                           PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


PERDUE FARMS, INCORPORATED;             
RETIREMENT BENEFITS
COMMITTEE OF THE PERDUE SAVINGS
PLAN, formerly known as The
Perdue Supplemental Retirement
Plan,
                Plaintiffs-Appellees,         No. 04-2208
                 v.
TRAVELERS CASUALTY AND SURETY
COMPANY OF AMERICA; RELIANCE
INSURANCE COMPANY,
            Defendants-Appellants.
                                        
           Appeal from the United States District Court
            for the District of Maryland, at Baltimore.
           William M. Nickerson, Senior District Judge.
                       (CA-03-1148-WMN)
                      Argued: March 17, 2006
                      Decided: May 16, 2006
  Before WILKINSON, MICHAEL, and MOTZ, Circuit Judges.


Affirmed in part, reversed in part, and remanded by published opin-
ion. Judge Wilkinson wrote the opinion, in which Judge Michael and
Judge Motz joined.


                            COUNSEL
ARGUED: John Carney Hayes, Jr., NIXON PEABODY, L.L.P.,
Washington, D.C., for Appellants. Stephen Richard Mysliwiec, DLA
2               PERDUE FARMS v. TRAVELERS CASUALTY
PIPER RUDNICK GRAY CARY US, L.L.P., Washington, D.C., for
Appellees. ON BRIEF: Leslie Paul Machado, Kevin M. Colmey,
NIXON PEABODY, L.L.P., Washington, D.C., for Appellants. Vic-
toria A. Bruno, DLA PIPER RUDNICK GRAY CARY US, L.L.P.,
Washington, D.C.; Glen K. Allen, DLA PIPER RUDNICK GRAY
CARY US, L.L.P., Baltimore, Maryland, for Appellees.


                              OPINION

WILKINSON, Circuit Judge:

   In this case an insurer issued its insured a policy that covered
claims based on violations of the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (West
2005), but that did not apply to claims for violations of wage and hour
laws. The insurer defended the insured in a class action suit seeking
relief under both ERISA and wage and hour statutes, but refused to
indemnify the insured for the subsequent $10 million settlement. The
insurer contended that the settlement was based predominately, if not
completely, on non-covered wage and hour claims. In the ensuing
coverage suit, the district court held that the insured was entitled to
indemnification for the settlement, and that the insurer could not
obtain a partial reimbursement of defense costs.

   We hold that the district court properly denied the insurer reim-
bursement for defense costs, but that a remand is necessary on settle-
ment indemnification because the district court conflated the duty to
defend and the duty to indemnify under Maryland law. On remand,
aside from limited amounts paid to class action plaintiffs asserting
only covered ERISA claims, the district court must determine how
apportionment between covered ERISA claims and non-covered wage
and hour claims should proceed. We therefore affirm in part, reverse
in part, and remand for further proceedings.

                                   I.

   Plaintiffs in this case are Perdue Farms, Inc., a Maryland corpora-
tion that operates poultry processing facilities in numerous states, and
                  PERDUE FARMS v. TRAVELERS CASUALTY                     3
the Retirement Benefits Committee of the Perdue Savings Plan (col-
lectively "Perdue"). Defendant Travelers Casualty and Surety Com-
pany issued Perdue a $10 million Pension and Welfare Fund
Fiduciary Responsibility Insurance Policy, effective October 1999 to
October 2000.1 The policy covered damages to third parties arising
out of any "Wrongful Act," defined as "a breach of fiduciary duty by
the Insured in the discharge of duties as respects the Trust or
Employee Benefit Plan." The parties agree that the policy covers
claims for relief under ERISA, but that it does not extend to claims
for violations of wage and hour laws. Under the policy, Travelers had
"the right and duty" to defend Perdue in any suit seeking relief for a
"Wrongful Act," "even if any of the allegations of the claim are
groundless, false or fraudulent."

   In December 1999, Leona Trotter and several other current and for-
mer Perdue employees filed suit against Perdue in federal court, chal-
lenging as unlawful Perdue’s compensation and record-keeping
practices. According to the district court:

      [T]he plaintiffs in the underlying suit (the Trotter plaintiffs)
      alleged that Perdue’s statutory violations stemmed from its
      practices of: (1) not paying hourly chicken-processing line
      workers for time spent putting on, taking off, and cleaning
      protective sanitary clothing and equipment; (2) not paying
      some chicken-processing line workers for some work after
      the line card for their department had been clocked out; (3)
      not keeping a record of hours worked but not paid for, pre-
      venting some employees from becoming eligible for retire-
      ment benefits; and (4) not contributing to the [Perdue
      Supplemental Retirement] Plan two percent of the pay that
      employees would have earned if they had been paid for the
      work time reference[d] in (1) and (2) above.

