Business Interrupted: A Legal Perspective

As we’ve covered here in the past, businesses across the country have brought lawsuits against their insurers seeking coverage for losses related to COVID-19. According to the COVID Coverage Litigation Tracker at the University of Pennsylvania Carey Law School, more than 1,500 suits have been filed since March 2020 in state and federal courts. Some interesting statistics based on that information:

  • Over one third of the cases have been filed by food services establishments.
  • Almost one quarter of the cases were brought as class actions.
  • Approximately one third of the cases involved insurance policies that did not contain a virus exclusion.
  • Insureds have been much more successful in state court than federal court. Insurers have obtained a dismissal in 93% of the 241 cases decided in federal court, but only 54% of the 58 cases decided in state court.
  • Appeals have been filed in 107 cases and, surprisingly, almost all have been filed by insureds who had their cases dismissed. Insurance companies have only filed appeals in four cases.

Despite the trend favoring insurers, especially in federal court, insureds have continued to file business interruption lawsuits, but at a lower rate than in spring and summer of 2020. Although there have been fewer suits filed, within the last month, several major business such as the Los Angeles Lakers, Sacramento Downtown Arena (including the Sacramento Kings), Ceasars Entertainment, Madison Square Garden (including the Knicks and Rangers), Hooters and Planet Hollywood have filed suits seeking coverage for sizable losses caused by COVID-19. Only the Madison Square Garden and Ceasars cases were filed in state court. It will be interesting to see whether the insurers seek to move those cases to federal court.

Thus, it appears that we are still in the early stages of what will likely be a multi-year process to resolve the COVID-19 business interruption insurance cases throughout the country. 

You can bet that when business gets interrupted, things are going to get “legal” pretty fast. Disputes are EVERYWHERE!  And when those nasty things including contract issues, landlord/tenant matters, nuisance ADA claims and even collections negatively affect YOU and YOUR business, call in the good guy business litigator, Dean Sperling to resolve YOUR matter with YOUR best interests in mind! 

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