Eighth Circuit: Insurer Has No Duty to Defend Janitorial Service Workplace Discrimination Suit

The United States Court of Appeals for the Eighth Circuit said that an insurer does not have to provide coverage to a St. Louis, Missouri janitorial service company for a workplace discrimination lawsuit, affirming a district court’s ruling.

Columbia Maintenance Company wanted AMCO Insurance to defend the company against employment-discrimination claims from two former employees who claimed they were fired over race and complaints about racially discriminatory behavior and comments.

The United States District Court Eastern District of Missouri Eastern Division granted AMCO’s motion for summary judgment in December 2020, ruling that Columbia’s claims were outside the scope of AMCO’s Commercial Umbrella Liability insurance policy.

Columbia appealed the ruling, arguing as it did under district court that AMCO’s policy is ambiguous in language and should be construed in favor of the insured as stated in Missouri law.

AMCO’s policy covers “personal and advertising injury” including “discrimination” committed “in the course of … business” but contains an exclusion for “employment-related practices, policies, acts or omissions, such as … discrimination.”

Columba said that because the policy has one provision that appears to grant coverage and another that takes it away, the language is ambiguous. Missouri courts have ruled in the past that “where one provision of a policy appears to grant coverage and another to take it away, an ambiguity exists that will be resolved in favor of coverage.”

The Eighth Circuit in its affirmation of the district court said that the two provisions are not “inconsistent” nor “irreconcilable”.

“Like many policies, this one contains a broad grant of coverage followed by exclusions that narrow the range of covered risks,” circuit judges Bobby Shepherd, James Loken and David Stras wrote. “It simply grants coverage for discrimination claims in one provision, and then excludes a subset of them in another, which is exactly how exclusions work.”