Sexual Harassment Claims: Emerging Trends in Coverage Litigation
| Publication year | 1995 |
| Pages | 63 |
| Citation | Vol. 24 No. 1 Pg. 63 |
1995, January, Pg. 63. Sexual Harassment Claims: Emerging Trends in Coverage Litigation
Sexual harassment litigation gives rise to complex insurance coverage issues. Asserting legal theories based on common law tort, breach of employment contract and Title VII violations, complaints are often artfully drafted in an attempt to invoke coverage under comprehensive general liability policies.
This article focuses on sexual harassment coverage issues in the workplace under general liability policies. It concludes by distinguishing those non-workplace situations in which allegations of negligent hiring and supervision may trigger coverage.
There are several legal theories that commonly appear in sexual harassment complaints. First are those under Title VII of the Civil Rights Act of 1964.(fn1) Title VII recognizes two types of discrimination: quid pro quo and hostile work environment.
In quid pro quo complaints, employment benefits are conditioned on sexual favors. In hostile work environment complaints, there is unwelcome verbal or physical conduct, usually of a sexual nature, that alters the terms, conditions or privileges of employment and creates an abusive working environment. The specific acts alleged in a hostile work environment complaint may range from sexual innuendos and use of pornographic materials and obscenities to aggressive sexual touching.
Many sexual harassment complaints allege that supervisors and bosses pay lip service to reports of harassment by saying they will deal with the problem, but actually drag matters out by doing nothing or by minimizing the severity of the situation. Often, the plaintiff is blamed for the situation. These factors contribute to the plaintiff's emotional distress. Title VII claims are not covered by the typical general liability policy.(fn2)
It is the other allegations in the complaint against the employer that give rise to insurance coverage questions. These often include: claims for intentional infliction of emotional distress; negligent infliction of emotional distress; negligent supervision or retention of an employee; defamation; invasion of privacy; false imprisonment; assault; battery; and breach of employment contract and wrongful discharge. However, the emerging trend is for the courts to uphold denials of coverage under the general liability policy to employers who are faced with sexual harassment complaints.
There are five major coverage issues that may be raised when an employer tenders the defense of a sexual harassment suit to its general liability insurer. These are: (1) whether the alleged sexual harassment constitutes "bodily injury" arising from an "occurrence"; (2) whether the exclusive remedy provision of workers' compensation acts bars tort actions against an employer; (3) whether policy exclusions for "bodily injury" arising out of the course of employment ("employee exclusion clause") may be applicable; (4) whether personal injuries are excluded from coverage because they are inextricably intertwined with the underlying sexual harassment claim; and (5) public policy considerations.
The typical commercial general liability policy provides coverage for bodily injury arising from an occurrence. Insurance Services Office, Inc. ("ISO") Form CG 00 01 11 88 provides as follows under Coverage A:
We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. This insurance applies to "bodily injury" and "property damage" only if: (1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";... "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
This insurance does not apply to:
a. "Bodily injury" or "property damage" expected or intended from the standpoint of the insured.
In Allstate Insurance Co. v. Troelstrup,(fn3) the Colorado Supreme Court rejected the argument that a child molester did not subjectively intend to harm the victim. The court held that intent to cause injury could be inferred as a matter of law in child molestation cases.(fn4) Thus, even if a complaint were to contain allegations of negligence, the insurer's duty to defend would not be triggered.(fn5)
The intent to harm may not always be inferred when the victim is an adult. However, the emerging majority trend is that acts of sexual misconduct are intentional acts and that sexual harassment does not constitute bodily injury arising from an occurrence.(fn6) In Commercial Union Insurance Companies v. Sky, Inc.,(fn7) a federal court in Arkansas held that incidents of sexual harassment, both verbal and physical, were...
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