The U.S. Eleventh Circuit Court of Appeals held that an employment practices liability policy does not provide coverage for claims made against the insured by an entity alleging it is the insured’s employer. Carolina Cas. Ins. Co. v. Red Coats Inc., 2015 WL 4880523 (11th Cir. Aug. 17, 2015).
The underlying plaintiff, a medical facility, sued the insured, a security company, for negligence and vicarious liability after one of the insured’s security guards stole computers with sensitive information from the facility. The facility alleged that it employed the insured at the time of the incident. The insured sought coverage from its employment practices liability insurer. The insurer sought a judicial declaration that it had no duty to defend or indemnify because the underlying claim did not arise from an employment relationship. A federal court in Florida granted summary judgment in favor of the insurer, finding that the underlying claims did not trigger coverage under the subject policy because an employment relationship did not exist between the insured and the underlying plaintiff. The insured appealed.
The Eleventh Circuit, applying Florida law, affirmed the district court’s entry of summary judgment in favor of the insurer. It held that the policy was designed to apply to disputes between the insured and its own employees – not disputes between an insured and its employer. Therefore, the Eleventh Circuit concluded that an employment relationship did not exist between the insured and the underlying plaintiff and that the underlying claim did not trigger coverage under the policy.