Harry Moren is a lawyer in Orrick's San Francisco office who specializes in commercial litigation. Harry also counsels corporate policyholders on insurance issues and helps them resolve disputes with their insurers. Harry has advised energy companies on regulatory issues.
Harry writes regularly for several Orrick blogs, including Trust Anchor (Cybersecurity & Data Privacy) and Trade Secrets Watch. Harry also writes for Orrick’s Weekly Auditor Liability Bulletin.
Pro bono is an important part of Harry's practice. He advocates for immigrants' rights through individual representations and national policy reform. Harry has also successfully represented low-income tenants in partnership with the San Francisco Bar Association’s Justice and Diversity Center. Harry leverages his experience in insurance issues to provide pro bono assistance to non-profits. Harry is currently representing a veteran before the U.S. Court of Appeals for Veterans Claims through The Veterans Consortium pro bono program.
Harry serves on the Advisory Board and Finance Committee for OneJustice, a non-profit dedicated to bringing legal help to those in need by transforming the legal aid system.
Prior to joining Orrick, Harry worked on the legal team of Greenpeace International in Amsterdam. As a law student, he interned with the Administrative Law Judge Division of the California Public Utilities Commission in San Francisco.
Before attending law school, Harry developed custom software for e-commerce platforms, enterprise management systems, and call center automation for companies including Amazon, Intel, ADT, Cable & Wireless, and Lucent Technologies.
Insurers’ recalcitrance to providing coverage for the “Business E-mail Compromise” (BEC) scam is a topic we’ve frequently discussed. On Monday, the Ninth Circuit heard oral argument in a BEC coverage action, Taylor & Lieberman v. Federal Insurance Company.
The fraudster in that case sent spoofed e-mails in 2012 to an accounting firm purporting to be from one of the firm’s clients. At the “client’s” request, the accounting firm executed two wire transfers from the client’s bank account, over which the firm had power of attorney, in amounts just under $100,000 each to banks in Malaysia and Singapore. The firm finally detected the scheme when it called the client for confirmation after receiving a third e-mail requesting another transfer of $128,000 to Malaysia. The accounting firm was able to recover most of the first wire transfer but nothing from the second, resulting in a $100,000 loss to the client’s account, which the firm restored.
The coverage landscape for “Business E-mail Compromise” (BEC) scams remains somewhat tenuous, as organizations and carriers continue to battle in court over the extent of coverage. Although recent positive, policyholder-friendly trends in the Eighth Circuit (hacker who took over a bank’s computer system) and federal district court in Georgia (scheme based on spoofing a CEO’s e-mail) found insurance coverage for fraudulently transferred funds, a recent unpublished Fifth Circuit opinion moves in the other direction. Unfortunately, this new ruling—and the uncertainty it creates—may embolden insurers in fighting coverage for these scams under crime insurance policies.
“Business E-mail Compromise” (BEC) scams are becoming an increasing concern. The FBI’s most recent report in June 2016 identified a 1,300% increase in reported incidents, reaching 22,000 victims targeted for $3.1 billion. Policyholders victimized by BEC scams should cheer the most recent decision addressing coverage for such scams. In Principle Solutions Group v. Ironshore Indemnity, a federal district court in Georgia ruled on summary judgment that a commercial crime policy covered a BEC scam in which a fraudster deceived a Principle Solutions employee into wiring $1.72 million to an account in China. The court rejected the insurer’s argument that the wire transfer was not directly caused by the BEC scam.
Principle Solutions suffered a hallmark BEC scam. The fraudster sent a spoofed email, purportedly from Principle Solutions’ CEO, to the company’s controller. The spoofed email instructed the controller to work with a specified attorney to wire funds that day for a highly confidential company acquisition. The controller then received an email from the named “attorney” with the wiring instructions. The “attorney” called the controller, representing that the CEO had approved execution of the wire and emphasizing the urgency of the funds transfer.
The controller initiated the necessary steps to execute the transfer that day. She logged into the company’s online account at its financial institution to enable the transfer approval, instructed another employee to create the wire instructions, and approved the wire transfer. The financial institution’s fraud prevention unit flagged the transaction and requested verification of the wire. The controller called the “attorney” to verify how he had received the wire instructions. The “attorney” told her he had received the instructions verbally from the CEO. The controller relayed this information to the financial institution, which then allowed the transaction to proceed.
The company discovered the fraud the next day when the controller told the CEO she had completed the wire transfer. The company immediately reported the fraud but unfortunately could not recover the funds.
