D&O Insurance Coverage for Competitor Hire Claims

A frequently recurring claim that many companies face is a lawsuit brought by a competitor after the company hires the competitor’s former employee. Depending on how the competitor’s lawsuit is framed, these kinds of claims can be an awkward fit with the defendant company’s D&O insurance policy. A recent insurance coverage dispute in Delaware state court illustrates the kinds of coverage issues that can sometimes arise in connection with these claims. As discussed below, there are ways that D&O insurance policies can be revised to try to address at least some of the coverage issues. Delaware Superior Court Judge Eric Davis’s May 2, 2018 in the insurance coverage litigation can be found here.   Background Bernadette Ruby was an employee of Extended Stay America (ESA). Ruby left ESA and began working at WoodSpring Hotels LLC. In October 2016, ESA sued WoodSpring alleging that WoodSpring, Ruby, and Michael Docteroff had misappropriated…

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