The Judicial Panel on Multidistrict Litigation (JPML) heard arguments on whether to create five separate multidistrict litigations (MDL) for five different insurers. Doing so would centralize nearly 300 lawsuits filed in federal district courts by businesses who sued their insurers after their COVID-19 related business interruption claims were denied.
Insurers facing a possible “single insurer” MDL include The Hartford, Cincinnati Insurance Co., Society Insurance Co., Travelers, and various underwriters at Lloyd’s of London.
More than 700 lawsuits have been filed since government-mandated closures of nonessential businesses went into effect last spring to stop the spread of COVID-19. Restaurants, bars, salons, and other businesses filed claims against their business interruption insurance, part of a business owner’s policy that provides coverage of operating expenses in the event a disaster causes the business to temporarily close. But insurance companies have denied these claims, claiming that the policies either had virus exclusions or, since the coronavirus didn’t cause physical damage to the establishments, the closures are not covered.
One group of businesses sought centralization in the Eastern District of Pennsylvania, and another group sought centralization in the Northern District of Illinois. Insurers were generally opposed to any form of centralization. Many policyholder plaintiffs supported the creation of an MDL, but some did not.
On Aug. 12, the JPML denied the petition for a nationwide centralization, finding the cases shared “only a superficial commonality,” and involved more than 100 different insurance companies. Many of the businesses suing their insurers are “on the brink of bankruptcy” due to the COVID-19-related shutdowns and, as a result, time isn’t on their side.
But the panel did indicate that it may still consider creating smaller MDLs for certain insurance companies facing higher volumes of cases. Those arguments began yesterday.
Business interruption insurance attorneys
Beasley Allen lawyers are actively investigating and filing claims against various insurance companies for denial of business interruption coverage during the COVID-19 pandemic, and are involved in advocating for consolidation of these actions in multidistrict litigation (MDL). Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, Rachel Boyd and Paul Evans, lawyers in the Section, are spearheading this litigation for our firm and are monitoring all MDL developments as they arise. Please contact them if you have any questions or would like to discuss potential claims.