The appellate court will also consider a captive insurer's argument that its pricing software is truly secret, in a suit accusing former shareholders of taking that software for a new venture. That's before hearing from an incarcerated man accusing a state prison system of suppressing his constitutional rights to provide legal help to others.
The judges will also consider whether a public school system violated an ex-substitute teacher's free speech rights when she refused to follow a gender identity policy.
Here are five cases highlighting the Fourth Circuit's October lineup.
Defunct Captive Insurance Co. Says Pricing Software Is Proprietary
A North Carolina-based captive insurance company is asking the Fourth Circuit to revive a lawsuit against ex-directors it accused of self-dealing and defecting with trade secrets to start a new company, arguing it plausibly alleged it tried to maintain the secrecy of proprietary pricing software.
Samuel Sherbrooke Corporate Ltd. insures nursing homes around the country. Majority shareholder Samuel Goldner said a lower court was wrong to not only grant the ex-directors judgment on the pleadings for the federal Defend Trade Secrets Act claim, but also to decline jurisdiction over the rest of the case.
Samuel Sherbrooke Corporate said in an opening brief it took reasonable steps to conceal confidential software that projected risk and priced insurance contracts more effectively than competitors.
From the point of view of two former directors and officers, Gabriel Mayer and Joe Matthew Queen, and former technology officer Beau Walker, the lawsuit is retaliation for reporting Goldner to state regulators after he became embroiled in a number of lawsuits over his nursing home entities, according to a response brief.
They argue the claims belong in state court; in fact, a derivative case accusing Goldner of siphoning funds from Sherbrooke and causing its collapse is pending in North Carolina Business Court. Samuel Sherbrooke Corporate is currently being wound down under a settlement agreement with the North Carolina Department of Insurance.
Oral argument is scheduled for Wednesday. The case is Samuel Sherbrooke Corporate Ltd. v. Gabriel Mayer, case number 24-2173, in the U.S. Court of Appeals for the Fourth Circuit.
Contractor Seeks Relief for $5.5M Motorcycle Accident Settlement
APAC-Atlantic Inc., a contractor for a North Carolina Department of Transportation paving project, is asking the Fourth Circuit to vacate a lower court's ruling that an insurance company tied to a subcontractor had no duty to indemnify APAC for a $5.5 million settlement resulting from two accidents.
In an opening brief, APAC argued that a North Carolina federal court was wrong to hand summary judgment to Owners Insurance Co., because APAC's liability for that settlement arose from subcontractor Emery Sealco Inc. APAC brought on Emery Sealco to do stationary signage work to protect motorists and keep the work area safe. Owners insured Emery Sealco under a commercial general liability policy.
APAC also argued the district court misapplied the plain language of the insurance policies, which it said provided broad coverage for any liability arising out of Emery Sealco's work on the project. Soon after Emery Sealco completed its work, two motorcycle accidents occurred, spurring a lawsuit against APAC alleging insufficient signage around the work site.
Owners disagreed in a response brief, arguing APAC doesn't qualify as an additional insured under the Owners' policy because the contractor's liability didn't stem from Emery Sealco's work. Any potential liability against APAC came from the lack of portable signage, rather than the presence of signs installed by Emery Sealco before repaving began, it said. Owners also argued the prime contract did not include specific reference to "uneven pavement" or "uneven lane" signs.
Oral argument is scheduled for Wednesday. The case is APAC-Atlantic Inc. v. Owners Insurance Co., case number 24-1969, in the U.S. Court of Appeals for the Fourth Circuit.
Insurers Fight $100M in Liability for Under Armour Securities Fraud Scheme
A smattering of insurance companies are asking the Fourth Circuit to prevent athletic apparel giant Under Armour Inc. from tapping into an additional $100 million in insurance coverage for a fraudulent securities scheme, arguing a district court was wrong to hold that claims around the single ongoing scheme were unrelated.
The coverage arises from a securities class action, derivative matters and a government investigation into Under Armour over accusations that its directors and officers intentionally misled investors about the company's finances and growth prospects.
In a request to reverse a district court's order granting Under Armour's motion for judgment on the pleadings, Navigators Insurance Co. and other insurers said in an opening brief that they already paid out a combined $100 million under their contractual limits to Under Armour, and the company can't now go after another "tower of coverage" to double the payday.
