sued by a former employee for wrongful termination, retaliation and labor code violations. This organization, which provides rehabilitation and counseling services for juveniles, had terminated the employee. Shortly after being terminated, the former employee alleged that he had been terminated for complaining about the lack of diverse representation on the organization’s board of directors and for notifying government authorities of improper public funds expenditures. Although on the surface this claim appeared to be defensible, the negative publicity surrounding the audit of the nonprofit’s financial records presented a difficult litigation environment. The case was settled after defense costs of $46,000 had been incurred.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Sexual Harassment

Two former female employees who alleged they had been sexually harassed sued a manufacturer of housewares and assorted products. The former employees claimed they were offended by the comments contained in a radio broadcast played in the office by co-workers. According to the claimants, the co-workers continued to listen to the particular radio station despite repeated requests to turn it off or change the station. Although employers often allow personal radios to be played in the workplace, they might not expect claims of sexual harassment to arise from such a seemingly innocuous circumstance. Defense costs in this case were $325,000.

Related Coverages: Employment Practices Liability

Gender Discrimination

A class action lawsuit was filed against a consumer retail products company. The claimants, all women, alleged the corporation discriminated against them by requiring a strength test at its meat packing plant. According to the Equal Employment Opportunity Commission (EEOC), which filed the suit on behalf of the women, roughly 60 percent of women failed the test while nearly all men passed it. A jury found intentional discrimination and a U.S. district judge upheld the decision and awarded $3.4 million in damages to the 52 plaintiffs.

Related Coverages: Employment Practices Liability

Sexual Harassment

An oil change franchise owner agreed to pay $299,000 to settle a sexual harassment lawsuit brought by three female employees through the EEOC. The lawsuit claimed supervisors and other employees at the franchise created a hostile work environment by making explicit sexual remarks and other inappropriate comments to female employees, two of whom were teenagers. One female employee also claimed that she was fired when she filed a complaint with the company.

Related Coverages: Employment Practices Liability

Gender and Race Discrimination/Retaliation

Nine ex-employees of a mortgage company (working at three different locations) filed a lawsuit claiming gender discrimination, race discrimination and retaliation. The claimants alleged that throughout the course of their employment, managers continually harassed them by calling them derogatory names and subjecting them to a hostile work environment. The claimants have demanded $3 million to settle despite being unable to show any tangible damages.

Related Coverages: Employment Practices Liability

Harassment/Slander/Defamation

Monitor’s insured, a general contractor, was sued by a worker who alleged that he was threatened and harassed while working on the jobsite of a large construction project. In his lawsuit, the claimant alleged intentional infliction of emotional distress, slander, bad faith and defamation. Monitor assigned counsel to defend the general contractor and the matter ultimately was settled through mediation for more than $100,000.

Related Coverages: Employment Practices Liability

Pregnancy Discrimination

An assistant estimator previously employed by the insured, a general contractor, filed a charge of discrimination with the EEOC alleging pregnancy discrimination. According to the claim, the former employee alleged she had advised her supervisor she was pregnant. She was terminated shortly thereafter for poor attitude and for not completing her work. The claimant also alleged she had been terminated just before annual bonuses were distributed. The defense counsel assigned by Monitor obtained a “no probable cause” finding. The defense costs exceeded $30,000.

Related Coverages: Employment Practices Liability

Negligent Misrepresentation

A potential client who was disenchanted with his current tax accountant met with a new CPA. During the initial interview, he mentioned he wanted to alleviate the tax burden associated with a gain on the sale of property. In fact, he asked the CPA for advice regarding a “tax shelter” he had heard about at a dinner party. The CPA outlined the high risks associated with such a shelter. The potential client thanked the CPA and left his office. The CPA did not hear from this individual again.

Later, when the IRS challenged this individual’s position, back taxes, penalties and interest were assessed. The individual filed suit against many parties, including the CPA he had met with once. Although the CPA eventually was exonerated, the litigation resulted in a tremendous loss of billable time and his insurance deductible.

Related Industries: Accounting

Securities Fraud/Conspiracy to Defraud

An accounting firm was hit with three lawsuits stemming from the merger of two companies. The claimants were former directors and officers of one of the merged companies, who alleged the accounting firm committed securities fraud and engaged in conspiracy to defraud. The lawsuits stated the firm failed to disclose certain financial information about the other party to the merger, information that would have stopped the merger. Damages in excess of $20 million are being sought.

