The U.S. District Court for the Northern District of Georgia, applying Georgia statutes and revising its earlier summary judgment, has determined that a restaurant is not eligible for coverage under a Claims Made and Reported Two Equal Employment Opportunity Policy Commission (“EEOC”) charges and a resultant claim brought by the same ex-employee as being claims arising out of “an insured event” and therefore as “created on the date of the first EEOC charge prior to the applicable period of insurance or raised” shall apply. PMTD Restaurants, LLC v Houston Cas. Co., 2022 WL 1398149 (ND Ga. March 23, 2022).
A former employee filed an EEOC lawsuit alleging discrimination against a restaurant on July 19, 2016, and subsequently filed another EEOC lawsuit alleging retaliation on December 30, 2016. After the employee received a right to sue, he filed a lawsuit against the restaurant on May 16, 2017. On May 25, 2017, the restaurant notified its insurer under a Claims Made and Reported policy with a policy term of December 26, 2017 December 2016 to 26 December 2017. The policy provided that claims for “an insured event”, i.e. “insured events” related by an unbroken chain of events or made or made by the same beneficiary, were to be made at the time of first such action shall be deemed to be “created or asserted”. The insurer denied coverage on the grounds that no claim was “reported or made” during the applicable policy period. After winning the court, the restaurant filed a subpoena to recover its defense costs related to the EEOC charges and the lawsuit.
In a previous order, the court ruled that the two EEOC fees were separate “claims” and that the restaurant had timely reported the retaliatory fee and the claim to the extent based on that fee to the insurer during the applicable policy period. Therefore, the court concluded that the insurer “arguably” should pay the defense costs for the second EEOC charge, but not for the first. PMTD Restaurants, LLC v Houston Cas. Co., 2021 WL 5033473 (ND Ga. 15 Sep 2021). The court therefore entered partial summary judgment in favor of both the insurer and the restaurant and ordered the parties to file additional summary judgment motions addressing the application of a provision in the policy requiring a notice of damage within 60 days or prescribe as soon as possible.
Upon the insurer’s second motion for summary judgment, the court reversed its earlier decision, finding that the policy did not cover the underlying EEOC charges or the claim. First, the court saw good reason to reconsider or reverse its previous order because the insurer’s arguments were valid and the restaurant was not disadvantaged by having had an opportunity to respond to the insurer’s arguments. In the merits, the Court held that since both the EEOC Charges and the Claim were brought by the same plaintiff, they were claims for “an insured event” and were therefore deemed “made or brought” on the date of the first EEOC Charge. apply before the insurance period. Because no claim was “reported or filed” during the period of insurance, the restaurant was not eligible for coverage.