Will Besl, a law clerk at Wiley Rein LLP, contributed to this blog post.
A Georgia federal district court has held that a charge filed with the Equal Employment Opportunity Commission (EEOC) was a “claim” and that there was no coverage for a charge first made against an insured during one policy period but not reported until a second policy period. PMTD Restaurants, LLC v. Houston Cas. Co., 2021 WL 5033473 (N.D. Ga. Sept. 15, 2021). The court also ruled, however, that a second charge by the EEOC filed by the same employee was a separate claim from the first.
The insured, a restaurant group, purchased two consecutive claims-made-and-reported EPL policies. The insured first received a Notice of Charge of Discrimination from the EEOC during the first policy period, with an employee claiming racial discrimination and retaliation. The insured did not notify its insurer of the charge, and its first policy term ended. During the second policy period, the EEOC sent the insured notice of a second charge by the same employee alleging that the insured retaliated against him for filing the first EEOC charge. Several months later, during the second policy period, the employee filed suit, and the insured notified the insurer of the lawsuit. The insurer denied coverage, however, after concluding that the charges and lawsuit constituted a single claim first made at the time of the initial EEOC charge but not reported during the policy that was then in force. Coverage litigation ensued.
On the parties’ cross-motions for summary judgment, the court made two significant rulings. First, the court held that the policy’s definition of “claim” included charges filed with the EEOC. In so ruling, the court rejected the insured’s argument that the filing of a notice of charges or a formal investigation order with the EEOC was not a “claim,” distinguishing case law cited by the insured on the grounds that the term “claim” in those cases was not defined in the respective policies. Second, the court determined that the two EEOC charges involved separate “claims” and were not part of the same “insured event.” In so ruling, the court reasoned that the two claims were based on distinct wrongs, observing that the insured could not even have known about the second EEOC charge during the initial policy period. Finally, the court gave the parties an opportunity to submit briefs regarding the potential impact of its ruling and the implications of the ruling in light of other provisions in the policy.