Navigators said the unambiguous language of the contract prevents the company from seeking more coverage under a different policy period for the directors and officers liability insurance. The district court was wrong to allow a single civil proceeding to be "chopped up" into multiple claims due merely to the unearthing of more evidence about the scheme, Navigators said.
Under Armour disagreed, arguing in a response brief that no provisions in the primary policy or its related excess policies bar coverage for the federal government's investigations into the company and subsequent related claims. The insurers should pay up because the government investigations involved different "wrongful acts" from those alleged in the original securities class action and derivative matters.
The investigations looked into alleged improprieties in the sales and accounting functions, while the class actions were based on allegedly overly optimistic public statements about growth rates from Under Armour officers, the company said. For this reason, the second tower of coverage is triggered.
Oral argument is scheduled for Wednesday. The case is Navigators Insurance Co. v. Under Armour Inc., case number 25-1068, in the U.S. Court of Appeals for the Fourth Circuit.
NC Prisoner Says State Stifles Free Speech, Access to Legal Aid
An incarcerated man asked the Fourth Circuit to reverse a lower court's order in favor of current and former leaders of North Carolina's prison system, arguing in his First Amendment lawsuit that North Carolina Department of Adult Correction policy suppresses inmates' legal speech by impeding access to legal knowledge and limiting their right to talk about it.
Cobey LaKemper said in an opening brief that the appellate court should reverse the district court's decision to grant state corrections officers summary judgment, arguing the lower court misconstrued the expanse of a policy that prohibits incarcerated individuals from helping another person with legal matters.
The lower court also ignored evidence that showed that TextBehind.com Inc., a company that provides communication between incarcerated people and those on the outside, obstructs the delivery of mail containing legal papers, he said.
Other evidence also showed that Barney Owens, then warden of Pamlico Correctional Institution, retaliated against LaKemper for his litigation against NCDAC by denying a request for access to his personal funds to pay a paralegal service, LaKemper said.
The state said in a response brief the district court properly analyzed LaKemper's free speech claim. The policy at issue — which permits disciplinary action for prisoners who help one another with legal matters — is "rationally related" to its goal of maintaining discipline by suppressing contraband and gang activity, the brief said.
NCDAC leaders can't be held accountable for TextBehind's failure to correctly apply the state's policies and its own policies, and the isolated instances where LaKemper did not receive his mail don't amount to a constitutional violation, they said. LaKemper's retaliation claim can't stand because LaKemper can't show that Owens' denial of a $900 special draw request for paralegal services resulted from LaKemper's lawsuit against the department, according to the response.
Oral argument is scheduled for Wednesday. The case is Cobey LaKemper v. Kenneth Lassiter, case number 24-6930, in the U.S. Court of Appeals for the Fourth Circuit.
Ex-Substitute Teacher Wants 2nd Shot at Injunction in Trans Policy Suit
A former substitute teacher in a Maryland school district urged the Fourth Circuit to grant her a preliminary injunction that would allow her to keep teaching in classrooms where there are no transgender students, arguing that the relief requested is narrowly tailored and prevents harm to the school board and students.
Kimberly Polk said in an opening brief that a lower court was wrong to deny her preliminary injunction and dismiss her free speech and free exercise claims, as she's likely to prevail in both. Those claims stem from her objection to the Montgomery County Public Schools' gender identity policy. The policy at issue requires staff members to address students by their identified name and pronoun, and try to maintain the confidentiality of a student's transgender status.
Polk said in the brief that she was first denied a religious exemption from complying with the policy over her "traditional vision" of God-given sexes, and was later fired.
The public school system disagreed, saying in a response brief that Polk can't substitute her own judgment for that of her government employer. The school system said it has broad authority over what employees say in the course of doing their jobs. It's well within the schools' right to require Polk to adhere to its guidelines, which are meant to promote a safe and supportive learning environment for students, the brief said.
The school system said Polk does not have a free speech right to preside over a classroom without following Montgomery County schools' best practices, nor does she have a free exercise right not to comply with those practices. The former substitute teacher is also unlikely to be irreparably harmed without the "disruptive and unworkable" preliminary injunction she's after, the school system said in a response brief.
Oral argument is scheduled for Thursday. The case is Kimberly Polk v. Montgomery County Public Schools, case number 25-1136, in the U.S. Court of Appeals for the Fourth Circuit.
--Editing by Robert Rudinger.
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