  1
   An excess insurance policy with Reliance Insurance Company, also
a defendant here, provided an additional $5 million in coverage. Travel-
ers acquired certain divisions of Reliance and is now responsible for pay-
ing claims asserted against it. We will thus refer to both insurers
collectively as Travelers.
4               PERDUE FARMS v. TRAVELERS CASUALTY
The Trotter plaintiffs’ amended nine-count complaint alleged three
counts under ERISA, one count under the Fair Labor Standards Act
(FLSA), 29 U.S.C.A. § 201 et seq. (West 2005), and five counts
under the wage and hour laws of Delaware, Kentucky, Maryland,
North Carolina, and South Carolina.

   Perdue notified Travelers of the Trotter suit shortly after it was
filed. Travelers thereafter determined that the ERISA claims created
a potentiality of coverage that triggered its duty to defend Perdue.
Travelers did, however, reserve its rights to refuse to pay any settle-
ment or judgment, to decline to defend non-covered wage and hour
claims, and to seek reimbursement for defense costs expended on
non-covered claims.2 During the next several years, Travelers paid for
Perdue’s defense. At the present time, it has spent over $4.4 million
defending Perdue in the Trotter matter.

   On August 16, 2001, the Trotter litigation was certified as a class
action. See Trotter v. Perdue Farms, Inc., No. CIV.A.99-893-RRM,
2001 WL 1002448, at *2-3 (D. Del. Aug. 16, 2001). The class was
defined as "[a]ll persons who at any time from December 16, 1993,
to the present have worked or continue to work as non-exempt hourly
production employees of Perdue Farms, Inc. in any one or more of the
chicken processing facilities operated by Perdue, and who were or are
participating in the Perdue Supplemental Retirement Plan." Id. at *2.
Additional subclasses were also certified, including one for each state
whose wage and hour laws were allegedly violated. Id. at *3. Mem-
bership in these subclasses did not require participation in Perdue’s
Supplemental Retirement Plan. Id. Collectively, the primary class and
state subclasses requested (1) backpay, overtime pay, and liquidated
damages under the FLSA and state wage and hour laws; (2) ERISA
plan contributions, injunctive relief, and "back pay incidental to such
injunctive relief" under ERISA, see 29 U.S.C. §§ 1132(a)(3), 1140
(2000); and (3) attorneys’ fees.

   In June 2002, Perdue settled with the Trotter plaintiffs for $10 mil-
lion and limited injunctive relief. Neither party admitted the validity
of the other side’s claims or defenses, but the Trotter plaintiffs did
    2
   We reject Perdue’s contention that Travelers cannot raise certain
defenses due to a failure to properly reserve its rights.
                PERDUE FARMS v. TRAVELERS CASUALTY                    5
withdraw any allegation that Perdue engaged in willful misconduct.
The settlement agreement did not indicate how much of the $10 mil-
lion was attributable to covered ERISA claims. However, relying on
findings by the magistrate judge overseeing the Trotter settlement, the
district court determined, and the parties do not dispute, that approxi-
mately $3 million was assigned to the Trotter plaintiffs’ class counsel
for fees and costs, $775,092 compensated plaintiffs asserting only
wage and hour claims, and $907,954.32 was distributed to plaintiffs
asserting only ERISA claims. The remainder was remitted to plain-
tiffs asserting both ERISA and wage and hour claims.

   Perdue requested that Travelers indemnify it for the Trotter settle-
ment. Travelers refused, contending that the settlement was based pri-
marily, if not entirely, upon non-covered wage and hour claims.
Perdue thereafter filed suit in Maryland state court, and Travelers
removed the case to federal court. Perdue sought as indemnification
for the Trotter settlement $9,428,841, plus prejudgment interest. This
figure includes the entirety of the Trotter settlement, except the
$775,092 paid to those Trotter plaintiffs asserting only wage and hour
claims and $98,515 in attorneys’ fees related solely to those claims.
Perdue conceded that these sums were unrelated to any ERISA
claims, and therefore not covered by the insurance policy. The
$9,428,841 figure also includes Perdue’s additional expenditures of
$248,994 in settlement costs and $53,455 in legal services. Travelers
filed a counterclaim seeking reimbursement from Perdue of that por-
tion of the approximately $4.4 million in defense costs attributable to
non-covered wage and hour claims. Both parties moved for summary
judgment.

