1. Director & Officers Liability Issues, Trends and Loss Control

2. Types of Claims Typically Filed Against D&O’s Wrongful Termination  “At will” provision may eliminate these claims.  Sexual Harassment and Discrimination (age, sex, race, disability, etc.) Civil Rights Violation Retaliatory Acts – such as a transfer to a physically arduous, less desirable job or a 37 day suspension without pay Breach of Contract (employment or other) Breach of Fiduciary Duty

3. Actual Claims Filed Against Golf Clubs  Alleged discrimination arising out of men’s grills/lounges.  Less Golf Time for women due to course dedicated to men’s tournaments.  Defamation or alleged lack of due process arising out of disciplinary actions taken against members when they overindulge and misbehave at club parties.  Alleged harassment of employees of the club when they are working club functions where members may be inclined to take inappropriate social liberties.  General employment practice claims filed by employees.

4. Golf Club Claims, Continued  Many of the claims are linked to the food/beverage service aspect of club, such as bus boys, waiters/waitresses and bartenders.  The backgrounds/education levels of the employees are sometimes very diverse.  The work environments typically range from high stress to an almost social atmosphere. The former can lead to flaring tempers and impromptu reprimands. The latter to sometimes off-color humor or sexual overtones.  Because the employees generally work in close physical proximity to one another, there are often many witnesses to the alleged EPL acts, which can be good or bad.  Claims made against the board involving membership issues, such as disgruntled parties who were refused membership; club members who disapprove of the board letting in too many members, the wrong kind of members, etc. Damages are often difficult to assess in such situations.

5. Why are D&O’s Sued? The accused is a Director or Officer Officer is the supervisor of the claimant Officer is the supervisor of the accused Officer is the decision maker in the dispute Inaction on the part of the Director/Officer Director/Officer developed the employment practice /company procedure Director/Officer approved the employment practice/company procedure

6. The Complaint Historically vs. Today Plaintiff sues employer  for Wrongful Termination  for Breach of Contract  for Civil Rights violation Plaintiff sues employer  and D’s and O’s  and supervisors/mgrs.  and co-employees for multiple wrongful acts based on federal statute and state law

7. 2004 Bases Alleged in EEOC Suits Filed Sex Discrimination18552.4% Retaliation 14437.9% Race5815.3% Disability4511.8% Age4511.8% National Origin379.7% Religion164.2% Equal Pay51.3% *Source: EEOC Accomplishments Report for Fiscal Year 2004 (www.eeoc.gov)

8. 2004 EEOC Resolutions By Statute Title VII264 Counts76.1%  Civil Rights Act – passed 1964 ADA 38 Counts10.9%  American with Disabilities Act – passed 1990 ADEA 28 Counts 8.1%  Age Discrimination Employment Act – passed 1967 *Concurrent 17 Counts 4.9% * under more than one statute

9. 2004 Monetary Relief By Statute Title VII$157.9 Million93.9% ADA $ 5.4 Million 3.2% ADEA $ 2.5 Million 8.1% *Concurrent $ 2.3 Million 1.4% * under more than one statute In 2004, the Office of General Counsel resolved a total of 347 merit lawsuits, Yielding $168,098,895 in monetary relief.

10. The Claims Process Review of facts and/or Complaint Review of Policy and/or coverage issues Correspondence/investigation Assignment of Counsel Response to plaintiff attorney/investigative agency Evaluation and mediation process

11. Potential Litigants Plaintiffs Job Applicants Current/Former Employees Terminating Employees Customers Co-workers Independent contractors Defendants Interviewers Human Resources Supervisors & Managers Board of Directors

12. Common Allegations Discrimination National Origin Race Religion Sex Sexual Preference Age Failure to Promote/Hire Hostile Work Environment Harassment Breach of Implied Contract Negligent Hiring or Supervision

13. Damages: What the Claimants Want Back Pay Front Pay Lost benefits and seniority Compensatory damages Punitive damages Attorneys fees and costs

14. Assessing Case Value Damning internal investigation or faculty committee findings Other complaints against same accused Multiple claimants or corroborating witnesses About the claimant  Hign earner/Professional?  Demeanor/Credibility?  Still Employed?  Sympathetic?  Contract Employee?  Length of employment

15. Assessing Case Value Con’t... Prior pattern of same conduct Documented evaluations Publicized Policy against discrimination, harassment, etc. Internal complaint procedures Written employment contracts Loss or partial loss of motion for summary judgement  Wake up call when you are dead set on defending Reputation of the judge, and reputation and experience of claimant’s counsel Claimant’s counsel has a lot of time/$ on the case  Attorney fees are recoverable

