Legal Insurrection by William A. Jacobson Sunday, August 6, 2023
Oberlin College Sues Insurers For Refusing To Cover $36 Million It Paid Gibson’s Bakery For Defamation And Other Torts
Four insurance companies have told the college to pound sand. Have you ever rooted for insurance companies ever? There’s a first for everything.After a six year struggle, in December 2022 Gibson’s Bakery finally was paid by Oberlin College a total of $36 million, representing a judgment of approximately $32 million plus post judgment interest. We covered the payment on December 11, 2022, Finally, The Gibson’s Bakery Family Has Been Paid By Oberlin College.
It was a six year struggle for the Gibson family, which saw Grandpa Allyn Gibson and David Gibson pass away after the trial but before the appeals were concluded.
It was a six year journey for us as well, as we covered the case almost since the inception of the protests outside the bakery in November 2016, after a black Oberlin College student was stopped for shoplifting. (He was in fact shop lifting.) The ensuing accusations by the college that the bakery had a long history of racial profiling let to a lawsuit, trial, appeals, and ultimately payment. We were there the whole way:
Along the way, for those of you paying careful attention, a controversy bubbled up as to whether the college’s insurers would cover the verdict. We covered the potential dispute on June 9, after the $11 million compensatory verdict, but before the $33 million (eventually reduced) punitive verdict, EXCLUSIVE: Oberlin College insurer likely to reject coverage for Gibson Bakery $11 million verdict:
A jury has awarded Gibson’s Bakery and its owners $11 million in compensatory damages against Oberlin College, for libel, intentional interference with business, and intentional infliction of emotional distress. The punitive damage hearing next week could add another $22 million, bringing the total to $33 million….
An obvious question, and one a lot of people have been asking, is whether the college has liability insurance to cover the verdict.
Based on court filings obtained by Legal Insurrection Foundation, it appears that the insurer, Lexington Insurance Company, is likely to disclaim coverage for the intentional torts which gave rise to the verdict.
The likelihood of refusal to cover the verdict was revealed in a May 1, 2019, Motion to Intervene (pdf.)(full embed at bottom of post) filed by Lexington Insurance Company.
The purpose of the motion, according to Lexington, was “for the limited purpose of submitting interrogatories to the jury in order to determine facts at issue in this action that would impact coverage under its policy.”
I then extensively quoted the Lexington Motion, which previewed how it would disclaim coverage and how the nature of the claims and verdict would be important:
Here is an excerpt from Lexington’s motion setting forth the nature of the insurance coverage (emphasis added):
Lexington issued a Commercial Umbrella Liability policy that potentially provides coverage to defendants Oberlin College aka Oberlin College and Conservatory (“Oberlin”) and Meredith Raimondo for certain damages in this action. Lexington seeks intervention in this action for the limited purpose of submitting interrogatories to the jury in order to determine facts at issue in this action that would impact coverage under its policy.
The Lexington policy does not provide coverage for “bodily injury” or “property damage” intentionally caused by defendants. While the Lexington policy potentially provides coverage in relation to “personal and advertising injury,” defined to include defamation and/or disparagement in certain circumstances, the Lexington policy excludes any such coverage if “personal and advertising injury” is caused “with the knowledge that the act would violate the rights of another … ,” or if the insured published material it knew to be false. Further, the Lexington policy provides coverage for punitive damages insurable by law, but only where the corresponding award of compensatory damages is also covered by the Lexington policy. In this action, plaintiffs Gibson Bros., Inc., Allyn Gibson, and David Gibson allege that defendants Oberlin and Ms. Raimondo published material that falsely characterized the bakery owned by plaintiffs (“Gibson’s”) as being a racist establishment. While such allegations potentially implicate “personal and advertising injury,” plaintiffs also alleged that the statements were published with malice, were intended to injure plaintiffs’ business reputation, and were part of a purported campaign to harm plaintiffs. If it is established that the defendants knew the alleged statements were false, or if the defendants knew their alleged acts would violate plaintiffs’ rights, the Lexington policy would exclude coverage for any resultant damage. Thus, Lexington seeks to intervene in order to submit jury interrogatories to determine the extent of the defendants’ knowledge in relation to the alleged publications.
More:
https://legalinsurrection.com/2023/08/oberlin-college-sues-insurers-for-refusing-to-cover-36-million-it-paid-gibsons-bakery-for-defamation-and-other-torts/