   The district court held that Travelers could not obtain reimburse-
ment for defense costs, and that Perdue was entitled to indemnifica-
tion for the Trotter settlement. With respect to indemnification,
Travelers argued in the court below that ERISA does not contain a
remedy for backpay and that the thrust of the Trotter plaintiffs’ alle-
gations amounted to claims for violations of wage and hour laws, not
ERISA. The district court disagreed, reasoning that Travelers was
required to compensate Perdue for the Trotter settlement because Per-
due was "potentially liable" under ERISA. According to the district
court, Perdue faced potential liability for this covered claim because
the Supreme Court had yet to determine whether backpay constitutes
6                PERDUE FARMS v. TRAVELERS CASUALTY
an appropriate remedy under ERISA, and because the record provided
a sufficient factual basis to conclude that the Trotter settlement was
based, at least in part, on potential ERISA liability. The district court
further held that Travelers was liable for the entire amount Perdue
requested because the non-covered wage and hour claims were "rea-
sonably related" to the covered ERISA ones.3 With respect to Travel-
ers’s counterclaim for defense costs, the district court held that no
such right of partial reimbursement existed under Maryland law.
Travelers appeals.

                                     II.

   This case involves two separate concepts in the law of insurance:
the duty to defend and the duty to indemnify. We begin with a brief
discussion of these duties and their differences, and then proceed to
Travelers’s request for defense costs and Perdue’s request for indem-
nification of the Trotter settlement.
    3
    We reject, as did the district court, Travelers’s contention that various
exclusions in its insurance policy operate to defeat its duty to indemnify.
Exclusion 7 denies coverage for any claim "[a]rising out of the Insured
gaining in fact any personal profit or advantage to which such Insured
was not legally entitled." In contradistinction to the wage and hour
claims, which specifically stated that Perdue’s labor law violations were
"for the benefit of Perdue," the Trotter plaintiffs’ ERISA claims never
alleged that Perdue gained any advantage from its unlawful conduct. In
any event, the alleged ERISA violations do not "aris[e] out of" illegal
profiteering, because 29 U.S.C. § 1140 proscribes specified conduct, not
profit. See Alstrin v. St. Paul Mercury Ins. Co., 179 F. Supp. 2d 376, 400
(D. Del. 2002) (exclusion "requires a profit or gain that is illegal; not an
illegal act that produces a profit or gain to the insured as a by-product").
Exclusion 8 precludes coverage for any claim "[f]or the failure to collect
contributions owed to the Trust or Employee Benefit Plan . . . from
employers." This exclusion is inapplicable because the Trotter plaintiffs
did not allege that the Retirement Benefits Committee failed to collect
payments from Perdue, but rather that Perdue failed to contribute to the
benefits plan because it failed to pay proper wages. Application of these
two exclusions would swallow most of the insurance coverage alto-
gether, and to the extent either exclusion is ambiguous, any textual
uncertainty must be construed against Travelers, the policy’s drafter, see,
e.g., Megonnell v. U.S. Auto. Ass’n, 796 A.2d 758, 772 (Md. 2002).
                PERDUE FARMS v. TRAVELERS CASUALTY                    7
                                  A.

   In Maryland, it is axiomatic that the duty to defend is broader than
the duty to indemnify. See, e.g., Provident Bank of Md. v. Travelers
Prop. Cas. Corp., 236 F.3d 138, 143 (4th Cir. 2000); BGE Home
Prods. & Servs., Inc. v. Owens, 833 A.2d 8, 14 (Md. 2003); Litz v.
State Farm Fire & Cas. Co., 695 A.2d 566, 569 (Md. 1997). These
obligations are conceptually distinct, and are triggered by different
circumstances.

    The duty to defend refers to an insurer’s obligation to defend its
insured when a third party files suit. This duty arises at the outset of
litigation against the insured, whenever the underlying complaint and
other appropriate extrinsic evidence reveal claims that are even poten-
tially covered under the insurance policy. See, e.g., Walk v. Hartford
Cas. Ins. Co., 852 A.2d 98, 106-07 (Md. 2004); Chantel Assocs. v.
Mount Vernon Fire Ins. Co., 656 A.2d 779, 784 (Md. 1995). "In order
for an insurer to be obligated to defend an insured, the underlying tort
suit need only allege action that is potentially covered by the policy,
no matter how attenuated, frivolous, or illogical that allegation may
be." Sheets v. Brethren Mut. Ins. Co., 679 A.2d 540, 544 (Md. 1996);
see also Litz, 695 A.2d at 572. Doubts as to potential liability are
resolved against the insurer. See Clendenin Bros. v. U.S. Fire Ins. Co.,
889 A.2d 387, 394 (Md. 2006). And in most circumstances, "if any
claims potentially come within the policy coverage, the insurer is
obligated to defend all claims, notwithstanding alternative allegations
outside the policy’s coverage," Utica Mut. Ins. Co. v. Miller, 746
A.2d 935, 940 (Md. Ct. Spec. App. 2000) (internal quotation marks
omitted); see also Montgomery County Bd. of Educ. v. Horace Mann
Ins. Co., 840 A.2d 220, 226 (Md. Ct. Spec. App. 2003) (same).

