D&O Suit Filed by Biotech Company Can Proceed – Business Insurance Reports on Shaun Crosner & Jacquelyn Mohr Heitman’s Representation of Skye Bioscience
As reported by Business Insurance, a federal district court in Los Angeles refused to dismiss directors and officers liability coverage litigation filed by Firm client Skye Bioscience. The lawsuit concerns coverage for defense fees, costs, and indemnity for underlying claims asserted by a former employee of Skye.
Partners Shaun Crosner and Jacquelyn Mohr Heitman are representing Skye Bioscience in the litigation and commented to Business Insurance, “We are pleased with the decision and believe the court correctly applied the governing legal principles. We and our client look forward to litigating this case on the merits.”
As noted by Business Insurance, Partner Re Ireland Insurance DAC issued a D&O policy to Skye Bioscience, and during the policy period, Skye received a demand from a former employee who alleged she had been wrongfully terminated after she complained about Skye’s alleged misconduct, including various violations of federal securities law. In her lawsuit, the employee alleged her termination amounted to retaliation under the Sarbanes Oxley Act. Partner Re denied coverage in the case based on its interpretation of the phrase “securities claim” in its coverage.
In the lawsuit against Partner Re, Skye charged the insurer with breach of its contractual duty to provide coverage and its implied covenant of good faith and fair dealing and with bad faith. Skye seeks damages for the legal fees and costs incurred to date in defending the employee’s lawsuit, as well as a declaration of Partner Re’s obligations to cover future defense fees and costs and any settlement or judgment in the underlying litigation.
As quoted by Business Insurance, in denying Partner Re’s motion to dismiss, the district court held “Skye has plausibly alleged that the Cunning Lawsuit is covered by the policy,” adding that, “[a]s Skye argues, Sarbanes Oxley is defined as a ‘securities’ in the Securities Exchange Act of 1934.”
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