Related Industries: Accounting

Gender Discrimination

A class action lawsuit was brought against a nonprofit organization that assisted women seeking refuge from domestic violence. A group of men claimed they had continuously been refused services. They initiated the lawsuit against the insured organization. Although the lawsuit was deemed by the court to be without merit during the initial stages, it required a strong defense. Ultimately, the case against the nonprofit organization was dismissed; however, this was after defense expenses had exceeded $100,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Race Discrimination

A resident lodged a complaint with the International Fair Housing Council against a homeowners’ association for discrimination on the basis of race and family status. The claim made against the insured association alleged that the association’s rules unreasonably restricted families with children from installing and using certain playground equipment. The resident further claimed the association enforced these restrictions most stringently against two families with bi-racial children. Even though the insured denied the allegations, after taking time and cost factors into account, the case settled. Indemnity costs alone were $4,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Misappropriation

An executive was terminated after a nonprofit organization discovered that $55,000 in grant money was misappropriated for his own use. The organization filed suit against the executive to recover the funds. The executive countersued the organization and several individual board members for breach of contract, defamation and copyright infringement. The organization’s indemnity costs were $22,500 and defense costs to-date have reached nearly $600,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Breach of Fiduciary Duty

A nonprofit organization providing housing for the disabled was sued by the parents of a group of adult disabled children for breach of fiduciary duty. After a jury trial and an appeal, the parents were awarded a judgment in excess of $3 million. Since the organization’s D&O insurance limits of liability were exhausted, each independent director of the nonprofit’s board of directors was required to contribute toward judgment.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Fraud/Deceptive Trade Practices/Breach of Fiduciary Duty

A company sued its former accounting firm, alleging the firm’s actions caused its bankruptcy. According to the suit, because the accounting firm resigned as auditor for the company and withdrew prior audit opinions, the company had to file for bankruptcy. The company is seeking damages of more than $30 million.

Related Industries: Accounting

Wage and Hour

Assistant managers formerly employed by a local restaurant chain filed a class action lawsuit alleging they should have been given overtime pay. They reasoned that they were required to perform non-managerial tasks on occasion, such as bussing tables running the cash register or serving customers.

Because they performed those tasks, the assistant managers asserted they should not have been classified as salaried employees. The restaurant chain knew it could face steep legal fees and an uncertain outcome if the case went to trial, so they settled. Defense costs amounted to $80,000 with a settlement of $20,000 each for the three managers.

Related Industries: Restaurants
Related Coverages: Employment Practices Liability

Professional Negligence/Audit Malpractice

An accounting firm was engaged to audit the financial statements of a software company. Even though the software company still owed the firm significant fees from prior accounting work, the accounting firm took on the new project. The company’s CEO, knowing of a defect in a software product, allowed it to be shipped in mass quantities just prior to the close of the fiscal year. The firm’s audit team, unaware of the defect within the shipped product, provided a “clean” opinion.

One of the software company’s lenders sued the accounting firm claiming reliance on the audited financials. Although an “unclean hands” defense was proffered, the past due fees owed at the time of the audit led some to question the firm’s independence. After lengthy litigation, the case settled for a six-figure sum.

Related Industries: Accounting

Misappropriation/Unfair Competition

A claimant alleged that he had developed patented processes for the mass production of specific biopharmaceutical applications. He also alleged that the insured, a bio-pharmaceutical company, had engaged in false advertising, misappropriation of trade secrets, tortious interference and unfair competition. The claimant sought a declaration of the ownership of certain patents. The insured prevailed at trial. Defense costs totaled $2 million.

Related Coverages: Directors and Officers

Retaliation/Sexual Harassment

An administrative assistant, who had been previously employed by a small construction company insured by Monitor, filed a complaint with the California Department of Fair Employment and Housing alleging retaliation. The former employee claimed she had been terminated for complaining about sexual harassment by a male coworker. The investigation conducted by Monitor’s assigned defense counsel revealed the claimant openly engaged in sexual conversations and flirting with the male employee in question after consuming alcoholic beverages at company events. This male employee did admit to slapping the claimant’s rear end for which he was reprimanded. The matter ultimately was settled. Defense costs exceeded $40,000.

Related Coverages: Employment Practices Liability

Age Discrimination/Wrongful Termination

A former employee of a property maintenance and construction firm filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC). The claim alleged age discrimination and wrongful termination. It stated the property manager of the company, a Monitor insured, fired the claimant because she told him that she suspected another employee was stealing.