   The duty to indemnify, by contrast, refers to an insurer’s responsi-
bility to pay a monetary award when its insured has become liable for
a covered claim. "[T]he duty to indemnify depends upon liability,"
i.e., an insurer’s obligation to pay a judgment or settlement. Walk, 852
A.2d at 106; see Jones v. Hyatt Ins. Agency, Inc., 741 A.2d 1099,
1104 (Md. 1999); Mesmer v. Md. Auto. Ins. Fund, 725 A.2d 1053,
1061 (Md. 1999). This duty is thus narrower than the duty to defend.
While an insurer must frequently defend both potentially covered
claims and claims that are not covered under its policy, it is only
8               PERDUE FARMS v. TRAVELERS CASUALTY
required to indemnify covered claims for which liability is incurred.
See, e.g., Mesmer, 725 A.2d at 1061; Utica Mut. Ins. Co., 746 A.2d
at 940. With the parameters of the duties to defend and indemnify set
forth, we turn first to Travelers’s request for reimbursement of
defense costs.

                                  III.

   After concluding that the ERISA claims in the Trotter complaint
created a potentiality of coverage, Travelers expended more than $4.4
million defending Perdue in the Trotter litigation. Travelers now con-
tends that it is entitled to a partial reimbursement of defense costs for
those funds allocated to the defense of non-covered wage and hour
claims. The district court disagreed, as do we.

   While jurisdictions differ on the soundness of an insurer’s right to
reimbursement of defense costs, compare Buss v. Superior Court, 939
P.2d 766, 776-78 (Cal. 1997) (approving of the right), with Gen.
Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 828 N.E.2d
1092, 1101 (Ill. 2005) (disapproving of the right), and Shoshone First
Bank v. Pac. Employers Ins. Co., 2 P.3d 510, 511 (Wyo. 2000)
(same), Travelers has not identified a single Maryland case that
extends this right to insurers. Under Maryland’s comprehensive duty
to defend, if an insurance policy potentially covers any claim in an
underlying complaint, the insurer, as Travelers did here, must typi-
cally defend the entire suit, including non-covered claims. See, e.g.,
Montgomery County Bd. of Educ., 840 A.2d at 226; Utica Mut. Ins.
Co., 746 A.2d at 940. Properly considered, a partial right of reim-
bursement would thus serve only as a backdoor narrowing of the duty
to defend, and would appreciably erode Maryland’s long-held view
that the duty to defend is broader than the duty to indemnify, see, e.g.,
Walk, 852 A.2d at 106.

   A partial right to reimbursement of defense costs would moreover
undermine the bargain that Maryland courts describe insurers reach-
ing with their insureds. The usual commercial liability policy, includ-
ing the policy that Travelers issued to Perdue, states that the insurer
has both the "duty" and the "right" to defend its insured. See, e.g.,
Sherwood Brands, Inc. v. Hartford Accident & Indem. Co., 698 A.2d
                 PERDUE FARMS v. TRAVELERS CASUALTY                      9
1078, 1083 (Md. 1997). Under Maryland law, "[t]hese are, essen-
tially, reciprocal or correlative provisions." Id.

   The arrangement is beneficial to both parties. "The duty to defend
is primarily, of course, for the benefit of the insured," Sherwood
Brands, 698 A.2d at 1083, and for its part, the insured receives a full
defense, see, e.g., Utica Mut. Ins. Co., 746 A.2d at 940. As Maryland
courts have long explained, "[a]lthough the type of policy here con-
sidered is most often referred to as liability insurance, it is ‘litigation
insurance’ as well, protecting the insured from the expense of defend-
ing suits brought against him." Brohawn v. Transamerica Ins. Co.,
347 A.2d 842, 851 (Md. 1975); see also Sherwood Brands, 698 A.2d
at 1083 (noting that defense costs will often exceed the amount of any
liability in an underlying action).

   The insurer, in turn, secures the right to defend "as a mechanism
for protecting and minimizing its duty of indemnification." Sherwood
Brands, 698 A.2d at 1083. "‘Faced with uncertainty as to its duty to
indemnify, an insurer offers a defense under reservation of rights to
avoid the risks that an inept or lackadaisical defense of the underlying
action may expose it to if it turns out there is a duty to indemnify.’"
Applied Signal & Image Tech., Inc. v. Harleysville Mut. Ins. Co., 252
F. Supp. 2d 215, 218-19 (D. Md. 2003) (quoting Terra Nova Ins. Co.
v. 900 Bar, Inc., 887 F.2d 1213, 1219 (3d Cir. 1989)); see also Sher-
wood Brands, 698 A.2d at 1083. Taking the arrangement as Maryland
has thus characterized it, allowing a partial recoupment of defense
costs would significantly tip the scales in favor of the insurer. Under
Travelers’s proposed rule, liability insurance would all but cease to
function as "‘litigation insurance,’" Brohawn, 347 A.2d at 851,
instead merely providing insureds with an up-front defense whose
line-item costs would then be the subject of subsequent litigation.

