Grammatical Error Costs Payless Shoes $2.45 million

A recent case from the U.S. Court of Appeals for the Tenth Circuit demonstrates the importance of using proper grammar in contracts and insurance policies. Payless Shoesource, Inc., parent company of Payless Shoes, sought reimbursement from its insurer, Travelers, from a 2003 class action settlement involving violations of the Fair Labor Standards Act. In an opinion written by Judge Neil M. Gorsuch, former law clerk to U.S. Supreme Court Justice Anthony M. Kennedy, the federal appeals court affirmed the decision by the district court.

The dispute involved the meaning of a misplaced modifier in the insurance policy. Justice Gorsuch wrote that “while misplaced modifiers are syntactical sins righteously condemned by English teachers everywhere, our job is not to critique the parties’ grammar, but only, if possible, to adduce and enforce their contract’s meaning. Here, a punctuation peccadillo notwithstanding, the meaning of the parties’ contract is unambiguous.”

The citation for the opinion is Payless Shoesource, Inc. v. Travelers Companies, Inc., — F.3d —-, No. 08-3246, 2009 WL 3739381 (10th Cir. Nov. 10, 2009).