Wade Clark Mulcahy LLP

<p style="text-align: justify;">The most significant insurance issue of the Covid-19 pandemic has been insureds’ claims for business interruption coverage resulting from the forced closure of their businesses around the country. This issue alone has sparked hundreds of lawsuits spanning nearly every jurisdiction in the country. After arguments last week, the Judicial Panel of Multidistrict Litigation (the “JPMDL”) is now set to decide whether so-called “single insurer” multi-district litigation claims can be consolidated against five insurers: The Hartford, Cincinnati Insurance Co., Society Insurance Co., Travelers, and various underwriters at Lloyd's of London.</p>
<p style="text-align: justify;">By way of brief background, in August, JPMDL issued an <a href="https://www.law360.com/articles/1300776/attachments/0">Order</a> denying the motions brought by insureds across the country to centralize the numerous lawsuits asserting business interruption coverage as a result of the Covid-19 pandemic. At the time, there were approximately 263 pending actions in 48 districts naming more than 100 different insurers. In denying the motion, the JPMDL specifically left open the possibility the “single insurer” multi-district litigation suits could proceed against five of the named insurers.</p>
<p style="text-align: justify;">Briefs have been filed, and arguments took place last week. As in their initial briefing, the insurers all argued that the differences in the underlying facts for each insured and language in each policy make multi-district litigation an impossibility. Lloyd’s in particular argued that it cannot even be considered a “single insurer” as the actual Underwriters are at times not even affiliated with each other.</p>
<p style="text-align: justify;">In addition to the insurers, a select group of insureds also opposed centralization, including a group of Chicago-area restaurants, bars, and theaters nicknamed the “Big Onion” plaintiffs. These insureds seek to apply Illinois law’s purportedly more favorable decisions and not have their case decided by a single federal court in another state.</p>
<p style="text-align: justify;">Most insureds, however, support the single-insurer MDLs. They argue that the policies at issue generally utilize the same, standard ISO forms, and therefore share the relevant terms. They also take the position that the interpretation of rarely analyzed policy provisions, such as “civil authority” clauses, would be best answered by one overarching court. Another argument in favor of the MDL is sheer efficiency; that is, the hundreds of currently pending business interruption cases could be resolved quickly resolved together.</p>
<p style="text-align: justify;">Whether or not the cases against the five insurers are consolidated will have a large impact on the status of business interruption coverage around the country. We will keep you apprised of any and all developments.</p>
<p style="text-align: justify;">Thanks to Doug Giombarrese for his contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>