The claimant also alleged the property manager made negative remarks regarding the claimant’s age, such as, “If I were to fire you, you would never get another job because you are as old as dirt.” Defense counsel assigned by Monitor successfully obtained a “no probable cause” finding. The defense costs totaled more than $25,000.

Related Coverages: Employment Practices Liability

Workplace Bullying

An employee at a hotel posts harsh words on a newly hired employee’s social network page, stating that the new employee is incompetent and lazy. Fellow employees “Like” the post, and add additional comments and threats about the new employee. The new employee sues the hotel for not preventing workplace bullying or a hostile work environment.

Related Coverages: Employment Practices Liability

Invasion of Privacy

An employee at a manufacturing company has a confrontation with his manager in front of other employees. Later that day, the employee posts about the confrontation on his blog, calling his manager a “jerk” and notes how much better the company would be if the manager got fired. The employee also speculates the only reason that his manager has a job is because she is dating a vice president in the company. Management is notified about the blog, and the employee is given a warning about conduct and moved to another department. The employee perceives the department change as a demotion and sues the company, stating invasion of privacy.

Related Coverages: Employment Practices Liability

Wrongful Failure to Hire

A potential employee is offered a job by two companies. He poses the following question on his Facebook page: “Do I go with Company A that will give me a large paycheck but be a terribly boring place to work, or do I go with Company B that offers an incredibly interesting position but the pay is sub-par?” A human resources representative at Company A sees his post and withdraws the job. The potential employee sued Company A for wrongful failure to hire.

Related Coverages: Employment Practices Liability

Faulty Business Valuation/Succession Plan

A business owner of a thriving heavy machinery company decided he needed a succession plan. His goal was to leave the business to his eldest son, entitling his other son to the remainder of the assets. The owner’s long-time CPA prepared a business valuation and advised him on succession planning.

After the business owner passed away, the eldest son quickly ran the business into bankruptcy. This son then sued the CPA for a number of claims, including a faulty business valuation.  A retained expert confirmed that the CPA’s valuation met the standard of care. Nonetheless, the opposing side’s expert was highly critical, causing the CPA concern about a negative verdict in excess of his modest limits of liability. The case settled prior to trial, but not until after the CPA accrued considerable legal expenses.

Related Industries: Accounting

Legal Opinion

A development company working with a vacation resort asked its associate general counsel for advice regarding development of an adjoining property. The development company relied on the associated general counsel’s written legal opinion about the costs involved in developing the property. His estimate was far less than the final cost of the property development and the company incurred close to $1 million in additional costs. In response to this loss, the company sued the general counsel for breach of fiduciary duty, negligence and conflict of interest. The case settled for $500,000.

Unauthorized Practice

A general counsel of a publicly traded technology company, admitted to practice law in California, wrote and revised legal documents for a sister company located in Hawaii.

An independent third party company used the documents to negotiate a contract. Shortly after, they discovered that the documents had several inaccuracies and misrepresentations. As a result, the independent company lost substantial sums of money. The independent company alleged that the general counsel was negligent in giving legal advice. In addition, the independent company notified the Office of Disciplinary Counsel to investigate unauthorized practice of law as they were not licensed to practice law in Hawaii. The matter settled for $3 million dollars.

Pro Bono

An attorney at a recruiting company agreed to take a case pro bono for an environmental advocate nonprofit group. The group often speaks out against polluters, developers and other private entities. A third party brought suit against the nonprofit for publishing defamatory statements. After numerous negotiations the attorney recommended a settlement amount. After the case resolved, the nonprofit was dissatisfied with the result of the case and sued the attorney for misrepresentation. The claim cost more than $270,000 to resolve.

Sexual Harassment

A male security officer hit a local security company with a lawsuit claiming sexual harassment. The claimant alleged that a male manager would regularly and repeatedly sexually harass him by touching him on the chest and stomach while stating different sexual phrases to him. He further alleged that his employer failed to investigate or take any corrective action concerning his allegations. The employer did in fact investigate the claim, and the manager was eventually terminated. In some states, strict liability can apply to certain situations such as this, meaning the employer is liable for the actions of its managers, even if no one was aware that improper behavior was taking place. This matter cost the security company $400,000 to resolve.

Related Coverages: Employment Practices Liability

Malicious Prosecution

The insured law firm filed an 11-count complaint on behalf of its client. After dismissal of the action, the firm found itself serving as a defendant in a malicious prosecution action put forth by this client. Recognizing the plaintiff could not succeed on all points of the malicious prosecution claim, the law firm brought a defense against the case. Unfortunately, the wealthy plaintiff decided vengeance outweighed economics and took the case through the trial and appellate courts. The exoneration of the law firm came with a hefty price tag. Defense fees exceeded $1 million.

