Class Action Against Online Casino Denied Coverage After Interrelated Claims Exclusion Holds in Court
DoubleDown Casino is an online platform where players can gamble using digital chips. DoubleDown offers players one million free chips at signup. Once players use their initial chips, DoubleDown charges $2.99 for an additional 300,000 chips.
Adrienne Benson began playing DoubleDown through Facebook in 2013. Since 2016, she allegedly lost more than $1,000. Then she found others in a similar situation.
Benson and her cohorts filed a putative class action suit against DoubleDown, alleging unjust enrichment, violations of the state’s gambling statue and violations of the state’s consumer protection act.
DoubleDown held two claims-made liability insurance policies from Navigators Specialty Insurance Company. The first provided coverage for claims made between June 2017 and June 2018. The second, considered a runoff policy, covered June 2017 through June 2023.
When the class action was filed, DoubleDown turned to Navigators for help. But according to Navigators, it had no duty to defend or indemnify DoubleDown under either policy.
Under the runoff policy, alleged Navigators, the Benson claim was excluded due to language surrounding “interrelated wrongful acts.”
Long before Benson’s, another class action was brought against DoubleDown with similar allegations. Navigators said the Benson claim was an extension of the original suit and therefore was an interrelated claim.
Additionally, the insurer argued, because of the previous claim, the Benson claim was not a claim first made during the policy period and should not be covered by Navigators.
DoubleDown argued that this interpretation of the two claims would impact the casino’s entire business model; the claims, they said, were from two different people, in different states, for different amounts.
But the court was not interested in the names or reimbursements requested; instead it looked at the language of the claims.
The Benson claim had pulled direct language from the original claim, with “several . . . portions of the Benson complaint … copied directly.” While the two complaints were not tenuously related, said the court, in many aspects they were the same complaint.
Because of that, ruled the court, the interrelated claims exclusion holds.
Scorecard: Navigators does not have a duty to defend or indemnify DoubleDown in the underlying class action.
Takeaway: Even after old claims are put to rest, they can still come back to haunt a business. Reviewing why a claim was made and working to improve can aid in eliminating repeat claims. &