   In the absence of any contrary indication from the Maryland courts,
we are unwilling to grant insurers a substantial rebate on their duty
to defend. And even if Maryland might at some point look favorably
on a right of partial reimbursement, in this case the defense costs for
covered and non-covered claims may have significantly overlapped,
as the district court found. We thus affirm the judgment of the district
court that Travelers is not entitled to recover defense costs attributable
to non-covered claims.
10               PERDUE FARMS v. TRAVELERS CASUALTY
                                   IV.

   We next turn to Travelers’s duty to indemnify the Trotter settle-
ment. The district court held that Perdue was entitled to virtually full
indemnification because it was, as a legal and factual matter, "poten-
tially liable" under ERISA, and because the non-covered wage and
hour claims were "reasonably related" to the covered ERISA claims.
Both of these determinations were misstatements of Maryland law,
and cannot support the conclusion that Travelers was required to
indemnify Perdue for the entire sum it was seeking.

                                   A.

   First, in relying on the "potentiality rule" in the context of indemni-
fication, the district court conflated the duty to defend and the duty
to indemnify. The potentiality rule applies only to the duty to defend.
See T.H.E. Ins. Co. v. P.T.P. Inc., 628 A.2d 223, 225 n.3 (Md. 1993).
It does not govern the duty to indemnify, because an insurer has no
obligation to remunerate its insured for claims not covered under its
policy. See Employers Mut. Liab. Ins. Co. of Wis. v. Hendrix, 199
F.2d 53, 59 (4th Cir. 1952); see also Balt. Gas & Elec. Co. v. Com-
mercial Union Ins. Co., 688 A.2d 496, 514 (Md. Ct. Spec. App.
1997). As Maryland’s highest court has stated:

     Under the typical liability insurance policy, the insurer has
     a duty to indemnify the insured, up to the limits of the pol-
     icy, for the payment of a judgment based on a liability claim
     which is covered. The insurer also has a duty to defend the
     insured against a liability claim which is covered or which
     is potentially covered.

Mesmer, 725 A.2d at 1061 (emphasis added). Thus, a "major distinc-
tion" between the duties to defend and indemnify "is that the duty to
defend depends only upon the facts as alleged, and the duty to indem-
nify depends upon liability." Walk, 852 A.2d at 106. For this reason,
courts applying Maryland law may conclude that an insurer has a duty
to defend, but commonly withhold judgment on the scope of the duty
to indemnify until the insured is found liable and the basis of any set-
tlement or judgment is determined. See, e.g., Sheets, 679 A.2d at 542,
                 PERDUE FARMS v. TRAVELERS CASUALTY                    11
551; Mut. Benefit Group v. Wise M. Bolt Co., 227 F. Supp. 2d 469,
478-79 (D. Md. 2002).

   Neither Perdue nor the district court cite a single Maryland case
applying the potentiality rule to indemnification, and this is under-
standable. "Under the potentiality rule, the insurer will be obligated
to defend more cases than it will be required to indemnify." Litz, 695
A.2d at 570. Under Perdue’s rule, by contrast, an insurer must indem-
nify in every instance in which it is required to defend. The district
court improperly indulged this theory, which would undermine Mary-
land’s longstanding view that the duty to defend is broader than the
duty to indemnify.4

                                   B.

   The district court also erred in concluding that Travelers had a duty
to indemnify all claims "reasonably related" to those covered by its
policy. The "reasonably related" rule, first announced in Continental
Casualty Co. v. Board of Education, 489 A.2d 536, 542-45 (Md.
1985), limits slightly the complete duty to defend in the specific con-
text of directors and officers (D & O) liability insurance. In Continen-
tal Casualty, the Court of Appeals of Maryland considered a D & O
policy with no "duty to defend" language and held that the insured
could not obtain costs for defending an entire suit, but could receive
costs for those legal services "reasonably related to defense of a cov-
ered claim." Id. at 542-43, 545. In the insurance context, this "reason-
ably related" principle has been limited to the duty to defend, see,
e.g., id. at 542-45, and in most cases still further limited to the spe-
  4
    The district court’s conclusion that Perdue faced "a significant risk"
of ERISA liability because the Supreme Court has yet to decide whether
backpay constitutes an available remedy under ERISA was thus also
premised on its improper reliance on the potentiality rule. Even if the
Supreme Court were at some future point to hold that ERISA provides
for awards of backpay in some circumstances, it is hard to believe that
ERISA would displace the federal and state wage and hour regulations
as a primary measure for amounts due and owing the class action plain-
tiffs. In all events, we expressly decline to resolve questions of ERISA’s
coverage that may well end up being irrelevant to the district court’s
apportionment inquiry on remand.
12              PERDUE FARMS v. TRAVELERS CASUALTY
cific area of D & O insurance, see, e.g., Collier v. MD-Individual
Practice Ass’n, Inc., 607 A.2d 537, 542 n.1 (Md. 1992) (describing
Continental Casualty as a D & O case); Telxon Corp. v. Fed. Ins. Co.,
309 F.3d 386, 389-90, 393-94 (6th Cir. 2002) (same); Fed. Realty Inv.
Trust v. Pac. Ins. Co., 760 F. Supp. 533, 535 (D. Md. 1991) (same).
Perdue has not directed our attention to any Maryland case that
extends the rule to the indemnification of settlement amounts.