Related Industries: Law Firms
Related Coverages: Lawyers Professional Liability
Related Products: Lawyers Professional Liability

Legal Malpractice/Error

A law firm with a primary area of practice in civil litigation, was retained to file a bad faith complaint against an insurance company on behalf of homeowners. According to the complaint, the insurance company had denied the homeowners’ water and mold damage claims. After the plaintiffs settled the bad faith claim for $190,000, they sued the insured for legal malpractice, alleging the bad faith claim filed by the law firm had not been filed in a timely manner and contained serious errors. The homeowners claimed they had been forced to settle the underlying bad faith case for less than full value because their case had been weakened. The initial demand was $635,000; however, the case against the insured was settled through mediation for $120,000. Defense costs were $100,000.

Related Industries: Law Firms
Related Coverages: Lawyers Professional Liability
Related Products: Lawyers Professional Liability

Negligence/Breach of Contract and Fiduciary Duty

The insured law firm with primary practice areas of municipal law and commercial litigation defended clients against allegations of embezzlement of family funds. The case was settled when the parties agreed to sell the family residence at fair market value. The former clients then filed suit against the insured alleging negligence, breach of contract, breach of fiduciary duty, intentional infliction of emotional distress, misrepresentation, statutory violations and constructive fraud. The plaintiffs claimed the property had been sold out from under them and demanded several hundred thousand dollars for the increased value of the property due to a rise in the real estate market. After the judge ruled on the parties’ motions in limine prior to jury selection, the plaintiffs non-suited their case. Recently, the plaintiffs filed an appeal.  Defense costs have totaled $200,000 to date.

Related Industries: Law Firms
Related Coverages: Lawyers Professional Liability
Related Products: Lawyers Professional Liability

Fair Labor Standards Act

A local florist franchise was named in a class action lawsuit. It alleged that the florist’s employee delivery drivers were required to use their own vehicles for deliveries and the driver expense reimbursement rate was substantially less than the actual cost of operating and maintaining their vehicles. The lawsuit also alleged a failure and refusal to pay minimum wages, a failure to fully indemnify all necessary expenses and costs incurred as a result of the performance of their duties as delivery drivers and a failure to allow meal and rest breaks. Total defense costs paid were more than $50,000.

Related Coverages: Employment Practices Liability

Wrongful Termination

The executive director of a nonprofit organization was terminated for failing to comply with terms regarding the use of federal grant money. The executive director was terminated after an outside audit revealed the organization had failed to keep proper records regarding the use of the grant money. The former executive director filed a lawsuit against the nonprofit alleging wrongful termination. Defense costs were more than $500,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Misappropriation of Trade Secrets

The plaintiff, an East Coast biotechnology company, alleged that it developed a patented process for manufacturing specific biopharmaceutical therapies. They asserted that the defendant company developed a similar process and by doing so misappropriated trade secrets, engaged in unfair competition, false advertising and interference with a business relationship. After a four-month trial in federal court, the jury awarded the plaintiff several million dollars. The defendant filed numerous post-trial motions and eventually the judge overturned the jury verdict. The plaintiff filed an appeal that was denied. Defense costs were more than $2 million.

Related Industries: Life Science

Gender Discrimination/Retaliation

The EEOC filed a gender discrimination and retaliation lawsuit against a large restaurant chain on behalf of a former female employee. According to the suit, the restaurant paid the female employee significantly less than a similarly qualified male employee who performed the same duties. She alleged that she was subject to different terms and conditions of employment based on her gender. She spoke to management multiple times about her concerns, but no action was taken. After her last complaint, she was terminated. The case went to trial and the jury concluded that the restaurant acted with malice and reckless indifference to her federally protected rights. The female employee was awarded more than $100,000 in compensatory damages and $2.1 million in punitive damages.

Related Coverages: Employment Practices Liability

Racial Discrimination

A software developer at a Web design firm alleged racial discrimination when he was denied a promotion to a senior-level position. He alleged that after interviewing twice, he was told that there were no available positions. The developer also claimed that following his interviews, the firm advertised for the same position he was told was unavailable. The firm denied his allegations and stated that after the software developer was interviewed, they made a business decision not to hire for the senior-level position. Defense costs exceeded $50,000.

