A jury has awarded Gibson’s Bakery and its owners $11 million in compensatory damages against Oberlin College, for libel, intentional interference with business, and intentional infliction of emotional distress. The punitive damage hearing next week could add another $22 million, bringing the total to $33 million.

There will be post-trial motions to set aside the jury verdict and/or reduce the dollar amounts, and then appeals. So while the Gibson family won a major victory, it is not over.

An obvious question, and one a lot of people have been asking, is whether the college has liability insurance to cover the verdict.

Based on court filings obtained by Legal Insurrection Foundation, it appears that the insurer, Lexington Insurance Company, is likely to disclaim coverage for the intentional torts which gave rise to the verdict.

The likelihood of refusal to cover the verdict was revealed in a May 1, 2019, Motion to Intervene (pdf.)(full embed at bottom of post) filed by Lexington Insurance Company.

The purpose of the motion, according to Lexington, was “for the limited purpose of submitting interrogatories to the jury in order to determine facts at issue in this action that would impact coverage under its policy.”

Here is an excerpt from Lexington’s motion setting forth the nature of the insurance coverage (emphasis added):

Lexington issued a Commercial Umbrella Liability policy that potentially provides coverage to defendants Oberlin College aka Oberlin College and Conservatory (“Oberlin”) and Meredith Raimondo for certain damages in this action. Lexington seeks intervention in this action for the limited purpose of submitting interrogatories to the jury in order to determine facts at issue in this action that would impact coverage under its policy.

The Lexington policy does not provide coverage for “bodily injury” or “property damage” intentionally caused by defendants. While the Lexington policy potentially provides coverage in relation to “personal and advertising injury,” defined to include defamation and/or disparagement in certain circumstances, the Lexington policy excludes any such coverage if “personal and advertising injury” is caused “with the knowledge that the act would violate the rights of another … ,” or if the insured published material it knew to be false. Further, the Lexington policy provides coverage for punitive damages insurable by law, but only where the corresponding award of compensatory damages is also covered by the Lexington policy. In this action, plaintiffs Gibson Bros., Inc., Allyn Gibson, and David Gibson allege that defendants Oberlin and Ms. Raimondo published material that falsely characterized the bakery owned by plaintiffs (“Gibson’s”) as being a racist establishment. While such allegations potentially implicate “personal and advertising injury,” plaintiffs also alleged that the statements were published with malice, were intended to injure plaintiffs’ business reputation, and were part of a purported campaign to harm plaintiffs. If it is established that the defendants knew the alleged statements were false, or if the defendants knew their alleged acts would violate plaintiffs’ rights, the Lexington policy would exclude coverage for any resultant damage. Thus, Lexington seeks to intervene in order to submit jury interrogatories to determine the extent of the defendants’ knowledge in relation to the alleged publications.

Further, the Lexington policy provides coverage for punitive damages only when the punitive damages are assessed relative to covered compensatory damages. Here, plaintiffs seek punitive damages for the claims of libel, tortious interference with contract, tortious interference with business, intentional infliction of emotional distress, and trespass. Only the libel claim is potentially embraced by the Lexington policy. Thus, Lexington seeks to intervene in order to submit jury interrogatories and instructions to determine what punitive damages, if any, correspond to each cause of action.

The motion then sets forth Lexington’s inability to gain cooperation as to jury interrogatories from the college:

In particular, Lexington affirmatively requested on several occasions that the defendants submit jury interrogatories and instructions as proposed through this motion. Lexington also inquired as to when proposed jury interrogatories and instructions were due, and was informed on April 27, 2019 by defense counsel for Oberlin and Ms. Raimondo that there was currently no deadline set by the Court and that the deadline would probably be several weeks away. Lexington advised the defendants that Lexington understood the defendants would adopt Lexington’s request to submit jury interrogatories and instructions as outlined by Lexington. On April 27, 2019, the defendants responded that they would inform Lexington of their position on April 29, 2019. Defendants did not inform Lexington on April 29, 2019 as represented and, as such, Lexington is acting out of an abundance of caution in the form of this motion, as Lexington remains uncertain of defendants’ position, despite repeated communications and requests by Lexington.

The motion then sets forth the history of Lexington fighting with Oberlin College as to insurance coverage:

After tender of the lawsuit, Lexington informed the defendants that the Lexington policy did not respond to certain claims in the lawsuit. In particular, based on the claims that remain in the lawsuit, Lexington advised that the Lexington policy only potentially responds to the libel claim, . but that the Lexington policy is excess to other insurance provided through a commercial general liability policy issued by College Risk Retention Group, Inc. (“CRRG”) and an Educator’s Liability policy issued by United Educators (“UE”) in relation to the libel claim. Lexington further advised that the Lexington policy only embraces punitive damages when assessed relative to covered compensatory damages that implicate the Lexington layer of coverage. (Affidavit of Patrick Fredette (“Fredette Aff. ‘), ,r 3). In this regard, Lexington’s coverage, if any, is also excess to the UE policy not simply for any covered liability arising out of the libel claim, if any, but also any covered punitive damage award, subject to the $1 million cap in the UE policy for such damages. (Id.).

The Court rejected Lexington’s motion to intervene:

The jury instructions proposed by Lexington (at page 31 of the pdf. of the motion) differ from the jury interrogatories submitted to the jury:

Gibson Bros Inc. Jury Interrogatories

Allyn W. Gibson Jury Interrogatories 

David R. Gibson Jury Interrogatories

Accordingly, based on Lexington’s court filing, it is likely that Oberlin College, should its post-trial motions and appeals fail, will have to pay out of pocket and then sue Lexington.

[Featured Image: Four generations of Gibsons after Jury Verdict][Photo Credit Legal Insurrection Foundation]

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Gibson’s Bakery v. Oberlin College – Lexington Ins Co Motion to Intervene by Legal Insurrection on Scribd

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