2019 saw a flurry of decisions under directors and officers (D&O) insurance policies, including a bizarre and self-prompted change of heart by the Seventh Circuit.

  • Seventh Circuit withdraws decision, affirms coverage for Emmis shareholder lawsuit despite notices to multiple insurers. 

In the Emmis Communications case, the U.S. Court of Appeals for the Seventh Circuit withdrew a controversial opinion that broadly interpreted an exclusion in Emmis’ directors and officers liability policy, barring coverage for losses in connection with claims of circumstances “as reported” under Emmis’ other insurance policy. The appeal to the Seventh Circuit stemmed from a district court ruling of summary judgment in favor of Emmis, rejecting the insurer’s broad reading of the exclusion and concluding that the use of “as reported” in the past tense must “refer[] to events that had already occurred at the time of drafting.” A three-judge panel in the Seventh Circuit initially reversed the district court and upheld the insurer’s denial of coverage. However, on Emmis’ petition for panel rehearing, the Seventh Circuit vacated the judgment in favor of the insurer, withdrew its initial opinion and affirmed the district court summary judgment decision. The reversal, while very rare, alleviated concerns about the chilling effect the court’s broad reading of the exclusion may have on policyholders’ decisions to provide notice under all potentially applicable insurance policies.

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