Related Coverages: Employment Practices Liability

Breach of Contract/Defamation

The founder and president of a nonprofit school resigned from his position due to personal issues. After he resigned, the school board discovered that he had not been performing his duties and several important projects had never been completed. When the former president requested to return to his former position, the school board refused due to this discovered dereliction of duty and poor performance. The former president then sued the school board alleging breach of contract and defamation. More than $120,000 was spent to resolve this matter.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Wrongful Termination/Retaliation

Shortly after being hired as the Development Director of a nonprofit organization, the claimant began to openly question the ethics of the organization’s executive director and CEO regarding the running of the organization, despite having no evidence of any wrongdoing. The claimant was terminated for gross insubordination. He then sued the nonprofit alleging wrongful termination and retaliation for whistle-blowing. Defense costs were more than $500,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Race Discrimination

A laborer for a pipe company in Conroe, Texas, contends co-workers subjected him to racial epithets and choked him with a hangman’s noose. The laborer won a $1 million settlement from his former employer. The settlement, which stems from a lawsuit filed by the Equal Employment Opportunity Commission (EEOC) in 2003, is the largest single award the agency has won for an individual in its history.

Related Coverages: Employment Practices Liability

Age Discrimination

A Tarrant County, Texas jury awarded $1.7 million to a former North Richland Hills assistant fire chief in an age discrimination lawsuit. The jury also noted that the 51-year-old was terminated as part of city retaliation for his complaints about age discrimination. The EEOC found that Hughes had been discriminated against because of his age. Two other former fire officials also filed complaints with the EEOC claiming age discrimination. The EEOC also found that they had been discriminated against because of age.

Related Coverages: Employment Practices Liability

Defamation

The president of a nonprofit organization was sued for defamation by a member of the organization. The member was running against the president in an upcoming board election. He alleged that the president sent letters out to tarnish his image and reputation so the organization’s members would not elect him. The member is seeking $1 million in damages. Defense costs to date have exceeded $15,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Breach of Contract and Fraud

The plaintiff, a contractor, sued a foundation alleging it persuaded people to donate property and then fraudulently failed to fulfill the terms of the donation agreements. The contractor also sued for breach of contract and related monetary damages. The foundation and its president were named as defendants. The district court awarded the claimant more than $1 million for unpaid commissions, $1 million in punitive damages and more than $46,000 for attorney fees.

Related Industries: Foundations
Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Racial Discrimination

A white female who was promoted from program coordinator to director sued a university-based foundation for racial discrimination. She alleged when promoted she was told by her supervisor, “You know you are not the right color for the position.” After serving nine months as director, she was informed her original hiring would now be subject to an affirmative action search. The plaintiff alleged she was unlawfully terminated from her position. After three years in litigation, a jury found the foundation constructively discharged the plaintiff on the basis of race. The plaintiff was awarded roughly $44,000 in back pay.

Related Industries: Foundations
Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Trademark Infringement

A musical artist and band filed a trademark infringement claim against a conservation and environmental foundation. The plaintiffs claimed the foundation’s name infringed upon and competed with their business trade name. After approximately four years of litigation, the plaintiffs voluntarily dismissed the case against the foundation. The defendant foundation paid in excess of $500,000 to defend the claim. The foundation’s subsequent counterclaim seeking attorney’s fees from the plaintiffs was denied.

Related Industries: Foundations
Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Financial Mismanagement

The Eighth Circuit Court of Appeals affirmed a jury verdict finding a foundation’s founder/director personally liable for $430,000 in architect fees in connection with the nonprofit’s plan to build a soccer stadium. Applying the “alter ego doctrine,” the defendant was considered to be the alter ego of the foundation. The court found that the director could be held personally liable based upon various wrongful acts including the undercapitalization of the foundation.

Related Industries: Foundations
Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Misuse of Funds

A former employee at a nonprofit professional council filed a lawsuit against the organization and its treasurer claiming violations of several Texas state election laws. The former employee claimed the organization made several political contributions in excess of $100. After a long investigation, the organization received several fines totaling more than $300,000. Defense costs in the case were more than $25,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Misappropriation/Breach of Fiduciary Duty

An internal investigation at an organization that administers grants for government research discovered thousands of dollars was missing. They determined the executive director was the likely culprit. Ultimately, several government agencies filed lawsuits against the organization claiming misappropriation of funds, breach of fiduciary duty and breach of client agreements. The lawsuits are still ongoing. So far defense costs have exceeded $50,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Third Party/Negligent Misrepresentation

