Public policy does not bar corporation from recovering under the policy for its settlement of a shareholder class action lawsuit
Genzyme Corp. v. Federal Ins. Co., 09-2485, concerned a challenge to the district court's judgment that a corporation's loss was not insurable as a matter of Massachusetts public policy, in the corporation's suit against its insurer seeking to recover its costs in settling a shareholder class action under a corporate and director and officer liability insurance policy.
In reversing in part and remanding, the court held that there is no public policy that prevents the corporation from recovering under the policy. However, the Bump-up clause bars recovery of settlement amounts paid to resolve claims against the corporation itself. Lastly, on remand, the district court must determine whether any amounts paid in settlement were attributable to the indemnification of the named directors and officers and, if so, determine how much of the settlement costs should be allocated to those claims.
- Read the First Circuit's Full Decision in Genzyme Corp. v. Federal Ins. Co., 09-2485