KFC Argues to Eleventh Circuit that EEOC Charge Isn’t a “Claim”

The U.S. Court of Appeals for the Eleventh Circuit recently heard arguments in PMTD Restaurants LLC v. Houston Casualty Co., case number 22-11391. PMTD, the owner of a KFC/Taco Bell franchise, argued that a Georgia federal district court erred in defining the word “claim” in its employment practices policy. More specifically, PMTD alleged that an U.S. Equal Employment Opportunity Commission discrimination charge filed by a former employee did not constitute a “claim” that Houston Casualty Company required it to report under the terms of its insurance policy. Instead, PMTD argued that its insurance policy did not require it to report the EEOC charge until the employee filed a lawsuit.

Shaconda Patton, a former employee, filed an EEOC charge against PMTD in July 2016 alleging discrimination, and a second charge in December 2016. Following an investigation, EEOC issued Patton “dismissal and right to sue” letters. Patton later sued PMTD in federal court, but she lost her suit after a jury trial. Patton also unsuccessfully appealed the jury verdict in PMTD’s favor.

PMTD’s insurance policy required that PMTD report all claims within the coverage period, which ran from December 2016 to December 2017. The policy defined “claim” as a “written demand received by the insured alleging damages or the filing of a ‘suit,’ or any administrative proceeding including but not limited to the Equal Employment Opportunity Commission.” The parties also disagreed on a related issue concerning a “one-insured event” provision in the policy, which treated related claims as accruing on the date of the earliest claim.

A Georgia federal district judge in March 2022 revised his interlocutory order from September 2021, finding that Patton’s two EEOC charges were related, and thus first made in July 2016, which was outside the effective period of the Housing insurance policy. The revised order still defined “claim” as including the EEOC charges that Patton had filed, albeit ambiguous.

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