James Thurston (Partner-Chicago, IL) and Melissa Murphy-Petros (Of Counsel-Chicago, IL) secured affirmance before the U.S. Court of Appeals for the Ninth Circuit on behalf of a major professional liability insurer client – their sixth collective victory before that court. In Adelman v. United States Specialty Ins. Co., et al., 2022 U.S. App. LEXIS 35554 (9th Cir. Dec. 23, 2022), the plaintiff, a judgment creditor against the insured, sought $5.5 million in settlement from the insured's D&O insurers for a director's alleged breach of fiduciary duties by failing to abide by the Worker Adjustment and Retraining Notification Act of 1988, 29 USC §2101, et seq. (the WARN Act). In this first case nationally on the application of the WARN Act Exclusion, Wilson Elser attorneys successfully argued that the alleged fiduciary breaches arose from the alleged WARN Act violations, such that there was no coverage for the $5.5 million settlement. The U.S. District Court for the Northern District of California agreed, dismissing the lawsuit. The Ninth Circuit agreed with James and Melissa and with the district court that the D&O policy's WARN Act exclusion barred coverage where the only breach of fiduciary alleged was that the directors and officers caused their company to violate the WARN Act.
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