JPML Groups COVID-19 Suits Against Society Insurance In Ill.


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Law360 (October 2, 2020, 9:56 PM EDT) —
The Judicial Panel on Multidistrict Litigation on Friday centralized in Illinois over 30 lawsuits accusing Society Insurance Co. of wrongfully denying coverage for businesses’ losses during the COVID-19 pandemic, but declined to create MDLs to group similar cases against The Hartford, Travelers, Cincinnati Insurance Co. and Lloyd’s of London underwriters.

The panel concluded that centralization before U.S. District Judge Edmond E. Chang of the Northern District of Illinois will provide an efficient path for the resolution of the 34 business interruption coverage actions pending against Society in federal district courts in the Prairie State and five other Midwestern states.

According to the seven-member JPML, the cases against Milwaukee, Wisconsin-based Society — which include both individual claims and propsosed class actions — will involve multiple common legal and factual questions, including the proper interpretation of Society’s policy terms and exclusions.

Society and several policyholders that opposed the formation of an MDL had asserted that centralization is inappropriate because, if the cases survive the insurer’s dismissal motions, any discovery would be highly individualized and focus on each policyholder’s specific circumstances. The JPML acknowledged that each case will likely involve “some unique aspects,” but said that is not enough to reject centralization.

“What sets this litigation apart is the defined geographical scope of these actions, which implicates only six state insurance laws,” the panel wrote. It added that Judge Chang can address potential differences among the cases by using “any number of pretrial techniques,” including establishing “state-specific tracks” for actions pending in the same state or a bellwether process to decide key common issues.

A spokeswoman for Society and counsel for policyholders that supported centralization did not immediately respond to requests for comment Friday evening.

One opponent of centralization, Robert R. Duncan of Duncan Law Group LLC, told Law360 his clients — a chain of Chicago-area taverns that filed a proposed class action against Society — have not yet decided how to proceed. In a phone interview, he said it is possible based on the JPML’s ruling that his clients may be able to ask Judge Chang to sever their case and return it to its original court.

“At the end of the day, what we are trying to accomplish through all this is to get relief for the restaurants and bars insured by Society in Illinois, and we will pursue any means to do that,” Duncan said.

While the JPML deemed centralization appropriate for the COVID-19 coverage actions against Society in federal court, it decided against creating additional MDLs for Hartford, which is facing 143 such actions; Cincinnati, which is named in 66 cases; Travelers, which is named in 44 actions; and various underwriters affiliated with the Lloyd’s insurance marketplace, which are facing 24 cases.

The JPML emphasized the sheer number and geographic scope of the cases involving Hartford, Cincinnati and Travelers, noting that each of those insurers is facing cases in district courts spread across 15 or more states. The panel said centralization would not promote the efficient resolution of the cases against the three carriers, especially since many of the policyholder plaintiffs “are on the brink of bankruptcy as a result of business lost due to the COVID-19 pandemic and the government closure orders.”

As for the Lloyd’s underwriters, the JPML said it would not make sense to centralize the cases against them because they are not a single insurance company, but rather a group of several dozen distinct insurers whose policies may differ significantly.

“The inclusion of non-standard and non-common forms and policy language would hinder the ability of the transferee court to organize the litigation and quickly reach the common factual and legal questions,” the JPML wrote.

In lieu of centralization, the JPML encouraged the parties in the cases involving Hartford, Cincinnati, Travelers and the Lloyd’s underwriters to engage in “informal cooperation and coordination” to avoid duplicative pretrial proceedings.

Moskowitz Law Firm founder Adam Moskowitz, whose firm is representing plaintiffs in 28 proposed class actions against a slew of insurers, including Hartford, Cincinnati and several Lloyd’s underwriters, said his team has already been informally organizing its cases, “joining together with the best and most knowledgeable insurance counsel from across the country.”

“We are confident that working as a group, we will continue the recent trend to have courts deny the motions to dismiss and not allow insurance companies to avoid liability with illogical and technical excuses,” Moskowitz said in an emailed statement.

Steven C. Marks of Podhurst Orseck PA, whose firm is representing policyholders in proposed class actions against a number of Lloyd’s underwriters and Hartford, among others, said that, without centralization, there could be “a race for judgment, where lawyers across the country are going to be trying to move as quickly as they can.”

“We will see competing requests for documents and witnesses,” Marks said in a phone interview. “Hopefully, parties will find some way to organize through Section 1404 transfers or agreed-upon consolidations, so we might be able to streamline discovery.”

In an emailed statement, Cincinnati spokeswoman Betsy Ertel said, “we agree with the panel’s decision against the centralization of these cases in a company-specific MDL. We look forward to working with the courts where these cases originated.”

Representatives for Travelers and Hartford did not immediately respond to requests for comment, nor did counsel for the Lloyd’s underwriters.

The JPML’s orders Friday followed its Aug. 12 decision refusing to create a single nationwide MDL for the more than 700 COVID-19 coverage cases pending in federal courts against over 100 insurers. 

The cases are In Re: Certain Underwriters at Lloyd’s, London COVID-19 Business Interruption Protection Litigation, MDL No. 2961; In Re: Cincinnati Insurance Co. COVID-19 Business Interruption Protection Litigation, MDL No. 2962; In Re: Hartford COVID-19 Business Interruption Protection Litigation, MDL No. 2963; In Re: Society Insurance Co. COVID-19 Business Interruption Protection Litigation, MDL No. 2964; and In Re: Travelers COVID-19 Business Interruption Protection Litigation, MDL No. 2965. 

–Editing by Bruce Goldman.

Update: This story has been updated with comment from a Cincinnati spokeswoman.

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