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XL unit must defend brokerage in discrimination, harassment suit

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An XL Group Ltd. unit is obligated to defend an insurance brokerage charged with discrimination and harassment under its employment practices liability insurance policy, says a federal appeals court in upholding a lower court ruling.

Employees of San Jose, California-based PHP Insurance Service Inc., who were predominantly Vietnamese-speaking individuals, had filed suit on charges including that the brokerage had purposefully hired immigrant workers to improperly take advantage of their lack of knowledge regarding labor and employment rights, and that they were forced to change their Vietnamese names to American names, according to Wednesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in PHP Insurance Service Inc.; PHP Group Inc.; Trung Tran v. Greenwich Insurance Co.

After XL Group unit Greenwich Insurance, which is based in Stamford, Connecticut, refused to defend PHP, the broker filed suit, and the U.S. District Court in San Jose granted PHP summary judgment in the case.

A three-judge appeals court panel unanimously upheld the lower court’s ruling. “The district court properly held that Greenwich had a duty to defend based on allegations in the first amended complaint that were potentially covered by the (employment practices liability) policy’s definitions of discrimination and harassment,” said the ruling.

The plaintiffs’ allegations “sufficiently triggered a duty to defend based on the policy’s definition of ‘discrimination’ due to the ‘segregation, classification or modification of any term or condition of employment of any Employee … because of race (or) national origin,’” said the ruling, affirming the lower court’s judgment.