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Tuesday, November 14, 2006
NFL Wins Insurance Dispute Over Maurice Clarett Case

The legal bill associated with fighting off Maurice Clarett's challenge to the NFL's age restriction? Just eight hundred and fifty thousand dollars, according to a New York Appellate Division opinion released today in NFL v. Vigilant Insurance Company, 2006 WL 3290617 (N.Y.A.D. Nov. 14, 2006). Vigilant issued an "executive protection insurance policy," which provided
the NFL with claims-made liability coverage and defined "Loss" to include indemnification for defense costs. The insuring clause required Vigilant to pay for "all Loss for which [the NFL] becomes legally obligated to pay on account of any Claim first made against the [NFL] during the Policy Period ... for a Wrongful Act." The policy defined "Wrongful Act" as "any error, misstatement, misleading statement, act, omission, neglect or breach of duty committed ... by [the NFL] before or during the policy period."
However, the policy contained an "employment exclusion", relieving the insurer of responsibility
"for Loss on account of any Claim made against [the NFL] ... for any Employment Practices."
Vigilant denied that it was responsible for the costs of defending Clarett's antitrust suit on the ground that the suit concerned the NFL's employment practices and was thus subject to the insurance contract's employment exclusion. The NFL sued Vigilant in New York state court, arguing that the exclusion applied only to employment law claims (such as FLSA claims, employment discrimination claims, and the like), not to antitrust disputes.

After a lower court granted Vigilant's motion to dismiss, the appellate division reversed. The court opined that
Clarett's antitrust claim against the NFL did not arise from any actual or prospective employment relationship with the NFL, as it is undisputed that NFL players are employees of individual NFL teams, not the NFL itself.
Interpreting the exclusion against the insurer, the court ruled that Vigilant's motion to dismiss should not have been granted.


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