Management Liability

Employment Practices Liability

Defamation: The plaintiff alleged that her prior company took steps to damage her reputation and improperly interfered with her ability to obtain other employment. Specifically, the plaintiff alleged that the company spoke with several competitors and disclosed the reasons for her termination. The complaint was comprised of: tortuous interference; defamation and wrongful interference with the plaintiffs’ livelihood and reputation; and violation of privacy. The plaintiff
agreed to settle out of court for $125,000 and defense costs exceeded $25,000.

Directors & Officers Liability

Breach of Investment Agreement: A company entered into an investment agreement with a third party and agreed not to negotiate with other entity regarding financing or a potential acquisition for a two-week period. During the exclusivity period the company engaged in negotiations with another investment group. The third party alleged breach of investment agreement and intentional and negligent misrepresentation. Total defense costs and settlement
exceeded $350,000.

Shareholder Derivative Action: A shareholder derivative action was taken against a company for breach of fiduciary duties on behalf of the directors. The plaintiffs contended that the defendants failed to provide them with information, such as shareholder listings, financial data and other corporate records. They also alleged that certain directors borrowed money from the company without the Board’s approval and subsequently those loans were forgiven. Total defense costs and settlement exceeded $500,000.

Fiduciary Liability

ERISA Violation: The plan fiduciaries for a 401(k) received a letter from the Department of Labor advising them that it appeared they had violated several provisions of ERISA. The DOL alleged that the plan fiduciaries: did not forward amounts withheld from employees on a timely basis; made delinquent employer contributions to the plan; and filed Annual 5500 Reports which falsely indicated that the plan was funded in accordance with the minimum funding requirements of ERISA. Total defense costs and settlement exceeded $250,000.

Imprudent Investment Decision: The trustees of an Employee Stock Ownership Plan (ESOP) were sued by the Department of Labor (DOL) and company employees who faulted the Plan Administrators (fiduciaries) for making imprudent investment decisions. The court ultimately found the fiduciaries failed to conduct impartial reviews of investment options. The suit finally settled for $1,000,000.


Theft of a Company Credit Card: An employee used a company credit card to purchase 35 expensive laptops. The employee later resigned and the company could not locate any of the laptops three months later. The total loss to the company was $122,500.

Wire Transfer Fraud: Your bank received a call from a man claiming to be your employee. The man requested the bank wire $75K into a supplier’s account who would not proceed with their services until payment was received. The bank wired the money and it was later discovered the man was not an employee and had perpetrated fraud upon your bank account.



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