(CN) - A misplaced modifier in an insurance contract may be a "syntactical sin," but it doesn't require Travelers Insurance to reimburse Payless ShoeSource for a $2.45 million class-action settlement, the 10th Circuit ruled.
Payless wanted the insurer to cover the costs of settling a 2003 class action accusing the shoe retailer of forcing employees to work off the clock, among other alleged labor code violations.
When Travelers refused, citing its exclusions provision, Payless sued in Kansas state court, claiming a misplaced modifier left out state claims similar to the Fair Labor Standards Act.
But Travelers insisted that, even if the modifier was misplaced, the contract clearly excludes coverage for Payless' claim.
Both the district court and the Denver-based appellate panel rejected Payless' grammatical argument.
"[W]hile misplaced modifiers are syntactical sins righteously condemned by English teachers everywhere, our job is not to critique the parties' grammar, but only, if possible, to adduce and enforce their contract's meaning," Judge Gorsuch wrote for the Denver-based appellate panel.
"Here, a punctuation peccadillo notwithstanding, the meaning of the parties' contract is unambiguous. By operation of the plain terms of the agreement, Payless has no claim for coverage against Travelers."
Here is the disputed modifier, in italics:
"The Insurer shall not be liable for Loss on account of any Claim made against any Insured ... for an actual or alleged violation of the Fair Labor Standards Act (except the Equal Pay Act), the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Occupational Safety and Health Act, the Employee Retirement Security Act of 1974, any workers' compensation, unemployment insurance, social security, or disability benefits law, other similar provisions of any federal, state, or local statutory or common law or any amendments, rules or regulations promulgated under any of the foregoing; provided, however, this exclusion shall not apply to any Claim for any actual or alleged retaliatory treatment on account of the exercise of rights pursuant to any such law, rule or regulation."
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