McDonald's, insurer reach deal on coverage for workers' COVID lawsuit

McDonald's Corp. reports fourth quarter earnings
The logo for McDonald's restaurant is seen as McDonald's Corp. reports fourth quarter earnings, in Arlington, Virginia, U.S., January 27, 2022. REUTERS/Joshua Roberts
  • McDonald's claimed policies covering "bodily injury" applied to workers' lawsuit
  • Companies did not disclose terms of tentative settlement
  • Judge had denied insurer's motion to dismiss

(Reuters) - McDonald's Corp and two of its Chicago franchisees have reached a tentative settlement with an insurer, which they said had improperly refused to cover the costs of litigating a proposed class action accusing McDonald's of not protecting workers from COVID-19.

McDonald's, the franchisees and Austin Mutual Insurance Co in a joint filing in Chicago federal court on Thursday said they had reached a settlement in principle that would end the 2020 lawsuit, but did not disclose the terms.

McDonald's and the franchisees said in the lawsuit that Austin was required to cover the costs of defending against the workers' lawsuit under insurance policies extending to cases alleging "bodily injury."

At the time the lawsuit was filed, the companies said they had already incurred $1.6 million in costs related to the McDonald's workers' proposed class action.

Illinois-based McDonald's, represented by Neal Gerber & Eisenberg, did not immediately respond to a request for comment. Nor did Austin Mutual's parent, Florida-based Main Street America Group.

The plaintiffs in the underlying 2020 lawsuit in Illinois state court accused McDonald's and the franchisees of failing to provide hand sanitizer, gloves and masks and said the companies had not notified staff when employees became infected with the coronavirus.

The plaintiffs last year agreed to dismissal of the case after McDonald's, which denied wrongdoing, implemented various policies to protect workers.

Austin Mutual in the lawsuit against it claimed the insurance policies did not apply to the case because the workers had not alleged they were actually injured.

U.S. District Judge Charles Kocoras in Chicago last year disagreed and denied Austin's motion to dismiss, saying the contraction of COVID-19 was "an indisputable bodily injury."

The case is McDonald's Corp v. Austin Mutual Insurance Co, U.S. District Court for the Northern District of Illinois, No. 1:20-cv-05057.

For McDonald's: Paul Walker-Bright of Neal Gerber & Eisenberg

For Lexi: Christopher Willis of Grasse Legal

For DAK4: Sande Shamash of Anthony J. Madonia & Associates

For Austin Mutual: Michael Rice of Harrison Law

Read more:

McDonald's sues insurer over refusal to cover legal fees in workers' COVID lawsuit

Insurer says McDonald's policy doesn't apply to workers' COVID-19 safety lawsuit

U.S. workers hit McDonald's with class action over COVID-19 safety

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at