MDL Panel Denies Nationwide Consolidation of COVID-19 Business Interruption Coverage Cases
We previously reported on the July 30 argument before the MDL Panel regarding plaintiffs’ motion to consolidate more than 275 COVID-19 Business Interruption cases.
On August 12, the MDL Panel issued an order denying industry wide consolidation. However it left the door open for the possibility of a limited centralization of cases against each of 4 of insurers who cumulatively accounted for 35% of the cases.
In denying all-encompassing centralization, the Court found that while plaintiffs had identified 3 common questions, they “share only a superficial commonality.” There were no common defendants in all cases, there was little potential for common discovery, the insurance policies were different, and they were purchased by different businesses in different states. And while there may be instances where standardized forms were used, these forms may have been modified and “seemingly minor differences in policy language could have significant impact on the scope of coverage.” The proposed MDL also raised “significant managerial and efficiency concerns.” As the Panel added, “to say this litigation would result in a complicated MDL seems an understatement.”
The Panel similarly rejected the concept of regional and state MDLs, holding these would be subject to the same problems.
However, the Panel found the case for centralization of insurer-specific MDLs to be “more persuasive.” Since each centralized case would be limited to a specific insurer, it would not encounter the challenges for “an industry-wide MDL involving more than one hundred insurers.” It was more likely that any given insurer would use the same wordings, (1) increasing the likelihood of common discovery, while (2) providing the opportunity for pre-trial rulings on common language and avoiding inconsistent rulings.
This said, since the issue of insurer-specific MDLs only arose midway through the briefing and was only addressed by several parties, the Panel declined to enter a ruling on the record before it. “The Panel requires a better understanding of the factual commonalities and differences among these actions, as well as the efficiencies that may or may not be gained through centralization, before creating an insurer-specific MDL.”
Accordingly, the clerk was instructed to issue orders to show cause why the cases against Lloyds (a collection of individual companies and syndicates rather than a single insurer), Hartford, Cincinnati and Society Insurance, should not be centralized. It set an accelerated briefing schedule and scheduled the issue for consideration at the Panel’s next hearing on September 24.
This article features contributions from Matt Revis.