Earlier today, the Panel for Multi-District Litigation issued an Order denying consolidation of hundreds business interruption coverage lawsuits related to COVID-19.
The Panel held that the allegedly common issues supporting consolidation, “share only a superficial commonality.” The Panel further held that there would be little potential for common discovery and that because each case will involve, “different coverages, conditions, exclusions, and policy provisions purchased by different businesses in different industries located in different states,” the differences in analyzing coverage will overwhelm any common issues.
The Panel held that consolidation would present serious managerial and efficiency concerns that make consolidation inappropriate for these claims.
COVID-19 Related Business Interruption in District Courts
As a result of this ruling, nearly all of the COVID-19 related business interruption lawsuits filed through the United States will remain in the District Courts where each case originated.
The exception may be for a limited number of insurers. The Panel has asked for additional briefing as to whether insurer-specific MDL’s might be appropriate for Lloyd’s, Cincinnati Ins. Co., the Hartford insurers, and Society Insurance.
Lether Law Group represented The Dentists Insurance Company in opposing MDL treatment for these matters. We are pleased that we were able to obtain this result. If you have any questions or if we can be of assistance on any COVID-19 related matters, including class actions, please feel free to contact us at any time.
On July 9, 2020, the Oregon Supreme Court issued its Opinion in Busch v. McInnis Waste Sys., Inc., Case No. SC S066098. Five of the seven justices representing the majority held that the $500,000 cap on non-economic damages for personal injury claims was unconstitutional under the Remedy Clause of Article I, Section 10 of the Oregon Constitution. This cap on damages was enacted in its current form in 1987 and is found at ORS 31.710(1). The statute provides:
Except for claims subject to ORS 30.260 to 30.300 [Actions against Public Entities] and ORS chapter 656 [Worker’s Compensation], in any civil action seeking damages arising out of bodily injury, including emotional injury or distress, death or property damage of any one person including claims for loss of care, comfort, companionship and society and loss of consortium, the amount awarded for non-economic damages shall not exceed $500,000.
In Busch, the plaintiff filed suit to seek personal injury damages against a private garbage company after he was run over by a garbage truck while a pedestrian in a crosswalk in downtown Portland. The plaintiff eventually underwent an amputation above-the-knee due to his injuries. Liability was admitted prior to trial. The jury awarded the plaintiff $10,500,000 in non-economic damages. However, the trial court reduced the non-economic damages awarded by the jury to $500,000 due to the application of ORS 31.710(1). The Court of Appeals reversed and review was accepted by the Supreme Court.
The Court’s decision in Busch follows a long line of cases addressing the constitutionality of statutory damages caps. These challenges are based on the Remedy Clause, which provides “every man shall have remedy by due course of law for injury done him in his person, property, or reputation.” In Busch, the Court confirmed that the new framework for analyzing the constitutional issues raised by all statutory damages caps was set forth in Horton v. OHSU, 359 Or 168 (2016). This new framework looks at the purpose and mechanics of the statutory scheme including the damages cap and whether a substantial remedy remained in general and as applied to the plaintiff. In Horton, the Court upheld the damages cap set forth in the Oregon Tort Claims Act, which applies to civil actions against public entities (and their employees). The Busch court used the analytical framework in Horton to distinguish the cases and strike down the damages cap proscribed in ORS 31.710(1) as applied to personal injury claims. The primary distinguishing point between the two caps is that the Oregon Tort Claims Act provided tort remedies against the State which did not exist before the Act due to sovereign immunity.
With the addition of the Busch decision, there is now more certainty regarding the application of statutory damages caps in Oregon. This is especially true in straight-forward personal injury claims involving private parties. However, because there is no bright-line rule, there remains the potential for uncertainty in other contexts.
Based on this new decision, we anticipate a significant increase in claim activity and exposures in Oregon. Lether Law Group has a number of highly experienced attorneys licensed to practice in Oregon courts. This includes shareholders Tom Lether, Eric Neal and Westin McLean. If you have any questions regarding the application of Oregon law on pending claims in that jurisdiction, please feel free to contact our offices.
The announcement included the following statements:
- Damage to commercial property/business caused by theft, vandalism, and/or fire should be covered under a commercial property policy unless that type of loss is specifically excluded;
- Coverage for damage to plate glass windows is dependent upon the individual policy language;
- Business that have been temporarily closed because of the COVID-19 pandemic are not considered vacant under the terms of an insurance policy; and
- A “war and military action” exclusion should not exclude damage caused during a protest.
In addition, the Insurance Commissioner advised business owners to take the following immediate steps if they plan on filing a claim: 1) contact their insurance company; and 2) consider hiring professional help with debris clean up and to secure their property to protect against further damage.
This announcement is not surprising given recent events and widespread resulting property damage.However, this advisement and increase in civil disturbance claims raise numerous coverage issues.These include the potential application of coverage exclusions including the vacancy exclusion, mitigation and duty to protect from further loss requirements, and valuation issues.
In addition, the steps necessary for an insured to properly mitigate damages and protect insured property from further loss is also fact dependent and will require a careful examination of the steps taken by an insured.Whether, and to what extent, any such mitigation efforts are covered by a policy will depend on the individual policy.The potential for coverage for any such steps should be discussed with an insured early in the claim handling process.
Finally, in light of the potentially severe impacts of the COVID-19 pandemic on business throughout the state and country, we expect more complicated valuation disputes.The risk of inflated claims may also increase.
Whether property damage by theft, vandalism, or fire is covered will ultimately be dependent upon the terms and conditions of the actual policy and the specific facts presented in any claim.As result, it is important that insurers proactively and thoroughly investigate each claim based on its unique facts.It will also be necessary to thoroughly and timely respond to these claims in order to avoid extracontractual exposures.
These are just a few of the potential coverage issues raised by the Insurance Commissioner’s announcement and the damage caused during by the recent civil disturbance claims.
Lether Law Group has been handling large first-party property losses for over 32 years.This includes earthquake claims, storm and hurricane losses, wildfire claims, and even a number of claims involving civil disturbances.If you would like to discuss these recent developments or any other matters, please feel free to contact us at any time.