A member of an upscale golf club in Houston filed a lawsuit against the club claiming fraud, negligent misrepresentation and defamation. He was a social member whose golf play was limited to just two days a week. He attempted to upgrade to a resident member with unlimited golf privileges. He claimed he was approved by the membership committee but was then told there were objections to his recommendation to resident member. The member claimed he was being “blackballed” and that it was against the by-laws. The club approved his membership upgrade and the case settled. Defense costs totaled $10,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Racial Discrimination

A teacher at a Dallas charter school brought a lawsuit against her employer alleging race discrimination. The teacher participated in the Principal Certification Program. Once she started, the school found she was unable to keep up with both the program and her teaching duties. After several performance issues, the teacher was eventually reclassified with a lower salary. She was then written up for failure to follow a supervisor’s directive, failure to follow policy and failure to maintain a professional level of conduct in the workplace. The teacher claimed she was written up due to racial discrimination and not performance related issues. The case settled for a nominal amount but defense costs were more than $10,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Misappropriation/Fraud

The Texas Attorney General’s Office filed a lawsuit against an animal sanctuary alleging the organization misused and wasted charitable funds. The lawsuit stated the organization sold some of its animals to breeders in violation of its mission and that it inappropriately paid expenses for its president. The lawsuit also stated that the overall condition of the facility was hazardous to the public and the animals. Defense costs in the case exceeded $45,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Sexual Harassment

A winery owner agreed to pay $50,000 to settle a sexual harassment lawsuit brought by two female employees through the EEOC. The lawsuit claimed supervisors and other employees at the winery created a hostile work environment by making explicit sexual remarks and other inappropriate comments to female employees, some of whom were still teenagers. One of the female employees also claimed she was fired when she complained to the management about the hostile work environment.

Related Coverages: Employment Practices Liability

Illegal Alien

An unsolicited tip resulted in an ICE investigation of a local nut harvesting company in California for allegedly hiring illegal aliens. The six-month investigation culminated in a worksite raid of the harvesting company, the arrest of three employees and federal charges of hiring unauthorized aliens. In the plea argument, the nut harvesting company’s owners pleaded guilty to illegal hiring practices and agreed to pay a total fine of $86,000. Defense costs exceeded $45,000.

Related Coverages: Employment Practices Liability

Wage and Hour

A Hispanic employee at a local fruit packing company alleged that she and the other Hispanic employees did not receive pay for numerous overtime hours worked. The employees alleged that their manager deducted time from their hours worked for a lunch break each day, even though they did not always take a lunch break. During the investigation, it was discovered that the packing company also failed to pay the employees for additional hours worked in the peak season. Defense costs totaled $37,000. The case settled for $75,000.

Related Coverages: Employment Practices Liability

Age Discrimination

A seasonal fruit packing business employed temporary workers during packing season. At the end of the season, all employees were laid off. The fruit packing business does not assign grades or levels of seniority. They did not hire, lay off, or rehire based on length of service. A former female employee alleged that she was laid off based on her age. She filed an age discrimination charge with the California Department of Fair Employment and Housing (DFEH).  After an investigation, the DFEH dismissed her charge and found in favor of the fruit packing business. Defense costs exceeded $40,000.

Related Coverages: Employment Practices Liability

Improper Wage Practices

A paralegal at a local law firm alleged that she failed to receive overtime compensation for assigned work completed after regular hours. She alleged that her status was misclassified as exempt; therefore she did not receive overtime pay according to the provisions of the FLSA. The law firm incurred fees in excess of $11,000. The case settled for $13,500.

Related Industries: Law Firms
Related Coverages: Employment Practices Liability

Racial Discrimination

A former employee of a small jewelry store alleged he experienced several separate and repeated events of racial harassment, including abusive language and threats of violence from his manager. The store owner ignored the employee’s complaints and the manager denied the allegations. The employee brought suit against the manager and the store. The store incurred more than $70,000 in legal fees and expenses before the case ultimately settled out of court for $75,000.

Related Coverages: Employment Practices Liability

Sexual Harassment

A cashier at a local fast food restaurant claimed her manager sexually assaulted her. The restaurant owners admitted that the assault occurred, but denied that they knew or could have known of the manager’s propensity to assault employees. The restaurant owners claimed that the incident occurred after hours, so the restaurant should not be involved. Defense costs exceeded $90,000. The case settled for $220,000.

