Class Actions Continue to Drive COVID-19 Insurance Coverage Litigation While Manufacturer, Insurer Bring New Suits
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Class Actions Continue to Drive COVID-19 Insurance Coverage Litigation While Manufacturer, Insurer Bring New Suits

Key Takeaways

  • Retail, hospitality, and professional services class actions continue to drive COVID-19 insurance coverage litigation

  • Policyholders are seeking consolidation of COVID-19 coverage actions, invoking “core issues” related to coverage triggers and the application of exclusions

  • Travelers v. Geragos & Geragos is the first known lawsuit initiated by an insurer for COVID-19-related losses

  • A Pennsylvania-based manufacturer has brought a coverage suit for COVID-19-related losses closely following the pattern of retail and hospitality suits

 

Since April 15 (what would have been Tax Day), COVID-19-driven insurance coverage litigation has been dominated by the filing of class-action complaints in federal and state courts throughout the country. Consistent with the initial wave of lawsuits, these class-action complaints seek to establish putative classes of hospitality and retail companies and professional service firms. In addition, last week was marked by the filing of the first known COVID-19-related coverage lawsuit by an insurer, albeit an insurer that had already been sued as a defendant in a separate action by its insured. This past week also saw the filing of a lawsuit by a manufacturer for its COVID-19-related losses. Below, we analyze some of the COVID-19-related coverage lawsuits that should be on your radar. If you would like a copy of any of these complaints, please contact us directly.

Policyholders Seek Consolidation of COVID-19 Coverage Actions

    • In re: COVID-19 Business Interruption Insurance Coverage Litigation (MDL No. 2942)

On April 20, 2020, counsel representing two policyholders in COVID-19-related coverage class-action suits filed a motion with the Judicial Panel on Multidistrict Litigation for transfer and coordination or consolidation of two class-actions suits filed in the U.S. District Court for the Eastern District of Pennsylvania with nine “Related Actions” filed in federal courts in Illinois, Florida, New York, Wisconsin, Ohio, California, Oregon, and Texas and “subsequent tag-along actions.” The motion seeks to transfer the actions to the Eastern District of Pennsylvania before the Honorable Timothy J. Savage, U.S.D.J., and asserts that the pending and future litigation involve the “core issue” of whether governmental orders trigger insurance coverage for losses caused by business interruption and whether any exclusions apply to bar coverage.

On April 21, 2020, another motion for transfer of actions for coordinated or consolidated pretrial proceedings was filed with the Judicial Panel on Multidistrict Litigation. This motion, filed by counsel for the “Related Actions” referenced above, seeks to transfer pending and subsequently-filed class actions involving similar facts or claims to the Northern District of Illinois before the Honorable Matthew F. Kennelly, U.S.D.J. The motion asserts that all of the pending class actions turn on the same two questions: whether COVID-19 causes “physical damage or loss to property” and whether COVID-19 was present on the insured property or on property sufficiently connected to the insured property to trigger coverage. Of note, the motion also states that claimants will likely present expert evidence on epidemiological modeling of the virus’ spread to determine its presence and impact.

Restaurant, Retail, and Dental Practice Policyholders Seek to Establish Nationwide Classes for Suits Alleging Denial of Business Interruption Coverage

    • Gio Pizzeria & Bar Hospitality LLC v. Certain Underwriters at Lloyd’s, London (S.D.N.Y. No. 1:20-cv-03107)
    • Rising Dough Inc. et al. v. Society Insurance (E.D. Wis. No. 2:20-cv-00623)
    • Bridal Expressions LLC v. Owners Insurance Co. (N.D. Ohio No. 1:20-cv-00833)
    • Caribe Restaurant & Nightclub Inc. v. Topa Insurance Company (C.D. Cal. No. 2:20-cv-03570)
    • Dakota Ventures LLC v. Oregon Mutual Insurance Co. (D. Or. No. 3:20-cv-00630)
    • Christie Jo Berkseth-Rojas DDS v. Aspen American Insurance Co. (N.D. Tex. No. 3:20-cv-00948)

On April 17, 2020, several plaintiff-oriented class action firms combined to file COVID-19-related class action complaints in federal courts in New York, Wisconsin, Ohio, California, Oregon, and Texas. (These suits are the some of the “Related Actions” referenced in the MDL transfer motion). In each case, the businesses, which include bakeries, taverns, restaurants, nightclubs, bridal retailers, and dental practices, allege they paid premiums to the insurance companies for business interruption insurance for situations in which they could be forced to close through no fault of their own, but their claims have been denied. The policies at issue allegedly do not contain virus exclusions applicable to property and business income coverages. The complaints seek to establish nationwide classes of policyholders that have been denied COVID-19-related coverage claims by each defendant insurer.

Travelers Seeks Declaration It Has No Obligation to Cover Losses

    • Travelers Casualty Insurance Company of America v. Geragos & Geragos. (C.D. Cal., No. 2:20-cv-03619)

Travelers became the first-known insurer to “initiate” a COVID-19-related coverage lawsuit seeking a declaration that it has no obligation to pay losses of business income related to the COVD-19 pandemic. While technically the “first” insurer to be the plaintiff in a COVID-19-related property coverage dispute, Travelers had already been sued by its insured in California state court. Among other coverage defenses, Travelers asserts that the presence or suspected presence of a virus does not constitute direct physical loss or damage, and that its policies’ virus exclusions apply to bar coverage.

Manufacturer’s Complaint Follows Pattern of Retail and Hospitality Suits

    • A. Spalding Co. v. Selective Insurance Group, Inc., et al. (E.D. Pa. 2:20-cv-01967)

A Pennsylvania-based manufacturer filed a COVID-19-related coverage lawsuit seeking to recover business income losses sustained allegedly as a result of government orders closing non-life-sustaining business and requiring residents to stay at home. The allegations in the complaint closely track the allegations in similar complaints filed on behalf of hospitality and retail entities. The complaint seeks business income and civil authority coverage and asserts, without explanation, that an Exclusion of Loss Due to Virus or Bacteria does not apply.

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