Media Coverage
Source: Law360
Media Coverage
12.15.15
A Minnesota district court’s ruling that $30 million of U.S. Bancorp’s $55 million overdraft fee class action settlement must be covered by two insurance companies is being reconsidered at the Eighth Circuit this week. The ruling could considerably impact how restitution is defined and covered by insurance policies.
A district judge granted summary judgment to U.S. Bancorp in December 2014, ruling that a $55 million class settlement in litigation surrounding overdraft fees does not qualify as restitution or an extension of credit and thus is a covered loss under the bank’s policies with insurers Indian Harbor and Ace American Insurance Co. According to Law360, Indian Harbor claims in its appeal that when a settlement provides for restitution or required disgorgement of profits, it is not covered.
Peter Gillon, co-leader of Pillsbury’s Insurance Recovery & Advisory practice, tells Law360 the appeal ruling could be significant for policyholders.
"This is an important issue — whether a lump-sum class action settlement can be considered restitution or disgorgement when the settlement amount is based on the amounts claimed but is not truly a disgorgement remedy," Gillon said. "There appears to be a tendency of insurers to assert that a claim involves restitutionary damages when there is little basis for that position, so the [Eighth Circuit's] clarification of the contours of what is a claim for restitution could be important."
Read Law360's full coverage here.