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Obstacle Course Race Company Needed an Insurance Lawyer

This case is a cautionary tale about what happens when a race director doesn't have an insurance and contract lawyer look over their documents.

New Bill Increases Penalty for Child Trafficking in Connecticut

More than 130 children have been forced into sexual slavery in Connecticut in the last five years and the Connecticut legislator is doing something about it.

UConn Law Professor Speaks to Congress on Cybersecurity

While many lobby to limit the duty to disclose consumer data breaches, Dr. David Thaw warns against rewarding companies for bad investigations and eroding consumer protection.

Appeal from Second Circuit Striking Down Town Prayer

Congress has been opening with prayer since before the revolution, but in Town of Greece v. Galloway, the practice began in 1999 and may have been intended to favor one religion.

New Connecticut Law Limits Immigrants Turned over to ICE

This controversial new policy means that Connecticut authorities will only honor ICE detention requests for immigrants on terrorist watch lists, felons or those who meet other safety risks.

Law is a Personal Profession

Life has become less personal, but Law remains a personal profession and anyone can put themselves on the short list for a job by skipping email and applying in person.

How to Study in Your Car - Redeeming the Time

Whether you're driving or folding laundry, you can get ahead by listening to the right audiobooks and lectures. This article reviews of the best audio resources and explains how to get them.


Monday, July 9, 2018

Second Circuit Finds Coverage in Cyber Fraud Case

Published on

On Friday, July 6, 2018, the United States Court of Appeals for the Second Circuit held that a fraudulent email that caused a company to transfer $4.8 Million to the fraudster was a “direct loss” covered by the company’s computer fraud insurance.

By defining “direct cause” as “proximate cause,” the Second Circuit Court of Appeals settled a major ambiguity in computer fraud insurance policies in favor of policyholders. “Direct cause” is one of the most hotly debated issues in crime insurance and courts disagree on its interpretation. Earlier this year, the 9th Circuit found against coverage in a similar situation in Taylor & Lieberman v. Federal Insurance Company, 2017 WL 929211 (9th Cir.). These conflicting decisions could give rise to an appeal to United States Supreme Court.

The Loss

In 2014, an employee of Medidata Solutions Inc., (a cloud-based technology company) received an email purporting to be from the company’s president. As a result of the email, the company eventually wired $4.8 million to an outside bank account. That email turned out to be spoofed, and the bank account belonged to a fraudster.

As the district court explained in the underlying case:
“[S]poofing” is “the practice of disguising a commercial e-mail to make the e-mail appear to come from an address from which it actually did not originate. Spoofing involves placing in the ‘From’ or ‘Reply-to’ lines, or in other portions of e-mail messages, an e-mail address other than the actual sender’s address, without the consent or authorization of the user of the e-mail address whose address is spoofed.
Medidata Sols., Inc. v. Fed. Ins. Co., 268 F. Supp. 3d 471, 477 n.2 (S.D.N.Y. 2017) (quoting Karvaly v. eBay, Inc., 245 F.R.D. 71, 91 n.34 (E.D.N.Y. 2007)).

The Claim
When the fraudster attempted the same scam a second time, Medidata discovered the fraud and tendered the loss under its Federal Executive Protection policy. The Policy contained a “Crime Coverage Section” addressing loss caused by various criminal acts, including Forgery Coverage Insuring, Computer Fraud Coverage, and Funds Transfer Fraud Coverage.

Federal denied coverage for two reasons. First, Federal claimed that no actual hacking or data breach took place “because the emails did not require access to Medidata’s computer system, a manipulation of those computers, or input of fraudulent information.” Medidata Sols., Inc., 268 F. Supp. 3d at 475. Second, Federal claimed Medidata did not sustain a “direct loss” because the spoofed emails directed Medidata’s employees to transfer the funds, and, therefore the fraudster’s computer-action was not the direct cause of the loss, rather Medidata’s action (through its employees) was an intervening cause.

The Ruling

The District Court rejected Federal’s arguments and the Second Circuit agreed.

Friday, May 18, 2018

Surviving a Tornado – How to Navigate Insurance Claims in the Wake of the Recent Connecticut Storm

Published on

Five minutes after I parked my car, a Tree fell on it.

On Tuesday, May 15th I pulled into my driveway, in my small Connecticut neighborhood, under a grey sky. As soon as I walked in the house, the lights flickered. And then suddenly there was a loud “Crack!” and “Crash!” and the sound of breaking glass. I looked out the window and trees were bent 90 degrees, then snapping, and then flying up instead of falling down. And as quickly as it came, it passed.

When I stepped outside, my first thought was that my car has seen better days. My second thought was that my whole neighborhood had seen better days.
Do you think the TV still works?
As I walked down the street surveying the damage, my neighbors started emerging from their homes like survivors in a post-apocalyptic movie. We speculated that it might have been a Tornado and that later proved to be true.
If I'm reading this correctly, it's bad to be in the "red" area.

Sunday, November 5, 2017

Obstacle Course Race Company Needed an Insurance Lawyer

This case is a cautionary tale about what happens when a race director doesn't have an insurance and contract lawyer look over their documents. Since this is a case about Obstacle Course Racing and Insurance law, it pretty much has my name written all over it. So that's why I offered to write this article, which was first published at SDV Law. This version has been updated a little because my readers here generally know a little bit more about OCR and there's no one here to edit out my bad jokes.

Me - running an obstacle course race in the rain
and wondering how anyone could ever get hurt
doing this.
With the rise in popularity of obstacle course racing, millions have participated in races like Spartan Race, Rugged Maniac, Tough Mudder, and Warrior Dash in the last ten years. Although serious injuries are rare relative to the number of participants, several notable incidents, including the collapse of the Warrior Dash obstacle “Diesel Dome” in October 2016 which resultedin the indictment of five individuals, have caused race companies and participants to question whether their insurance will cover injuries sustained during one of these extreme competitions. Insurance issues have become even more prevalent as smaller race brands and even local farms have started getting into the obstacle course racing business.

Such was the case in Maxum Indemnity Co. v. Dirty Foot Mud Ranch, LLC. In Dirty Foot, a small race company sought defense and indemnity from its general liability insurer after a race participant sued for an injury sustained during one of its events.