16. Assessing Case Value Con’t... Mediator’s recommendation significantly exceeds current thinking on case value Defense counsel is telling you to settle Agency finding of probable cause (or EEOC “A” or “B” charge rating) Rating the alleged behavior  Sexual contact or just verbal  Frequency? - one time occurrence or repeated offenses  Related crime matter

17. Profile of a “Bad” Claim (Features of a Potentially Costly Suit) Egregious or Outrageous Behavior Professional Level Plaintiff Class Action or Potential Class Action History of Repeated and Reported Incidents Lack of Published Policy & Procedure Inadequate or no civil management training Ignored policy or procedure Plaintiff in protected class Multiple Allegations, Plaintiffs, Defendants Poor, if any, documentation

18. Prevention of Employment Liability Losses Establish & implement  management training  employee awareness  manuals  interview procedures  complaint procedures

19. Controlling Employment Litigation Oversee internal complaints through resolution Retain decision-making in litigation Remain sensitive to rights of accused Establish committees for special tasks (i.e.. Downsizing) Offset Losses (ie. Insurance )

20. Recommendations for Employment Law Training Sexual Harassment  Types of harassment ( hostile environment and quid pro quo)  How to respond to formal and informal complaints of harassment, including the role of the supervisor and manager  Maintaining appropriate confidentiality  Non-retaliation

21. Employment Training (Con’t) Equal Employment Opportunity  Define & describe protected classes ( disability, age, race, etc.)  EEO issues in hiring and interviewing  Non-discriminatory discipline & discharge  Selection for training & other job benefits  Reasonable accommodation issues

22. Employment Training (Con’t) Wrongful Discharge & Wrongful Demotion  At will employment  Types of claims including breach of contract, public policy, negligent hiring & supervision  Performance evaluations  Discipline & discharge  Training & other job benefits  Documentation of performance issues

23. Interplay Between the ADA, FMLA and Worker’s Compensation Must understand:  Who is protected individual under the ADA & FMLA  When you can make medical inquires or request medical examinations and how this relates to worker’s compensation claims  When you have a duty to make a reasonable accommodation for a person with a disability related to occupational injuries  When you have a duty to grant leave under the ADA  Job modification or reassignment and leaves of absence

24. Activities, which if mishandled by management, often lead to liability Ill-considered e-mail messages Failure to document misconduct and performance problems Inappropriate complimentary evaluations Failure to follow company policies and procedures Talking with others about why an employee was discharged.

25. Activities, which if mishandled by management, often lead to liability Failure to communicate problems to Human Resources Dept. Uncontrolled letters of reference Failure to treat like cases alike Showing favoritism Failure to obtain advice when a situation arises that is not covered by company policy

26. QUESTIONS?

27. Non-Profit Director & Officers Liability Overview

28. PARTS OF A D & O POLICY D efinitions I nsuring Agreement C onditions E xclusions

29. POLICY DECLARATIONS PAGE Named Insured Policy Period Limit Of Liability Retention Premium Retro Active Date Endorsements

30. WHAT’S A GOOD RISK ? Good Loss History Good Employment Procedures Low Turnover Rate Diverse Sources of Revenue Positive Fund Balance In Operation 3+ Years Steady Revenue Nature of Operation / Type of Services Provided Experience of Directors and Officers

31. MERIT SUITS FILED 1995 TO 2004

32. MERIT SUITS RESOLVED

33. Monetary Relief – 1995 through 2004

34. Golf and Country Club Coverage

35. DEFINITION OF GOLF COURSE Golf Course meaning tees, cut fairways, greens, practice driving ranges, bunkers, cut and maintained roughs and other cut and maintained playing surfaces. Golf Course means a tract of land containing at least 9, but not more than 18, separate holes of golf. Greens, tees, fairways, and rough means: the outdoor grounds at the described locations that are specifically designed and maintained for the game of golf. Golf Course means tees, fairways, putting surfaces, practice driving ranges and other playing surfaces used to play golf. Golf Course means greens, rough areas, sand bunkers, fairways, tee boxes, out of bounds areas, driving ranges. Lawns coverage – greens, tees and cut fairways.

