Nationwide Mutual Insurance Co. this week joined other insurers in pushing back against efforts to consolidate more than 100 small-business lawsuits seeking coverage of pandemic-related losses.
Hundreds of small business have filed state and federal lawsuits over denied business interruption coverage, with many opting to file individually or as part of a proposed class. A significant chunk or those cases —involving medical practices, restaurants, law firms, and others— have been floated for consolidation into multidistrict litigation, with or without the support of the individual filers.
Nationwide, in its opposition to the multidistrict ligation (MDL) filed June 4,pointed to a lack of common facts that would prevent consolidation from being “efficient or convenient” for the parties involved. The company said it’s only named in a few of the 142 actions floated for the pending MDL and has no affiliation with most other defendants.
The pros and cons of consolidation on this scale probably balance themselves out in the eyes of the parties involved, said Ross Silverman, a partner at Katten Muchin Rosenman LLP.
A lot depends on the forum of the original filing, he said.
“If you think your case is in a good jurisdiction and you have a good judge, and then they suddenly transfer you to another judge in another jurisdiction where you’ll be required to litigate by committee,” you might be upset, he said.
But the benefit of consolidation “is that you’ll almost certainly have a judge who understands the issues,” he added. “And that you’ll have the benefit of the collective resources and wisdom of the parties and law with whom your positions are generally aligned.”
Nationwide contends that even a cursory comparison of other actions shows a lack of common questions. It said its contested policies contain virus exclusions, while policies at issue in other cases don’t. The plaintiffs also operate in a “wide variety” of businesses and professions, meaning they’re seeking coverage under provisions that don’t exist in some policies.
Owners Insurance Co. and several affiliates of The Travelers Companies Inc. recently joined Nationwide in opposing the motions to transfer and consolidate.
The pending MDL has caused parties in some business interruption cases to seek stays until the question of consolidation is sorted out.
A motion filed June 4 by Stan’s Bar-B-Q LLC suggested that the Judicial Panel on Multidistrict Litigation is likely to consider motions to transfer and for consolidation at its July 30 hearing session. A federal judge on Friday granted the stay, which was unopposed by the insurer being sued, The Charter Oak Fire Insurance Co.
The judicial panel has asked responses to the question of consolidation to be filed by June 5, and that reply briefs be filed by June 15. However, the pending case has not yet appeared on the panel’s official schedule.
The case is IN RE: Covid-19 Business Interruption Protection Insurance Litigation, J.P.M.L., No. 2942, 4/20/20.
Burgers & Retail
Here’s a handful of other cases and developments highlighting this week’s slate of insurance coverage litigation:
- West Coast Restaurant Chain In-N-Out Burgers is asking a California federal court to sort out whether Zurich American Insurance Co. must pay out claims for “significant” losses incurred after Covid-19 sparked states of emergency across the country. The company —operator of about 350 restaurants in California, Texas, Nevada, Utah, Oregon, and Texas— said in its recent complaint that its “all-risk” policy covers the economic fallout after all of its dining rooms were forced to close. In-N-Out said its policy with Zurich is subject to a $250 million total limit, with sub-limits of $2.5 million per property covering issues of civil or military authority. The chain is also suing the insurer for breach of contract and asking the court for damages. (The case is In-N-Out Burgers v. Zurich American Insurance Co., C.D. Cal., No. 8:20-cv-01000, complaint filed 5/29/20.)
- Goodwill’s operation in central Oklahoma is now suing its insurer in federal court, seeking coverage for pandemic-related losses stemming from mandatory store closures. The company, which has locations in Oklahoma City and other cities within the region, first filed for a declaratory judgment in Oklahoma state court on May 6. But its case against its insurer, Philadelphia Indemnity Insurance Co., was transferred June 1 to U.S. district court. In its complaint, Goodwill argued that stay-at-home orders and the temporary shuttering of non-essential businesses stopped it from accessing its property “in response to dangerous physical conditions” that constitute covered loss. It also alleges that, without its knowledge, the insurer worked in an endorsement to the policy that purports to exclude loss due to virus or bacteria. (The case is Goodwill Industries of Central Oklahoma Inc. v. Philadelphia Indemnity Insurance Co., W.D. Okla., No. 5:20-cv-00511, removal notice filed 6/1/20.)
- A Los Angeles-based plaintiffs firm is pushing to throw out the lawsuit filed against it by Travelers Casualty Insurance Co. of America, accusing the insurer of “forum shopping.” Geragos & Geragos, which is representing businesses in similar coverage disputes, filed a motion to dismiss Travelers’ case on June 2. The firm filed its own pandemic-related lawsuit against Travelers in California state court 10 days before Travelers counter-sued. According to Geragos’ recent motion, the insurer “improperly removed” the law firm’s initial lawsuit to federal court while leaving other, similar actions in state court. Geragos now argues that the court should toss Travelers’ case against it, or alternatively stay the action until parallel state cases are sorted out. (The case is Travelers Casualty Insurance Co. of America v. Geragos & Geragos, C.D. Cal., No. 2:20-cv-03619, motion to dismiss filed 6/2/20.)