Travelers loses bid to revive sex trafficking coverage fight

The 9th U.S. Circuit Court of Appeals ruled Wednesday a federal judge in San Francisco correctly dismissed a Travelers Cos. Inc. unit’s lawsuit seeking to avoid coverage for lawsuits involving allegations of sex trafficking.

The three-judge appellate panel in Travelers Property Casualty Company of America v. Salesforce.com Inc. said there is potential coverage for the software company because it is unclear if it intentionally engaged in wrongdoing when conducting business with classified advertising website Backpage.com.

The individuals’ lawsuits, which have been consolidated in a federal multidistrict litigation in Houston, contend Salesforce.com violated the Texas Sex Trafficking Statutes by aiding Backpage.com’s business, which compelled them into prostitution, court records say.

Salesforce.com sought coverage from Travelers, which agreed to provide a defense but reserved the right to challenges its obligations. The insurer filed the present lawsuit in federal court in San Francisco seeking reimbursement of defense costs and an order saying it is not required to defend Salesforce.com after the plaintiffs dismissed their negligence claims. The judge dismissed the lawsuit after finding the lawsuits potentially trigger Travelers’ coverage obligations.

Representatives for the parties did not respond to requests for comment.