MDL Panel Denies Consolidation for COVID-19 Insurance Cases for All Insurers (with One Exception)
As we reported in a prior blog, on August 14, the Judicial Panel on Multidistrict Litigation rejected plaintiffs’ request for a consolidation of all COVID-19 insurance coverage federal litigation, agreeing to consider mini-MDLs as respects five specific insurers, which accounted for roughly one-third of the federal cases. On October 2, the Panel rejected the concept of mini-MDLs as respects four of these five insurers and accepted an MDL for the fifth insurer.
At the outset, the Panel agreed with plaintiffs that each of the proposed mini-MDLs presented common legal and factual questions about the drafting and interpretation of the respective insurer’s insurance policy forms. However, the Panel ultimately concluded that consolidation would not be the most efficient course of action for federal suits against The Hartford, Travelers, Cincinnati Insurance Co., and Lloyd’s of London. As it explained, because COVID-19 and the resulting government closures have placed many policyholders on the brink of bankruptcy, efficiency needed to be the litigation’s primary goal. The time it would take a transferee court to organize a centralized action accommodating laws of a multitude of states would undermine that goal, especially where dispositive motions addressing policy interpretation questions are already briefed and pending. The Lloyd’s suits faced the additional efficiency hurdle of multiple syndicates with multiple policy forms, putting a single, discrete question of policy interpretation out-of-reach.
However, the Panel did see fit to centralize over 30 lawsuits against Society Insurance Co. The Panel based its deviation on the limited geographical scope of the lawsuits against Society, which only implicated insurance law of six states, making the action more manageable than the nationwide cases facing the other insurers. The Panel left the door open for further streamlining measures in the Society case, like establishing “state-specific tracks” or choosing already-briefed motions as “bellwether motions” upon which to decide threshold policy interpretation issues. The Panel transferred the Society suits to Judge Edmond E. Chang in the Northern District of Illinois, who was already handling a number of these cases.
The Panel’s ruling brings to a close the COVID-19 MDL saga for at least five insurers and their policyholders, as the actions will proceed separately in courts nationwide. To the extent other federal courts were delaying proceedings pending the Panel’s decision, those actions should also resume.