- The Washington Times - Monday, April 16, 2001

The D.C. Court of Appeals gave a partial victory to the United Food & Commercial Workers International Union last week following a lawsuit by Food Lion grocery stores.

The issue was whether the union's insurance company was required to cover the union's legal expenses in the lawsuit.

Charles Craver, a George Washington University Law School professor of labor and employment law, says the ruling shows the importance of understanding the requirements of insurance contracts.

"It's the duty of anybody," Mr. Craver says. "Your insurance policy will require you to give reasonably prompt notice to your insurance company. It's a pure contract question."

Food Lion sued the UFCW in 1993 for abuse of process and defamation. The union won the lawsuit and then tried to seek coverage for its legal costs from its insurer, Travelers Indemnity Co.

Travelers Indemnity, however, said the union waited too long to notify the insurer it wanted coverage. Letters from the union's attorneys did not clearly say the union was claiming legal expenses, the insurer says.

Part of the delay apparently was caused by confusion over legal terminology used in the lawsuit. Food Lion claimed "abuse of process" while the union's insurance policy covered "malicious prosecution."

The union argues that although the claims carried different names, they were substantially the same allegation. As a result, they should be covered by the insurance policy. The courts eventually agreed with the UFCW.

Travelers says the delay in notification about the claim meant the union should not have its legal expenses covered.

The UFCW argues that if Travelers believed the union gave inadequate notice, the insurance company had an obligation to tell the union's leadership. By failing to warn them, the insurance company gave up its right to contest the union's right to coverage, the UFCW says.

The D.C. Superior Court ruled for the UFCW, saying the union did properly notify the insurance company of its claim. Travelers Indemnity appealed.

The D.C. Court of Appeals agreed the union's expenses should be covered unless the notice could be proven to be inadequate. The appeals court also gave Travelers Indemnity more time to prove the UFCW did not give proper notice.

The ruling was the most recent in years of actions involving disputes between Food Lion and its employees.

The lawsuit by Food Lion that led to the decision last week resulted from another lawsuit filed by a former employee. The employee said Food Lion routinely fired employees to prevent them from participating in a profit-sharing plan and wrongfully denied their health benefits. The employee filed the lawsuit with the assistance of the UFCW.

Food Lion then sued the UFCW, saying in its complaint the union "used legal action for the ulterior purpose of inflicting economic harm on [Food Lion] … and ultimately destroy the reputation and business of [the company]."

The UFCW's defense against that lawsuit led to the legal dispute with Travelers Indemnity.

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