Many non-cyber policies include data breach exclusions, but few cases have addressed their scope. In a recent case, a federal district court rejected an insurer’s broad interpretation of the term “data” as it was used in data breach exclusions in a multimedia liability policy. In Ellicott City Cable, the insurer contended that satellite television programming was “data” within the meaning of the exclusions. The court found the term ambiguous, construed the ambiguity against the insurer, and ruled that the underlying lawsuit triggered the insurer’s duty to defend. While the case did not involve a data breach, the decision demonstrates that data breach exclusions should be narrowly construed and also offers helpful guidance about interpreting the term “data” if it is undefined in a policy.
The underlying case involved a distribution arrangement between Ellicott City Cable and DirecTV, whereby Ellicott City Cable distributed satellite television programming to its customers. Apparently Ellicott City Cable was overzealous in serving its customers and allegedly distributed DirecTV’s programming beyond the scope of the contracts. DirecTV sued Ellicott City Cable, alleging that Ellicott City Cable fraudulently obtained and distributed DirecTV’s programming.
The Eighth Circuit’s decision last Friday in State Bank of Bellingham v. BancInsure, holding that computer systems fraud insurance indeed insures against such fraud, even where employee negligence was a contributing factor, was a positive development for financial institutions as well as any crime insurance policyholder. The Eighth Circuit agreed with the district court that under Minnesota’s concurrent-causation doctrine, the insured could recover under a standard Computer Systems Fraud insuring agreement regardless of whether any excluded peril, i.e., employee negligence, contributed to the loss because the covered peril of computer systems fraud was the “efficient and proximate cause” of the loss.
This week, a Fourth Circuit panel in an unpublished decision validated arguments long made by policyholders: that commercial general liability policies may provide coverage for certain data breach liabilities. In this case, Travelers Indemnity Company v. Portal Healthcare Solutions, the appellate court affirmed the district court’s 2014 ruling that an insurer had the duty to defend a company that provides electronic medical record management services in a class action alleging that the company made patients’ confidential records publicly accessible by posting the records to an unsecured public website.
Your company’s controller receives an email instruction from your CEO to wire funds to complete a time-sensitive and confidential deal–seems like a clear directive to execute, but it’s not. It’s an increasingly common scam known as the “Business E-mail Compromise” (BEC).
Your insurer wrongfully denies coverage—so you file a complaint in court, right? Not so fast! Many new insurance policies now include mandatory arbitration provisions. While at one time arbitration clauses were common only in policies issued by foreign insurers, they are now finding their way into policies issued by domestic insurers and in all types of coverages, including commercial liability insurance policies, D&O, E&O, employment liability, and cyber insurance. While the terms of these clauses vary, to the extent they are enforceable or cannot be negotiated out of the coverage, arbitration provisions close the courthouse doors to insurance disputes and force policyholders and their insurers to resolve disputed issues in private and free from judicial scrutiny. READ MORE
The time may be approaching when no distracted, intoxicated or fatigued driver ever causes an accident and automobile insurance as we know it becomes a thing of the past. If this seems like fantasy, only a few years ago, so did the reason: the “driverless” car—an idea that has fascinated the public for decades is quickly becoming a reality.
There has been a fair amount of discussion and commentary on insurance issues related to this new technology. An article last year in the Wall Street Journal posed the question, “How Do You Insure a Driverless Car?” The answer, it concluded, was not to be found any time soon, noting that insurance companies were unprepared for driverless, or autonomous, cars and were presently unable to evaluate or price the risk. But with the “Internet of Things” setting the pace for current technology trends, some commentators predict that autonomous cars will be common as soon as the year 2020, so it is not too early to think about the risk of driverless cars and the inevitable questions of insurance coverage related to this new risk and others like it. READ MORE
President Obama wants to go where the Supreme Court refused to tread. As part of his cybersecurity and privacy initiatives, which we discussed last week, the President would strengthen the federal anti-hacking provisions of the Computer Fraud and Abuse Act (CFAA), including an expansion of activity covered by the statutory phrase “exceeds authorized access.” In so doing, the President would resolve a circuit split between the First, Fifth, Eighth, Seventh, and Eleventh Circuits, on the one hand, and the Ninth and Fourth Circuits, on the other. His reason? “No foreign nation, no hacker, should be able to shut down our networks, steal our trade secrets, or invade the privacy of American families.”