Further Attempts at Consolidating COVID-19 Business Interruption Insurance Cases (Mostly) Rejected by Panel

Kelley Drye Client Advisory

In August, a Judicial Panel on Multidistrict Litigation (“JPML”) declined to consolidate hundreds of cases against insurers who denied business interruption claims for COVID-19 losses, but hinted that consolidating cases against individual insurers may be acceptable.

Earlier this month, the JPML denied Motions to Centralize cases against Travelers, Hartford Group of Insurers, Cincinnati Insurance and Lloyd’s of London but permitted the creation of a Multi-District Litigation against regional insurer: Society Insurance.

In denying the Motions to Centralize, the JPML found that, although the Complaints involved nearly identical policy language and shared common questions —notably, whether losses due to COVID-19 constituted a covered direct physical harm or damage”—differences in state law accounted for variations in the causes of action plead by plaintiffs.  The Panel found that under these circumstances consolidation would be inefficient.

By contrast, the 34 actions against Society Insurance are spread across six nearby states, and 22 of the cases are concentrated in one jurisdiction, the Northern District of Illinois, where the consolidated cases will be transferred pursuant to the JPLM’s Order.

The 34 cases against Society Insurance represent just a fraction of the business interruption suits facing insurers across the country. Between March and June alone, there have been over 400 cases involving business interruption claims in response to COVID-19 losses in the US, representing part of the 20% increase in insurance litigation reported between 2019 and 2020.

Kelley Drye & Warren LLP will be closely monitoring the case law as it progresses. Please click here if you would like to be kept abreast of current developments.