Court Denies Efforts to Consolidate COVID-19 SuitsThe Panel on Multidistrict Litigation has rejected efforts to centralize pretrial proceedings in actions in Pennsylvania and Illinois seeking insurance coverage for business interruption losses resulting from COVID-19. The request for MDL-status was hotly contested, with insureds in more than 175 coverage actions responding to the centralization motions. Some insureds supported centralization in either Pennsylvania or Illinois, while others sought centralization elsewhere – including in California, Florida, Missouri, New Jersey, and Washington. Other insureds opposed centralization altogether. Yet other insureds suggested centralization on a state-by state, regional, or insurer-by-insurer basis.

Unlike the insureds, who took different positions, the insurers unified in their opposition to centralization.

The panel recognized that these coverage cases were not suited for centralization as they “share only a superficial commonality.” The panel noted the lack of common defendants, specific insured industry groups, and common insurance policies:

There is no common defendant in these actions — indeed, there are no true multi-defendant cases, as the actions involve either a single insurer or insurer-group (i.e., related insurers operating under the same umbrella or sharing ownership interests)… Furthermore, these cases involve different insurance policies with different coverages, conditions, exclusions, and policy language, purchased by different businesses in different industries located in different states.

The panel recognized that “[t]hese differences will overwhelm any common factual questions.”

The panel also noted that the use of standardized forms did not support centralization, because insurers use numerous “standard” forms endorsed to address the needs of particular insureds.

The panel did leave open the possibility of insurer-specific MDLs limited to a single insurer or group of related insurers but did not create those MDLs on the record before it. The panel directed parties in actions involving Certain Underwriters at Lloyd’s, London; Cincinnati Insurance Company; the Hartford insurers; and Society Insurance to show cause why those actions should not be centralized. We will update this blog post as the panel rules on those potential MDLs.

Insureds seeking coverage for COVID-19 business interruption losses should be mindful of these potential MDLs and factor their impact into your overall coverage strategy. Consult with coverage counsel before determining whether to support or oppose any particular MDL effort to ensure that you consider all of the risks and benefits associated with centralization in an MDL.