Related Industries: Restaurants
Related Coverages: Employment Practices Liability

Wage and Hour

A chef worked catered events for a restaurant chain. She brought suit against her employer for failing to pay wages at the overtime rate. The chef alleged that she regularly worked in excess of 40 hours per week due to her work at summer festivals. The restaurant alleged that it was not a covered enterprise according to the Fair Labor Standards Act (FLSA) nor was the chef individually covered. Sloppy record-keeping by the restaurant hindered full disclosure of the revenue generated by the summer festivals. The case could not be resolved by negotiations or summary judgment. The restaurant incurred $75,000 in legal fees and the case eventually settled for $55,000.

Related Industries: Restaurants
Related Coverages: Employment Practices Liability

Retaliation

An event planner filed a complaint against her former employer, a well-known restaurant. She alleged that she was subject to sexual harassment by her direct supervisor because of her pregnancy. Shortly after, she was terminated. She then sued the restaurant and claimed that her termination was in retaliation for complaining of unlawful pregnancy discrimination. The case settled for $75,000.

Related Industries: Restaurants
Related Coverages: Employment Practices Liability

Sexual Harassment

A fast food restaurant chain paid $225,000 to settle a sexual harassment claim by a male cashier who alleged that his female supervisor groped him and made unwanted sexual advances towards him. He complained to other managers, but no action was immediately taken. Defense costs exceeded $50,000.

Related Industries: Restaurants
Related Coverages: Employment Practices Liability

Breach of Contract

A nonprofit organization that provides recreational services entered into a contract with a company to pursue sponsorship development. After conflicts regarding billing issues, sponsorship contracts and fees, the company filed
a lawsuit against the organization alleging breach of contract, outrageous conduct and intentional interference with business relationships. During the trial it was found
the contract was poorly drafted by the vice president of the organization and several provisions were subject to different interpretations. A jury returned a verdict in favor of the sponsorship development company in the amount of $45,000. Defense costs totaled $155,000.

Related Coverages: Directors and Officers
Related Products: Nonprofit Liability

Trademark Infringement/Unfair Competition

A nonprofit organization that provides shelter and adoption services for animals was sued by a humane shelter alleging that the organization infringed upon its name. The lawsuit claimed both the organization and the shelter had the
same potential donor base and the similarity of the two organizations’ names caused confusion within the community. During the litigation, the shelter was able
to demonstrate some confusion between the names within the community. The matter settled with the nonprofit organization agreeing to change its name. Defense costs totaled $110,000.

Related Coverages: Directors and Officers
Related Products: Nonprofit Liability

Misappropriation

A large city filed suit against the local chamber of commerce
for breach of fiduciary duty and breach of contract in the administration and management of hotel occupancy tax (HOT) funds. An audit of the chamber’s financial records found more than $700,000 in funds was misused. The suit alleged that the chamber and its leadership failed to adequately account for expenditures of HOT funds, improperly used HOT funds and failed to notify the city of HOT funds remaining after each budget year. After a two week trial, a jury returned a verdict against the chamber and its former president. The jury awarded the city $649,000 in damages and $125,000 in attorney fees.

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Defamation

A former judge filed a $110 million defamation suit claiming that a political opponent’s pre-election brochure lied about his record and ruined his reputation. The suit named a nonprofit business development organization along with its chairman and treasurer. It also named the state chamber of commerce that co-sponsored the brochure as a defendant. The lawsuit alleged the brochure sent out by the two agencies implied the judge approved the release of a convicted murderer and overturned a conviction by a sexual predator, and that such actions highlighted his questionable judgment. The judge further claimed the erroneous information cost him the election. The case ultimately settled for $225,000. Defense costs exceeded $100,000.

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Breach of Contract/Defamation

A former president of a nonprofit education association
filed a lawsuit against the organization. She claimed she
was ousted from her position and wrongly banned from ever serving on the board. She also alleged the executive board embarked on a smear campaign that affected her ability to perform her full-time job with the local school district and secure future nonprofit board positions.
The matter ultimately settled for a nominal amount,
plus an agreement by the claimant not to run for a
position on the board for 10 years. Defense fees and
costs exceeded $40,000.

