Fourth Circuit Finds Under Armour’s “Single Scheme” to Misrepresent Financial Stability Constitutes Single Claim Under D&O Tower

On January 20, 2026, the Fourth Circuit Court of Appeals held in Navigators Insurance Co. v. Under Armour Inc. that Under Armour was not entitled to access an additional $100 million directors and officers tower after finding that various securities class actions, shareholder derivative actions, and federal investigations constituted a single claim.

During the mid-2010s, Under Armour, a prominent publicly traded company in the sports apparel industry, consistently reported strong financial performance. By 2016, the company had reported more than 20% sales growth for 26 consecutive quarters. As market conditions shifted and certain major distributors experienced financial instability, shareholders began demanding inquiries into Under Armour’s books and records. This scrutiny revealed that Under Armour had allegedly failed to disclose several adverse internal conditions while continuing to issue strong, favorable financial statements. These conditions included the financial deterioration and liquidation of a major distributor, increased costs associated with heavy promotional activity, concerns regarding excess inventory, and substantial executive stock sales. Shareholders alleged that these omissions rendered the company’s public statements misleading and artificially inflated its stock price.

In February 2017, shareholders filed an amended federal securities class action alleging material misrepresentations and omissions, and by December 2018, additional shareholders brought derivative actions asserting similar allegations. In 2017, the Securities and Exchange Commission began a parallel investigation and issued subpoenas to assess Under Armour’s revenue reporting and accounting practices. In 2019, The Wall Street Journal reported on the investigations and reported that the SEC and Department of Justice uncovered evidence of improper accounting practices, including accounting pull forwards. This reporting prompted additional amendments to the class action and derivative complaints to incorporate these improper accounting-related allegations.

As these various litigations and investigations progressed, Under Armour provided notice to its insurers of potential claims. Two claims-made towers were at issue: a 2016–2017 tower and a 2017–2018 tower, each of which provided coverage only for claims first made during the policy period. The primary and excess insurers agreed that all of the litigation-related claims were properly noticed under the 2016–2017 policy. The dispute centered on whether the costs and damages arising from the subsequent government investigations constituted separate claims under the 2017–2018 policy or instead related back to the earlier litigation-related claims. If treated as separate claims, the investigation-related demands would trigger coverage under the otherwise untapped 2017–2018 tower, providing an additional $100 million in coverage; if they related back, all matters would be treated as a single claim subject only to the original $100 million tower.

In analyzing whether the litigations and government investigations constituted a single claim, the Fourth Circuit analyzed the “single claim provisions” both in the main coverage form and a subsequent endorsement. The single claims provision stated: “All Claims which arise out of the same Wrongful Act and all Interrelated Wrongful Acts of Insureds shall be deemed one Claim” and “interrelated wrong acts” mean “all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of causally connected facts, circumstances, situations, events, transactions or causes.” The single claims endorsement provision stated: “[a]ll Claims ... that arise out of the same fact, circumstance, situation, event, or Wrongful Act, or facts, circumstances, situations, events, or Wrongful Acts that are logically or causally related shall be deemed one Claim.”

Without resolving the parties’ question whether the endorsement limited the policy language, the Fourth Circuit held that the alleged misrepresentations, material omissions, and improper accounting practices constituted one claim under either provision. Through a plain language analysis, the court held that even assuming arguendo that Under Armour properly argued that the endorsement narrowed the policy, the endorsement’s “logical and causally related” language required only that each claim must be “reasonably or rationally connected to or associated with one another.” The court found that the policy’s language requiring a “common nexus” set a similar standard and low bar for relatedness. In applying this interpretation to the claims at issue, the court determined that the government investigation, which focused on improper accounting practices, was rationally connected to the misleading public statements and material omissions. Under Armour’s reliance on pull-through accounting allowed it to “pull[ ] forward its orders ... [and] continue forecasting its 20% target publicly.” Put differently, these accounting practices “covered up Under Armour’s actual financial condition, allowing its officers to make the public statements.” As the court noted, this accounting impropriety was “part of a single scheme, stemm[ing] from a single goal — to convince its shareholders and the public that it was achieving 20% growth in spite of the trouble with Sports Authority and the market generally.”

Given the court’s finding that claims related to the accounting impropriety and claims related to the public misstatements and material omissions, the litigations and government investigations were all properly treated as a single claim subject to the 2016–2017 policy, precluding access to the second $100 million coverage tower, and the court reversed and remanded with instructions for the lower court to find in favor of the insurer on the summary judgment coverage issues.