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In a decision with significant implications for D&O insurance coverage, the U.S. Court of Appeals for the Fourth Circuit recently reversed a district court ruling and held that Under Armour could not access an additional $100 million D&O insurance tower for later-filed claims. See Navigators Ins. Co. v. Under Armour, Inc., No. 25-1068 (4th Cir. Jan. 20, 2026).
The reason: the underlying securities class action, shareholder derivative litigation, and related government investigations were all deemed to arise out of the same alleged fraudulent scheme, and therefore constituted a single "claim" first made before the relevant policy period.
The ruling is a reminder that, in D&O coverage disputes, how claims are related, and how policies define and frame "claim" and "interrelated wrongful acts," can be outcome-determinative, regardless of how many lawsuits or investigations follow.
1. The Coverage Dispute
The dispute focused on whether Under Armour could tap a later-in-time $100 million excess D&O insurance tower after related litigation and investigations unfolded over several years.
Following Under Armour's February 2017 announcement ending its 26-quarter streak of 20% revenue growth, the company was hit with a securities class action alleging false and misleading statements in its 2016 earnings reports, along with books-and-records and shareholder derivative demands asserting similar misconduct by directors and officers. Coverage under the 2016–2017 D&O policies was acknowledged and ultimately exhausted.
Two years later, reports surfaced that the SEC and DOJ were investigating whether Under Armour used accounting practices—such as pull-forward sales—to inflate reported results. Plaintiffs amended the securities complaint to add those allegations, and the SEC later concluded that Under Armour had made materially false and misleading statements by failing to disclose the impact of those practices on revenue growth.
Under Armour then sought coverage under a separate $100 million D&O tower for the 2017–2018 policy period, arguing that the government investigations and amended claims involved distinct accounting misconduct and therefore constituted new claims. Insurers responded that all of the proceedings were logically and causally related aspects of a single alleged scheme to mislead investors—making them one claim first made under the earlier policy period and exhausting only the original tower.
2. The Fourth Circuit's Analysis
The Fourth Circuit sided with the insurers and reversed the district court, emphasizing substance over sequencing.
Key points from the court's analysis include:
- Common factual nucleus matters. The court focused on whether the various actions shared a common factual basis, not whether they were filed at different times or by different parties.
- Logical and causal connection is enough. Claims need not be identical to be treated as one; it is sufficient that they arise from the same alleged fraudulent "scheme."
- Policy language controls. The court closely examined the D&O policies' definitions of "claim," "interrelated wrongful acts," and related-claims provisions, applying them according to governing state law.
- Later proceedings don't reset the clock. The fact that derivative suits and government investigations emerged after the securities class action did not create new, separate claims for coverage purposes.
In short, the court rejected the notion that serial litigation equals serial coverage, where all proceedings trace back to the same alleged wrongdoing.
3. The Appellate Holding
The Fourth Circuit ultimately held that:
- The securities class action, derivative suits, and government investigations were interrelated;
- They constituted a single claim first made before the later policy period; and
- Under Armour therefore could not access the additional $100 million D&O insurance tower.
This result underscores a core principle in D&O coverage litigation: multiple legal actions do not necessarily mean multiple claims—especially when they stem from the same alleged misconduct.
4. Key Takeaways and Practical Implications
This decision reinforces several critical lessons for policyholders and insurers alike:
- Related-claims provisions matter. These clauses often determine whether coverage expands or collapses into a single policy period.
- Claim framing is critical. How allegations are described, by plaintiffs, regulators, and insureds, can materially affect coverage outcomes.
- Timing alone is not dispositive. Courts will look past the chronology of lawsuits to assess whether they are substantively connected.
- Coverage expectations should be stress-tested early. Companies facing early signs of regulatory or civil exposure should evaluate how later-arising actions may be treated under existing D&O programs.
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