Oberlin College is embarking on another legal battle now that it has finally paid out $36.59 million in damages to a local bakery for falsely accusing the business owners of racism. This time, the college is suing four of its insurance providers after they failed to reimburse the school for the multimillion-dollar judgment in the Gibson Bakery’s case.
After a years long legal battle, Oberlin agreed to pay the massive sum to the bakery in September 2022.
Gibson’s Bakery sued the college in 2017, accusing the school and one of its administrators of hurting its business and libeling it over an incident in which the son of the bakery owner stopped three black Oberlin College students, one of whom was stealing wine bottles from the store, in November 2016.
Students from the school protested the bakery after the arrest, handing out fliers outside the shop telling patrons to shop elsewhere. The fliers also accused the Gibsons of having a long history of racial profiling, citing the November 2016 incident. Witnesses who testified at the trial said Oberlin College Dean of Students Meredith Raimondo participated in the protests, handing out stacks of fliers for others to distribute.
Oberlin College regularly purchased baked goods from the bakery for its student dining service but suspended its purchasing for a month after the incident.
The students ultimately pleaded guilty to a misdemeanor in 2017 and said Allyn Gibson’s actions were not racially motivated.
In 2019, Lorain County Judge John Miraldi awarded the bakery more than $40 million in punitive and compensatory damages. However, the sum was later reduced to $25 million, though the bakery was awarded more than $6 million for lawyers’ fees. The $36 million payment includes post-judgment interest.
Now the college is pursuing legal action against Lexington Insurance Company of New York; United Educators Insurance of Bethesda, Maryland; Mount Hawley Insurance Company of Peoria, Illinois; and StarStone Specialty Insurance Company of Cincinnati.
The school filed the suit in Lorain County Common Pleas Court in April accusing the companies of wrongfully refusing to “to honor promises they made in their respective policies to protect the interests of Oberlin College” and the school’s former vice president and dean of students, Meredith Raimondo.
The college had $25 million in commercial umbrella liability coverage from Lexington and another $10 million from Mount Hawley. The school had an additional $5 million from StarStone and $25 million in overlapping educators legal liability coverage from United Educators, according to the lawsuit.
“These policies were intended to provide seamless coverage for lawsuits like the Gibson litigation,” the complaint says. “Unfortunately, the defendant insurers have failed to pay a penny toward the $36,590,572.48 sum that Oberlin paid the Gibson plaintiffs. They also have failed to pay for the full cost of Oberlin’s appeals, which were pursued at the behest of the insurers in order to reduce their collective exposure.”
The college claims its insurers said that “some, if not all, of the damages” would be covered.
The lawsuit alleges Lexington and United Educators allegedly “engaged in a systematic, multi-year effort to avoid their coverage obligations by attempting to shift responsibility from the Gibson lawsuit to each other,” other insurance companies or the college.
Lexington and United Educators “both had numerous pretrial opportunities to resolve the underlying litigation for a small fraction of the eventual verdict” and could have settled the case for for less than $10 million before the trial, the school alleges. The college claims it even told the insurance companies to do so.
United Educators is now refusing to renew the college’s policy after 34 years, the lawsuit says.
William A. Jacobson previously noted at Legal Resurrection that a Motion to Intervene filed by Lexington in 2019 offered evidence that the company was likely planned to refuse to cover the judgement.
The company wrote in the filing that the policy at hand “potentially provides coverage in relation to ‘personal and advertising injury,’ defined to include defamation and/or disparagement in certain circumstances” but that it “excludes any such coverage if ‘personal and advertising injury’ is caused ‘with the knowledge that the act would violate the rights of another … ,’ or if the insured published material it knew to be false. Further, the Lexington policy provides coverage for punitive damages insurable by law, but only where the corresponding award of compensatory damages is also covered by the Lexington policy.”
The filing went on to note that the plaintiffs in the Oberlin case “allege that defendants Oberlin and Ms. Raimondo published material that falsely characterized the bakery owned by plaintiffs (“Gibson’s”) as being a racist establishment.”
“While such allegations potentially implicate ‘personal and advertising injury,’ plaintiffs also alleged that the statements were published with malice, were intended to injure plaintiffs’ business reputation, and were part of a purported campaign to harm plaintiffs,” the filing read. “If it is established that the defendants knew the alleged statements were false, or if the defendants knew their alleged acts would violate plaintiffs’ rights, the Lexington policy would exclude coverage for any resultant damage. Thus, Lexington seeks to intervene in order to submit jury interrogatories to determine the extent of the defendants’ knowledge in relation to the alleged publications.”