(Reuters) - Dozens of insurance companies, facing an avalanche of suits by policyholders who allege they were improperly denied coverage for COVID-19 shutdowns, have asked the Judicial Panel on Multidistrict Litigation to slow down its briefing schedule on whether the cases in federal court should be consolidated in an MDL.
In a motion filed Tuesday, insurers including Allianz, Liberty Mutual, The Hartford and Lloyd’s requested a three-week extension to file briefs responding to consolidation requests by lawyers for policyholders. As I told you last month, two sets of plaintiffs firms' – one led by Levin Sedran & Berman and the other by DiCello Levitt Gutzler – moved aggressively to bring the litigation before the JPML when fewer than 20 cases had been filed in federal court. Since those late-April transfer motions, policyholders have filed dozens more suits, many of them prospective class actions alleging that COVID-19 constituted physical damage or property loss, triggering coverage under business interruption and government shutdown provisions.
Want more On the Case? Listen to the On the Case podcast.
The JPML set a tight schedule, calling for appearances to be filed on May 5 and response briefs on May 12. The insurers argued in their motions to extend the briefing schedule that many defendants have just been hit with complaints in the burgeoning litigation and need more time to “analyze and evaluate” their response to the proposed creation of an MDL. The judges on the panel, insurers said, are not going to consider consolidating the business interruption insurance cases until their hearing at the end of July. So even if the JPML gives insurers three additional weeks to brief the issue, the extension motion said, all briefing will be complete with plenty of time to spare before the July 30 hearing.
Plaintiffs' lawyers, however, have suggested that insurers may have a different motive to slow down the prospective MDL. In a May 1 motion to expedite briefing so that the JPML can consider consolidation at its May 31 hearing, policyholders’ lawyers argued that waiting until July will allow piecemeal litigation across the country in individual cases. And though the plaintiffs’ brief urged the JPML to spare insurers the cost of defending cases in nationwide jurisdictions, you can be sure that policyholders’ lawyers are worried that insurers will try to obtain quick wins in individual suits, then leverage those results in dozens more cases before the MDL panel decides whether to centralize the litigation. Lloyd’s, for example, has already moved to dismiss a declaratory judgment suit filed in federal court in Tampa by a sports bar denied business interruption insurance coverage.
The judges on the JPML denied plaintiffs’ motion to expedite in a terse order on Monday that said simply, “The panel considers all motions in due course and is not persuaded to depart from its long-standing practice.” That sure sounds like the panel plans to wait until its July hearing to decide whether to consolidate the business insurance litigation, despite plaintiffs’ arguments that the litigation is too important and affects too many businesses to allow three months of activity in scattered cases.
Regardless of whether there’s eventually an MDL for these cases, the business interruption insurance litigation will feature big names on both sides of the class and MDL bar. Among the firms representing insurers Gibson Dunn & Crutcher, O’Melveny & Myers, Alston & Bird, Sidley Austin and Steptoe & Johnson. (The full list is much, much longer.) Plaintiffs’ firms include the Lanier Law Firm, Seeger Weiss, Keller Rohrback, Robbins Geller Rudman & Dowd, Barrack Rodos & Bacine and Boies Schiller Flexner.
Our Standards: The Thomson Reuters Trust Principles.