In 2003, a class action suit was filed on behalf of thousands of newspaper carriers against the Orange County Register. The carriers alleged that the newspaper’s parent company, Freedom Communications Inc., classified them as independent contractors, and not employees, and subsequently denied them lunch breaks, overtime pay and mileage. The class action case was ultimately settled in January 2009 for $38 million. However, Freedom filed for bankruptcy on Sept. 1, 2009, a week before the agreed upon payment date. As a result, James Skorheim was appointed trustee of a litigation trust to pursue claims against the directors and officers of Freedom. The trustee subsequently recovered $14.5 million in connection with Freedom’s Chapter 11 bankruptcy proceedings in 2010. The trustee then filed suit against Freedom’s directors and officers in federal court. He claimed that the directors and officers breached their duties of loyalty and good faith by squandering hundreds of millions of dollars in company assets while heading toward an inevitable bankruptcy filing. Defense counsel contended that Freedom’s directors and officers did nothing wrong and did not breach their fiduciary duties. Counsel further contended that the directors and officers considered the best interests of the company at all times and that Freedom was not harmed as a result of anything they did., The trustee sought recovery of $31 million in damages based on what alleged were improper fees and costs incurred by Freedom as a result of the defendants’ conduct. The defendants’ insurers claimed that there was no coverage for the claims at issue. The insurers also argued that even if they were obligated to provide insurance, their exposure on any judgment was limited to whatever policy limits remained after paying all attorney’s fees, expert fees and costs of defense because they were “burning limits” policies. In addition, the insurers claimed that fees and costs in defending the case would exceed $10 million, which meant that there would be less than $15 million in policy limits available if the case proceeded to trial.