Coverage Implications of the #MeToo Movement

In October 2017, the #MeToo movement burst onto the national scene as a platform for individuals who had been victimized by sexual assault to express their anguish and seek support. In addition to offering a voice to its impact on individual victims, #MeToo spearheaded a political and social movement aimed at eliminating workplace harassment.¹ Almost from its inception, it was clear that the effect of the movement would ripple throughout myriad industries, ranging from entertainment to finance to mom and pop shops, as employees came forward with allegations of sexual misconduct against current and former employers.

What also soon became apparent was that the insurance industry would be affected by #MeToo-inspired claims. For example, famed film producer Harvey Weinstein is the target of at least 11 lawsuits arising from allegations of sexual harassment or assault. In the face of the prospect of paying for the mounting related defense costs out-of-pocket, Weinstein tendered his defense to his personal indemnity insurer, Chubb Ltd.² In response, Chubb declined coverage under a variety of general liability policies, including those with homeowners coverage. Chubb cited as its bases for declining coverage a lack of occurrence, as well exclusions for discrimination, director’s liability, intentional acts, molestation, misconduct, and abuse.³ Litigation between Mr. Weinstein and several of his insurers remains pending in multiple jurisdictions, both nationally and abroad.

Another example of an insured’s attempt to defray defense costs arising from allegations of sexual misconduct is the case of sitcom star and comedian William “Bill” Cosby. Ten women in three states filed defamation claims against Mr. Cosby in connection with his public denials of their claims of sexual misconduct. Mr. Cosby attempted to use the personal injury coverage afforded by several homeowners insurance policies issued by AIG Property Casualty Company (“AIG”) to pay his legal fees related to the defamation claims.⁴ In response, AIG argued that “because Cosby’s allegedly defamatory denials were prompted by the women’s sexual-assault allegations, the defamation injury and the excluded conduct are so ‘inextricably intertwined’ as to trigger . . . sexual misconduct exclusions.”⁵ In a June 2018 ruling, the United States Court of Appeals for the First Circuit held that AIG did have a duty to defend Cosby against the defamation claims, primarily due to ambiguous drafting of the policy as to the term of art “arising out of.”⁶ However, while the court ruled against the insurer with regard to the duty to defend, it remains to be determined whether there is coverage for any damages that might eventually be awarded in the underlying action.⁷

In addition to tenders under homeowner and other general liability policies, insurers can expect to receive tenders seeking coverage under a variety of policies, such as those containing directors and officers as well as employment practices liability endorsements. The #MeToo movement might impact coverage in other ways, too, as the courts interpret common policy terms such as “arising out of,” as evidenced by the Cosby case. As more insurance claims arising from workplace harassment are litigated, the coverage implications of the #MeToo movement will become clearer.