Related Coverages: Nonprofit Organizations
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Emotional Distress

A seasonal volunteer who assisted with the upkeep of a nonprofit’s orchard alleged he contracted sinusitis and needed sinus surgery as a result of his work for the organization. The volunteer claimed his health problems were caused by breathing the air near a holding tank used for irrigation that sat filled with untreated creek water. He also claimed to suffer severe emotional distress and depression as a result of his illness. At his deposition, he asked for future lost wages in the amount of $339,000 plus damages for emotional distress. The case settled in mediation for $50,000. Defense costs exceeded $20,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Age/Racial Discrimination

A volunteer case worker filed a claim against a family services nonprofit organization. Her duties were to visit the homes of pregnant women, guide them through their pregnancy and offer assistance once the baby was born. The volunteer alleged she was given several corrective reprimands based on her age and race. She claimed she was not given assistance to do her volunteer work and had case files taken away from her. The volunteer also alleged the situation caused her severe emotional distress. The case settled for $10,000 with defense costs exceeding $50,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Racial/Religious Discrimination

A mother filed a lawsuit against a nonprofit organization that acts as a special advocate for juveniles. She alleged that the organization and its volunteer case worker intentionally provided false information to a juvenile court to show she was responsible for child abuse and neglect. The mother claimed it was done to remove her children from her home because of her race and religion. The matter resolved favorably for the organization and its case worker, however, defense costs were more than $100,000.

Related Coverages: Nonprofit Organizations
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Retaliation

A server at a North Carolina country club was fired after 10 years on the job. Management said she was terminated for being rude to customers. The server claimed she was fired for taking FMLA leave and looking into filing a worker’s compensation claim after an injury at work. She stated that her immediate supervisor told her coworkers that she "would not get a dime of workers compensation benefits." The server filed a lawsuit alleging FMLA retaliation, interference with FMLA rights and wrongful discharge in retaliation for her attempt to get workers’ compensation benefits. The claim settled for $22,000. Defense costs totaled $11,000.

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Racial Discrimination/Defamation

A Texas country club hired an African-American woman as a line cook for their on-site restaurant. On her second day of work there was a mistake with the quantity of food she was preparing and the executive chef made several derogatory and disparaging remarks out loud in the kitchen. The woman left work and did not return, alleging racial discrimination and defamation. Several witnesses confirmed the executive chef’s comments and said that he had used offensive language when talking to her on several other occasions. The matter settled for $30,000. Defense costs topped $25,000.

 

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Age Discrimination

A seasonal employee on the grounds crew at a Minnesota golf course filed a claim with the EEOC stating he was terminated because of his age. It was the policy of the golf course to terminate seasonal employees at the end of the season, allowing them to re-apply for positions at the beginning of the next season. Throughout his last season, the employee stated that he heard discriminatory remarks from management about older workers.

At the end of the season, the employee said he was told that he would not be re-hired for the following season due to budget constraints. Despite his request to reduce his hours and pay, he was not re-hired. Upon subsequent visits to the golf course, he saw younger workers employed on the grounds crew. Defense costs have exceeded $16,000 to date.

 

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Breach of Contract/Wrongful Termination

The former food and beverage manager at a Tennessee country club is suing his employer for breach of contract and wrongful termination. The manager moved from another state to accept what promised to be a long-term position at the club. The manager stated that during the interview process, he was told that the club was only interested in someone who planned to stay for several years. Once he accepted the job, he signed a one-year lease for housing. Five months later, he was told by the club manager that he wasn’t a good fit and was terminated. He is requesting $270,000 in lost wages.

 

Related Coverages: Nonprofit Organizations
Related Products: Nonprofit Liability

Wrongful Termination

An employee at a nursery was terminated after he accumulated multiple unexcused absences and failed to complete his assigned work. His poor work quality caused the loss of multiple clients, who later purchased with the nursery’s competitor. The employee sued the company claiming they failed to follow the corrective action procedures as described in the company’s employee handbook. The nursery incurred $50,000 in legal fees and expenses. The case ultimately settled for $75,000.

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Related Coverages: Employment Practices Liability

Gender Discrimination

A female landscape architect sued a landscaping firm for alleged gender discrimination after she was denied a promotion. She also claimed that her manager sexually harassed her. The firm refuted the architect’s allegations and the manager denied that the harassment occurred.
The firm maintained that she did not receive the promotion due to poor work performance. Even though the case settled quickly, the firm incurred defense costs of $25,000. The case settled for $200,000.

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Related Coverages: Employment Practices Liability

Wrongful Termination

The owner of a prominent landscaping firm hired a close friend as a marketing manager. Due to the involved friendship, employment terms were discussed verbally and there was only a rough draft of the written job description. After five years had passed, the marketing manager grew bored with the monotony of his position and began to market his services to competitors. When the owner found out about his actions, he terminated the manager’s position. The manager filed a breach of oral contract suit. He claimed that the owner had no right to break the contract based on work he conducted after hours. Defense costs totaled more than $220,000.
The case settled for $350,000.

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Related Coverages: Employment Practices Liability