   Perdue nevertheless argues that "[t]he logic of Continental Casu-
alty applies equally to the indemnification of settlement costs as it
does to the indemnification of defense costs." We disagree. As articu-
lated, the reasonably related rule helps sort through specific itemized
legal costs, see Cont’l Cas. Co., 489 A.2d at 544-46, and it is entirely
unclear how such a rule would map onto the dissimilar considerations
involved in a mixed-action settlement.

   And even if the rule could be transported into the indemnification
context, it would inexorably result in an expansion of the duty to
indemnify well beyond the payment of insured claims, see Mesmer,
725 A.2d at 1061, so long as the non-covered claims related in some
uncertain manner to those that were covered. Because even a suit with
multiple claims will typically involve both a similar set of operative
facts and overlapping legal theories, applying the reasonably related
rule to indemnification would often leave insurers footing the bill for
an entire judgment or settlement, even for those claims the policy did
not reach. This, of course, would expand the duty to indemnify to
near if not complete parity with the duty to defend. The instant case
proves the point, for the district court concluded that the entire
requested settlement amount was "reasonably related" to the covered
ERISA claims. Maryland law provides no support for this approach,
and we again decline Perdue’s invitation to dismantle the longstand-
ing distinction between the duty to defend and the duty to indemnify.

                                   C.

   Notwithstanding the standards applied by the district court, Perdue
nonetheless insists that a full indemnification award is justified
because of the nature of the Trotter litigation. It is true that we would
affirm the judgment if the record of the Trotter litigation confirmed
that the class action settlement was based on covered ERISA claims.
                PERDUE FARMS v. TRAVELERS CASUALTY                  13
But even a brief review of the record persuades us that the nature of
the Trotter litigation cannot provide a sufficient justification for
granting Perdue the full indemnification that it seeks. We caution that
the discussion herein is not intended to provide a formula for appor-
tionment, but rather to set forth a full explanation for why Perdue’s
claim for complete indemnification here is not well-taken.

   First, in raising claims under both ERISA and wage and hour laws,
the Trotter plaintiffs were simultaneously pursuing relief for distinct
injuries under statutes that govern separate aspects of the employer-
employee relationship. "In enacting ERISA, Congress’ primary con-
cern was with the mismanagement of funds accumulated to finance
employee benefits and the failure to pay employees benefits from
accumulated funds." Massachusetts v. Morash, 490 U.S. 107, 115
(1989); see also Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983).
But while ERISA serves these important congressional objectives, it
was not designed to address every conceivable aspect of an employ-
ee’s monetary rights, and it is not primarily concerned with hourly
wages and overtime pay, the domain of the FLSA and its state coun-
terparts. As the Supreme Court has instructed, "the danger of defeated
expectations of wages for services performed [is] a danger Congress
chose not to regulate in ERISA." Morash, 490 U.S. at 115 (emphasis
added); see also Cal. Div. of Labor Standards Enforcement v. Dil-
lingham Constr., N. A., 519 U.S. 316, 327 (1997). For this reason,
"the distinction between ‘wage’ compensation (not regulated by
ERISA) and ‘benefit’ compensation (regulated by ERISA) must be
sensitively drawn to avoid invalidating state regulatory schemes Con-
gress intended to encourage." Cal. Hosp. Ass’n v. Henning, 770 F.2d
856, 861 (9th Cir. 1985).

   In this case, by seeking relief under both wage and hour laws and
ERISA, the Trotter plaintiffs thus pursued remedies for two different
kinds of injuries, one based on inadequate wage compensation, the
other based on insufficient benefit compensation. The Trotter plain-
tiffs alleged both that Perdue had failed to pay them wages for time
worked, and that Perdue violated ERISA by improperly maintaining
plan records, not crediting employees with hours of service, and not
contributing to the Supplemental Retirement Plan two percent of the
wage compensation that Perdue wrongfully withheld. These claims
were different in kind and in fact, and addressed themselves to differ-
14              PERDUE FARMS v. TRAVELERS CASUALTY
ent aspects of Perdue’s responsibilities as an employer. In view of the
fact that employer violations of wage and hour laws and employer
violations of ERISA are hardly coincident, the district court was
incorrect to award nearly full indemnification to Perdue under a pol-
icy that covered only ERISA-based claims.