36. GOLF COURSE LIMITS $1,000,000 $2,000,000 $100,000 $50,000 Each Green, $250,000 Occurrence, $500,000 Annual Aggregate $250,000 $50,000 Limit shown in the Declarations page

37. GOLF COURSE - TREES, SHRUBS & PLANTS $50,000 Any one tree, shrub or plant $25,000 occurrence/$2,500 per tree, shrub or plant $75,000 occurrence/$2,500 per tree, shrub or plant $100,000 Aggregate per occurrence/up to $3,000 per tree $500,000 Annual Aggregate/$250,000 per occurrence/$25,000 each tree, shrub or plant/$50,000 each green $10,000 per occurrence $1,000 each tree, shrub or plant $50,000 any one occurrence

38. GOLF COURSE - DEBRIS REMOVAL COVERAGE $250,000 Annual Aggregate $150,000 Tree Removal Sublimit $50,000 $50,000 Any one occurrence $250,000 Any one occurrence $25,000 $10,000

39. Golf Course – Covered Perils Fire, Smoke Lightning Smoke Explosion Riot or Civil Commotion Aircraft, Vehicles V&MM Wind/Hail if covered in the Property Collapse, Sinkhole collapse, Volcanic Action Ice

40. Country Club Property Coverage Form Coverage Extensions Most Golf Programs Enhancement Endorsements Your Carrier Accounts Receivable$50,000 Arson Reward$5,000 Automated External Defibrillators Not Provided Back-up of Sewers and Drains $25,000 Brand and Label$2,500 Building Alterations$100,000 Building GlassIncluded Business Income and Extra Expense $25,000

41. Coverage Extensions Most Golf ProgramsYour Carrier Business Personal Property Within 1000 Feet Claims Expenses$25,000 Club Professional Replacement Expenses Not Covered Communication Towers, Antennas or Satellite Dishes, including their Lead- in Wiring, Masts and Guy Wires Not Covered Computer UpgradeNot Covered Computer Virus Extraction Expense Not Covered Consequential Damage to covered BPP Not Covered

42. Coverage Extensions Most Golf ProgramsYour Carrier Contract Penalty Clause $25,000 Electronic Data Processing Equipment and Media $50,000 Emergency Real Estate Consulting Fee Not Covered Emergency Vacating Expense Not Covered Employee Dishonesty Available EQSLNot Covered Errant Golf Ball Property Damage Coverage Not Covered Expanded Premises Boundary Included

43. Coverage Extensions Most Golf ProgramsYour Carrier Expediting ExpensesNot Covered Fines for False Alarms Not Covered Fine Arts$25,000 Fire Department Service Charge – No Deductible $10,000 (Emergency Service Charge Fire Protection System – Recharge or Refill $2,000 to $5,000 Fire Protective Devices $10,000 Furs$2,500 to $5,000 Garages / Storage Sheds Not Provided Golf Course$1,000,000

44. Coverage Extensions Most Golf ProgramsYour Carrier Hole-in-One Reimbursement Expense $250 Occurrence / $2,000 Aggregate Identity Theft Expense Not Provided Inventory or Appraisal $25,000 Kidnap / RansomNot Provided Lease Cancellation Moving Expenses Not Provided Lost Key / Lock Replacement $5,000 Machinery and Equipment Not Provided Money and Securities Not Provided

45. Coverage Extensions Most Golf ProgramsYour Carrier Newly Acquired Business Personal Property $1,000,000 / 180 Days Newly Acquired or Constructed Buildings $2,000,000 / 180 Days Off Premises Utility Failure $50,000 Utility Services Ordinance or Law$250,000 Outdoor Property / Debris Removal Coverages $50,000 Outdoor Trees, Shrubs and Plants $25,000 / $2,500 per Tree Outdoor Signs$10,000

46. Coverage Extensions Most Golf ProgramsYour Carrier Pairs, Sets or PartsNot Stated Personal Effects$25,000 Personal Effects – Spouses Not Covered Personal Property of Members and Guests in your CCC $5,000 per person / $50,000 per occurrence Property of Others$10,000 Pollutant Clean Up and Removal (each separate 12 month period) $25,000 Power InterruptionAvailable

47. Coverage Extensions Most Golf ProgramsYour Carrier Precious Metals$5,000 Preservation of Property $25,000 Property in Transit, on Exhibition or in Custody of Salespersons $25,000 Property Off Premises $25,000 Reward Reimbursement $5,000 Spoilage$25,000 Temporary Meeting Space Reimbursement Not Covered Terrorist Travel Reimbursement Not Covered

48. Coverage Extensions Most Golf ProgramsYour Carrier Theft of Dataline Services $5,000 Theft of Fur Garments $5,000 Theft of Jewelry$5,000 Theft of Precious Metals $5,000 Valuable Papers and Records – Cost of Research $50,000 Worldwide Coverage – Limited to Certain Areas for Property Not Included Workplace Violence Counseling Not Included

49. HOW TO ANALYZE GOLF COURSE COVERAGE Golf Course Coverage can be confusing Have your agent complete the comparison sheet Check the definition of Golf Course Check the limit of insurance for the Golf Course Check the limit of insurance for Trees, Shrubs & Plants Check the limit of insurance for Debris Removal Check to see if there is a limit per golf hole Check the covered perils for the Golf Course Are the limits “per occurrence”, “Aggregate per loss”, “Annual Aggregate”

50. QUESTIONS?