Settlement Amount:
$2,600,000

Case Name:
JENNY CRAIG, INC., et al. v.
MT. HAWLEY INSURANCE COMPANY, et al.

Case Number:
San Diego Superior Court, No. 688088

Plaintiff:
Jenny Craig, Inc., et al.

Defendants:
Mt. Hawley Insurance Company, et al.

Facts and Background:
Jenny Craig, Inc., its officers and directors , and certain
institutional underwriters and investors were named as defendants
in a class action lawsuit alleging violations of federal and
state securities laws. Plaintiffs’ officers and directors were
insured by defendant Mt. Hawley Insurance Company under a
Directors and Officers Excess Liability Insurance Policy. The
officers and directors repeatedly requested defendant to
reimburse them for attorneys’ fees and costs incurred to defend
the class action lawsuit and to participate in the settlement
negotiations. Defendant allegedly refused to cooperate and filed
an action for declaratory relief in Delaware State Court on April
3, 1995. Plaintiffs filed a civil action in San Diego Superior
Court on May 1, 1995, alleging breach of the implied covenants of
good faith and fair dealing.

Plaintiffs Contentions:
The defendant was not entitled to allocate any part of the class
action settlement to individuals other than the officers and
directors of Jenny Craig, Inc. Plaintiffs contended further that
California law applied to defendant’s unreasonable claims
handling conduct.

Defendants Contentions:
It had no obligation to reimburse plaintiffs because the class
action settlement was excessive and should not have implicated
its layer of coverage. Defendant contended further that
plaintiffs’ civil action was governed by Delaware law, which
restricted plaintiffs’ right to proceed under bad faith theory.

Damages:
Attorneys’ fees and costs incurred in defending the class action
lawsuit.