   Quite aside from this general proposition, the wage and hour-based
claims represented a not insignificant part of the Trotter plaintiffs’
allegations. Their primary contention, after all, was simply that Per-
due had failed to pay them wages for time worked. Specifically, the
Trotter complaint alleged that Perdue had clocked out chicken-
processing line employees before their workday was actually com-
plete, and that Perdue also did not pay these workers for minutes
spent donning and doffing the protective attire — smocks, aprons,
boots, gloves, arm guards, and the like — that is needed for the
assembly-line slaughter, deboning, and packaging of chicken.

   The Trotter plaintiffs’ allegations concerning ERISA were, if any-
thing, more limited than their wage and hour claims, and in any event
would not serve as a basis for the near complete indemnification
awarded by the district court. Many of the ERISA allegations were
effectively contingent on Perdue’s failure to pay wages in the first
place. The Trotter plaintiffs contended that Perdue failed to contribute
to the Supplemental Retirement Plan two percent of the pay they
would have earned had Perdue properly compensated them for the
work described above. The plan of allocation for the Trotter class
action settlement further indicates that the unpaid plan contributions
were to be deducted from the payments to individual class members
rather than made in addition thereto. And while the Trotter plaintiffs
did seek injunctive relief under ERISA, this relief of course could not
translate into monetary awards in the class action settlement. Many
of the alleged ERISA violations were, in sum, often collateral conse-
quences of Perdue’s wage and hour violations, and to the extent that
Perdue’s failure to make plan contributions exposed it to any addi-
tional liability, this liability was not of such magnitude as to justify
an indemnity award for virtually all of the total settlement amount.

   Nor do the events leading up to the consummation of the Trotter
settlement support Perdue’s claim for nearly full indemnification. As
early as January 2000, several weeks after the filing of the Trotter
                PERDUE FARMS v. TRAVELERS CASUALTY                    15
complaint, Perdue informed Travelers that "the preponderance of any
potential awards may very well fall outside the indemnity obligation
of Travelers, which at this time may be limited to the ERISA counts."
Several months later, in July 2000, the Trotter plaintiffs offered to
settle for $40 million, assessing Perdue’s total potential monetary
exposure at close to $223 million. Of this latter amount, only about
$1.6 million was tabbed as ERISA-based liability. In May 2002, the
Trotter plaintiffs submitted a revised settlement demand of $17 mil-
lion, this time pegging Perdue’s total liability exposure at approxi-
mately $56 million. Only $367,500 was assigned to ERISA-based
liability.

   For all of the above reasons, treating the ERISA claims as the dom-
inant feature of the Trotter liability would turn the insurance policy
on its head. To affirm the judgment on the basis of this record would
simply impose liability upon Travelers for claims that its insurance
policy never covered. This we cannot do.

                                   D.

   The district court’s conclusion that Travelers was required to
indemnify Perdue for the full amount it was seeking thus cannot stand
on its own reliance on the potentiality and reasonably related rules,
nor can we uphold the judgment on the record before us. We therefore
remand this case to the district court for an appropriate determination
of Travelers’s duty to indemnify. "[T]he duty to indemnify depends
upon liability," Walk, 852 A.2d at 106, and "[c]learly there can be no
judgment against [Travelers] until it is determined what part of the
[Trotter settlement] was paid" in satisfaction of covered claims, Hen-
drix, 199 F.2d at 59. This is an inquiry that the district court must now
undertake.

                                   V.

   We thus turn to how the district court should proceed on remand.
As described above, the situation before us is as follows: Perdue has
entered a settlement of both covered and non-covered claims, the set-
tlement agreement does not fully indicate how liability was allocated
between them, and Travelers is not liable for non-covered claims.
This scenario evidently arises with some frequency, but the apportion-
16              PERDUE FARMS v. TRAVELERS CASUALTY
ment of settlement amounts between covered and non-covered claims
is typically resolved through negotiation and private agreement, as lit-
igation costs can be astronomical. See, e.g., 4 David L. Leitner et al.,
Law and Practice of Insurance Coverage Litigation § 47:44 (2005);
1 Allan D. Windt, Insurance Claims & Disputes § 6:31 (4th ed. 2001
& Supp. 2005); William H. Black, Jr., Coverage Conundrum: Post-
settlement Determination of an Insurer’s Indemnity Obligation, 26
Ins. Litig. Rep. 205, 205, 216 (2004); Davis J. Howard, Apportioning
an Insurer’s Liability Between Covered and Noncovered Parties and
Claims, in Insurance, Excess, and Reinsurance Coverage Disputes,
597, 599, 602, 613 (Barry R. Ostrager & Thomas R. Newman eds.,
1989). Litigation of this type also has the unfortunate consequence of
reducing the cost-savings associated with settling the underlying
action in the first place.

