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Judicial Panel Considers Motions to Consolidate All COVID-19 Business Interruption Claims

May 1, 2020

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<p style="text-align: justify;">COVID-19’s impact has reverberated through almost every aspect of American life. The impact has been political, social, and economic. For businesses deemed “non-essential,” such as restaurants, hair salons, and gyms, the impact has been felt even greater. Governmental authorities on the national, state, and local levels have implemented various “stay at home” orders. These orders have, in turn, caused many businesses to lose significant income. As such, several businesses have filed actions seeking recovery of losses they sustained as a result of the orders. The businesses allege that they are entitled to recovery of their losses through their business interruption insurance policies.</p>
<p style="text-align: justify;">As few states have lifted their respective “stay at home” orders, it is likely more claims for business losses will come soon. Anticipating the influx of related litigation, counsel representing multiple policyholders in COVID-19 related lawsuits have filed motions with the Judicial Panel on Multidistrict Litigation for transfer and consolidation of the cases.</p>
<p style="text-align: justify;">The first motion, <em><a href="">MDL No. 2942</a>,</em> filed April 20, 2020, seeks transfer and coordination or consolidation of two class-action suits filed in the U.S. District Court for the Eastern District of Pennsylvania with nine “Related Actions” filed in federal courts throughout the country. All actions referenced in the motion seek a finding that the “stay at home” orders trigger coverage under the plaintiffs’ business interruption insurance policies.</p>
<p style="text-align: justify;">The second motion, also MDL No. 2942, filed April 21, 2020 by counsel for the “Related Actions” referenced above, seeks to transfer pending and similar business interruption coverage litigation to the Northern District of Illinois before the Honorable Matthew F. Kennelly. This motion asserts that all of the pending actions involve the questions of 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. In support, the motion asserts that claimants will present expert evidence on epidemiological modeling of COVID-19’s spread to determine its presence and impact.</p>
<p style="text-align: justify;">Both motions argue that consolidation is appropriate since the panel has consolidated other widespread cases litigated around the country. Specifically, the motions reference the panel’s consolidation of the 2,700 lawsuits related to the opioid crisis, which spanned several states and were brought against more than a dozen pharmaceutical companies. The motions maintain that consolidation is necessary because, regardless of the different insurers, policies are relatively standard.</p>
<p style="text-align: justify;">Although the panel has yet to decide a factually similar case, it has not hesitated to consolidate cases involving multiple districts and diverse defendants in the past. If the panel consolidates the business interruption claims, the future of business interruption claims—as a whole—will have much at stake in the court that hears the consolidated actions. The insurance defendants are due to respond to the MDL panel in May.</p>
<p style="text-align: justify;">Thanks to John Lang for his contribution to this post. Please email <a href="">Heather Aquino</a> with any questions.</p>

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