As anticipated, many policyholders across the nation have already filed COVID 19 business interruption lawsuits against more than a dozen insurance companies. Some of these lawsuits include class action allegations. Some seek only a declaratory action. Some of the lawsuits allege that COVID-19 constituted the physical damage or property loss. Some allege that property loss was due solely to government orders requiring shut-down and not COVID-19. No matter the differences, all these lawsuits are the result of the insurance companies’ denial (or anticipated denial) of the policyholders’ claims for business interruption coverage during this historical pandemic. It should be of no surprise to learn that there are pending efforts by the Plaintiffs Bar to transfer all these lawsuits into one national multi-district litigation proceeding (“MDL”), wherein the cases will be transferred to a single judicial district and single judge for consolidated and coordinated pretrial proceedings.
On April 20, 2020, two Pennsylvania restaurants filed a Motion to Transfer and Consolidate under 28 U.S.C. §1407 with the Judicial Panel on Multi-District Litigation (“JPML”), seeking to establish an MDL in the Eastern District of Pennsylvania. Movants argued the cases involved one or more common questions of fact, and their consolidation into one proceeding would serve the convenience of the parties, witnesses and promote the just and efficient conduct of the actions. The next day, on April 21, 2020, a subsequent Motion to Transfer was filed in the same action by eleven different businesses, seeking consolidation and transfer to the Northern District of Illinois. Two days later, on April 24, 2020, still another motion was filed in support of consolidation, but seeking to transfer the cases to the Southern District of Florida. Since that time, there have been more than 40 additional lawsuits identified and requested to be included in the MDL, and more than 15 different insurance companies have appeared.
It is expected that the insurance industry, individually and through amicus participation, will altogether oppose consolidation, citing to differences in policy language, differences in claim handling procedures and differences in underlying facts. Some policies contain applicable exclusions, which would serve to deny coverage, while others do not. The protocols for handling and responding to COVID-19 claims differ from insurance company to insurance company. And the underlying facts, including the type of business, the scope of actual or potential COVID-19 contamination, and the scope and length of the government orders requiring shut-down, will vary from case to case and state to state.
On Wednesday, May 6, 2020, in response to several Motions for Extension of Time filed by the recently-appearing insurance companies, the JPML extended the original briefing schedule for the Motion to Transfer and Consolidate, requiring Notices of Appearances and Corporate Disclosure Statements to be filed on or before May 26, 2020; Responses to be filed on or before June 5, 2020; and Replies, if any, to be filed on or before June 15, 2020. The JPML also indicated there would be no further extensions of time, absent extraordinary circumstances. Although there is no set time period by which the JPML has to rule upon the motion, we expect its decision – a decision which could have far-reaching procedural and substantive effects on the barrage of business interruption lawsuits expected to come -- will be swift.