   Nevertheless, we have held that when courts are presented with this
situation, the only proper solution is a rough apportionment of settle-
ment amounts among covered and non-covered claims. See Employ-
ers Mut. Liab. Ins. Co. of Wis. v. Hendrix, 199 F.2d 53, 59-60 (4th
Cir. 1952); accord Lockwood Int’l, B.V. v. Volm Bag Co., 273 F.3d
741, 743 (7th Cir. 2001); Enserch Corp. v. Shand Morahan & Co.,
952 F.2d 1485, 1494-95 (5th Cir. 1992); Cont’l Cas. Co. v. Canadian
Universal Ins. Co., 924 F.2d 370, 376, 378-79 (1st Cir. 1991); Cooper
Labs., Inc. v. Int’l Surplus Lines Ins. Co., 802 F.2d 667, 674 (3d Cir.
1986); 2 Leitner et al., supra § 23:30 ("[I]f a judgment or settlement
includes several claims, some of which are covered and others of
which are not covered, the judgment or settlement must be allocated
as between covered and uncovered claims."); Windt, supra § 6:31 &
n.3 (discussing apportionment and collecting cases). We have simi-
larly held that apportionment is necessary in the analogous context of
a general jury verdict that does not separate out liability between cov-
ered and non-covered claims. See Bd. of County Supervisors v. Scot-
tish & York Ins. Servs., Inc., 763 F.2d 176, 179 (4th Cir. 1985); see
also Sheets, 679 A.2d at 542 (declining to resolve an insurer’s indem-
nity obligation for a mixed-action settlement where the record con-
tained no indication of how damages were allocated among covered
and non-covered causes of action). In these situations, the burden is
on the insured to prove the amounts attributable to covered claims.
See, e.g., Canadian Universal Ins. Co., 924 F.2d at 376; Windt, supra
§§ 6:26, 6:31.
                 PERDUE FARMS v. TRAVELERS CASUALTY                        17
   On remand, it is at least clear that Travelers must indemnify Perdue
for the $907,954.32 in settlement awards paid to Trotter plaintiffs
asserting only ERISA claims. This sum plainly represents liability for
a covered claim, see Mesmer, 725 A.2d at 1061, and Travelers does
not suggest that the amount is otherwise unreasonable. The district
court must also determine how apportionment of the remaining liabil-
ity between covered and non-covered claims should proceed. We do
not pass upon the appropriate guideposts that are to govern apportion-
ment, a subject that neither party has briefed or argued here.

   We do note that most courts and commentators to have considered
the allocation of settlement amounts have recommended consider-
ation of a variety of factors short of a full trial of the original suit, see,
e.g., Enserch Corp., 952 F.2d at 1495; Hendrix, 199 F.2d at 59-60;
Windt, supra § 6:31. These factors include the underlying complaint
and settlement agreement, see, e.g., Enserch Corp., 952 F.2d at 1494-
95, the intent of the parties entering the settlement, see, e.g., Am.
Home Assurance Co. v. Libbey-Owens-Ford Co., 786 F.2d 22, 31 (1st
Cir. 1986); Windt, supra § 6:31, and the relative merits of the under-
lying claims, see, e.g., Enserch Corp., 952 F.2d at 1495; Hendrix, 199
F.2d at 59-60. The relevance of these factors and others may be a
proper subject on remand. And while we have broached some consid-
erations in our preceding discussion, they are not intended to be
exhaustive, and the district court must consider them with the benefit
of briefing and argument from the parties.

                                     VI.

   In sum, Travelers is not entitled to partial reimbursement from Per-
due for that portion of the $4.4 million expended on the defense of
non-covered claims. Travelers is not required, however, to indemnify
Perdue for the $775,092 in settlement awards paid to Trotter plaintiffs
asserting only wage and hour claims, as well as the $98,515 in attor-
neys’ fees related exclusively to those claims. Perdue acknowledges
these amounts are unrelated to any ERISA claims, and does not seek
them here. By the same token, however, Travelers must indemnify
Perdue for the $907,954.32 distributed to Trotter plaintiffs asserting
only ERISA claims. And while it may well be that Travelers does
have some further duty to indemnify, it simply cannot be true that
18             PERDUE FARMS v. TRAVELERS CASUALTY
Travelers is required to indemnify Perdue for the full amount Perdue
now seeks.

   We thus affirm the district court’s conclusion that Travelers may
not obtain reimbursement of defense costs, but reverse and remand
for further proceedings consistent with this decision on Travelers’s
duty to indemnify.

                      AFFIRMED IN PART, REVERSED IN PART,
                                          AND REMANDED
