Attorneys Seek MDL Over COVID-19 Business Interruption Insurance Denials
By Amanda Bronstad | April 27, 2020 | The original version of this story was published on The Legal Intelligencer
Podhurst Orseck in Miami is among the law firms suing Lloyd’s of London underwriters for denying claims, and the flow of new cases is growing.
Anticipating growth in the number of business-interruption lawsuits being filed against insurance companies in the wake of COVID-19, two groups of lawyers are seeking a multidistrict litigation proceeding to coordinate all the cases.
Many plaintiffs firms accustomed to the MDL arena are piling into new cases. Chicago and Philadelphia have been nominated to host consolidated cases.
Dozens of small businesses are suing their insurers, including Lloyd’s of London underwriters, Chubb and Admiralty Indemnity Co., alleging they rejected claims for economic losses caused by government shutdowns over the coronavirus pandemic.
“This issue — whether business interruption insurance policies will cover losses incurred by businesses forced to shutter their business as a result of the governmental orders—is one of national importance and great significance to the ultimate survival of many businesses,” plaintiffs attorney Richard Golomb wrote in a motion filed Monday before the U.S. Judicial Panel on Multidistrict Litigation. “This is a monumental issue.”
Podhurst Orseck filed a lawsuit Monday against Lloyd’s underwriters, Axis Specialty Europe SE and HDI Global Specialty SE in the Southern District of Florida, and the firm combined with Boies Schiller Flexner on another case filed in Miami federal court last week against Chubb Ltd. and Westchester Surplus Lines Insurance Co.
Podhurst Orseck managing partner Steven Marks said Tuesday that the firm has not adopted a formal position on an MDL but would oppose locations in Pennsylvania and New Jersey, a major insurance headquarters state.
“Given the volume of these claims and the differences in the policies, even for the same insurer, we think that an MDL will be unmanageable,” he said by email. “While a nationwide MDL against all insurers seems unlikely, It is conceivable that the MDL panel could have multiple MDLs in several locations” by insurer.
Overall, Marks said this is “not an easy one to predict.”
Golomb’s firm, Golomb & Honik, and Levin Sedran & Berman, which joined in the motion, represent Philadelphia eateries River Twice and Chops in two lawsuits. They want to coordinate all the cases in the Eastern District of Pennsylvania and have suggested Judge Timothy Savage, who has not handled MDLs before.
“The Covid-19 business interruption litigation is obviously a complex case that has national ramifications and requires a national solution,” Golomb said in an email. “As a result, we believe there is no better method than multi-district litigation to efficiently work toward a fair and timely resolution for all small businesses involved.”
On Tuesday, attorneys Adam Levitt of Chicago’s DiCello Levitt Gutzler and Mark Lanier of The Lanier Law Firm, who filed six class actions against insurers, suggested an MDL in the Northern District of Illinois before Judge Matthew Kennelly, who sits on the MDL panel. Joining them were Burns Bowen Bair in Madison, Wisconsin, and Daniels & Tredennick in Houston.
Cases have been filed in federal courts in Illinois, Florida, Pennsylvania, New York, Wisconsin, Ohio, California, Oregon and Texas. One motion references another nine state court lawsuits filed in Oklahoma, Louisiana, California, Texas, Indiana, Wisconsin and Washington, D.C.
The motions focused on 16 cases filed in federal courts against eight insurers, but Golomb predicted an “avalanche of cases.” Tuesday’s motion referenced statements from The Hartford and Travelers, not defendants as yet, insisting their business-interruption coverage included losses from physical damage caused by hurricanes, fires, winds or theft — not a virus. They also noted Allstate, Zurich and Allianz, also not defendants, have headquarters in Illinois.
Acknowledging the potentially large number of MDL defendants, both motions said the cases were all about the common issue of business-interruption insurance policies. They referenced other cases, like those brought against more than a dozen companies that distribute and manufacture opiate pharmaceuticals. More than 2,700 lawsuits over the opioid crisis are coordinated in an MDL in the Northern District of Ohio.
“While there is a multiplicity of parties across these litigations, the panel — in cases like Opioids, Chinese Drywall, TVM and the like — has repeatedly demonstrated its belief that, even in the most sprawling actions, coordinating pretrial processes in a single court, before a single judge, is preferable to any alternative approach,” Levitt said in an email. He prefers Chicago because it’s “a major U.S. insurance hub, as well as its central location, which is needed for this nationwide litigation.”
Insurance defendants are due to respond to the MDL panel next month.