Kink Appeals Denial of Insurance Coverage to Ninth Circuit

SAN FRANCISCO—Cybernet Entertainment's production arm Armory Studios (better known as Kink Studios) may no longer occupy the San Francisco Armory, and its production teams may be scattered to the four corners of the Bay Area (and beyond), but that doesn't mean that its troubles with HIV-positive performers Cameron Adams, Joshua Rogers and one "John Doe" have ended. The trio had claimed that they were infected with HIV while performing in Kink-directed scenes at the Armory, but an investigation revealed that none of the people with whom the three had sex were HIV-positive, and a ruling by U.S. District Judge Yvonne Gonzalez Rogers in November of 2017 said that the three should be pursuing workers' compensation claims rather than attempting to sue Cybernet in civil court—and that the State Compensation Insurance Fund was not obligated to defend such a suit. But the trio had already filed a civil suit in 2015, and in December of 2017, yet another federal judge ruled that Cybernet's own liability insurance company, Atain Specialty Insurance, had no duty to defend or indemnify Cybernet against those plaintiffs, saying that Cybernet was barred from seeking such coverage due to a policy exclusion for claims related to sexual acts. "There can be no serious dispute that plaintiffs would not have contracted the virus but for their sexual activity during the shoots," wrote U.S. District Judge James Donato. "Consequently, it cannot seriously be debated that even the claims and causes of action against Armory and [its manager] are ones that 'aris[e] out of ... sexual behavior intended to lead to, or culminating in any sexual act, ... caused by ... omission by ... [t]he insured or the insured’s employees'." That put an end to Cybernet's remedy through its own insurance policy, so now it has appealed Judge Gonzalez Rogers' ruling to the Ninth Circuit Court of Appeals, arguing that the claims put forth by Adams, Rogers and Doe, including negligence, battery and intentional infliction of emotional distress, had "distracted" the judge to the point that she missed the fact that Kink never intended to harm the performers, not even through carelessness or any disregard for their safety, and that therefore, coverage under the State Compensation Insurance Fund should apply to the performers' case. For purposes of the alleged injuries, Cybernet has not quarreled with the idea that Adams, Rogers and Doe were its "employees" when they performed in sex scenes for the company, and hence, their injuries, allegedly having occurred on a Kink set, should have been covered by workers compensation fund under the State Compensation Insurance Fund, to which Cybernet paid regular premiums. Judge Gonzalez Rogers' denial of the coverage was based on an exclusion in the insurance contract which exempts the fund from coverage if an employer’s conduct is deemed to be so egregious that it takes the employer "beyond the boundaries of the compensation bargain," and the Fund's position appears to be that the sexual activity which Cybernet hired the performers to take part in puts that activity "beyond the boundaries." Part of being "beyond the boundaries" would be if Cybernet intentionally performed any acts which led directly to the injuries to the performers. However, Cybernet has argued to the Ninth Circuit that there is a second part to the State Fund insurance policy that serves as a "gap-filler," which is intended to cover instances such as this, where the employees are able to sue their employer directly. One problem: The performers sued Cybernet in state court, and the judge overseeing that case has not yet decided whether the Compensation Fund's exclusion applies to these three plaintiffs—but if that judge decides that the exclusion does apply, then Cybernet should still have coverage under the "gap-filler." It is therefore strange that Judge Gonzalez Rogers nonetheless ruled that the Compensation Fund is not liable under any circumstances for the injuries—but that's what Cybernet is appealing. If an actor were injured during the filming of any sort of action movie, Cybernet argued in its Ninth Circuit pleadings, "no one would doubt that injuries suffered in the filming of any such movie would be considered inadvertent, even if the injuries resulted from intentional acts undertaken while filming a scene. The same is true of the injuries alleged here." How this will all work out is a legal muddle that may easily take many more months to resolve, though in the meantime, the performers are reportedly being treated for their infections.