In re Soc'y Ins. Co. COVID-19 Bus. Interruption Protection Ins. Litig.
Decision Date | 22 February 2021 |
Docket Number | No. 20 C 05981,MDL No. 2964,Master Docket No. 20 C 5965, No. 20 C 02005,No. 20 C 02813,20 C 02813 |
Citation | 521 F.Supp.3d 729 |
Court | U.S. District Court — Northern District of Illinois |
Parties | IN RE: SOCIETY INSURANCE CO. COVID-19 BUSINESS INTERRUPTION PROTECTION INSURANCE LITIGATION This Document Relates to the Following Cases: Valley Lodge Corp., Plaintiff, v. Society Insurance, a Mutual Company, Defendant. Rising Dough, Inc. (d/b/a Madison Sourdough), et al. individually and on behalf of all others similarly situated, Plaintiffs, v. Society Insurance, Defendant. Big Onion Tavern Group, LLC, et al., Plaintiffs, v. Society Insurance, Inc., Defendant. |
This multi-district litigation addresses Society Insurance's broad-based denials of business-interruption coverage for a variety of restaurants and other businesses in the hospitality industry whose operations have been affected by the COVID-19 pandemic.
This Opinion decides dispositive motions in each of the three bellwether cases selected by the Court. R. 69. Those cases are: Big Onion Tavern Group, LLC, et al. v. Society Insurance , No. 1:20-cv-02005; Valley Lodge Corp. v. Society Insurance , No. 1:20-cv-02813; and Rising Dough, Inc., et al. v. Society Insurance , No. 1:20-cv-05981. Society has filed a motion to dismiss for failure to state a claim in the Rising Dough action, R. 20, No. 20 C 05981, Society's Br. in Support of Mot. to Dismiss; and a motion to dismiss for failure to state a claim or, in the alternative, for summary judgment in the Big Onion and Valley Lodge actions. R. 113, No. 20 C 2005, Society Mem. of Law; R. 17, No. 20 C 02813, Society Mem. of Law.
As detailed in this Opinion, Society's motions to dismiss and summary judgment motions are denied to the extent that they target the claims for business-interruption coverage. Those claims do survive. Also, the Section 155 claims survive in Big Onion and Valley Lodge. But the summary judgment motions in the Big Onion and Valley Lodge actions are granted as to the coverage theories under the Civil Authority and the Contamination provisions, and in the Rising Dough case as to the Sue and Labor clause.
As readers of this Opinion know all too well, the novel coronavirus has generated a global pandemic lasting almost an entire year. Many government agencies around the world have responded by closing (at least in part) businesses of all kinds and by restricting activities, particularly group gatherings.
At issue here are the impacts of those closures on the plaintiffs in those three cases: specifically, businesses in the hospitality industry in Illinois (the Big Onion and Valley Lodge plaintiffs), and Wisconsin, Minnesota, and Tennessee (the Rising Dough plaintiffs). All have been forced to modify their normal business operations due to the pandemic—for example, suspending in-person dining and relying only on take-out orders—and all allege that they have lost significant revenue as a result. R. 1, 20 C 2813, Valley Lodge Compl. ¶¶ 3-4, 33-42; R. 14, 20 C 5981, Rising Dough Am. Class Action Compl. ¶¶ 50–80; R. 29, No. 20 C 2005, Big Onion First Am. Compl. ¶¶ 6, 97–108. All plaintiffs—indeed, all the plaintiffs in all the cases within this MDL, by definition—are insured by Society Insurance against certain interruptions to their business. The fundamental questions at stake in this litigation are how properly to classify the interruption that has happened here, and whether this particular interruption is covered under the policy. Beyond following state and local government orders and guidance, the Rising Dough plaintiffs also allege that the losses to their businesses occurred as a direct result of the actual presence of the coronavirus itself on the premises. R. 26, 20 C 5981, Rising Dough Pls.’ Resp. at 8; R. 14, 20 C 5981, Am. Class Action Compl. ¶ 80 () (emphasis added). The Big Onion plaintiffs have similarly alleged that the "continuous presence of the coronavirus on or around Plaintiffs’ premises has created a dangerous condition and rendered their premises unsafe and unfit for their intended use and therefore caused physical property damage or loss under the Policies." R. 29 ¶ 100.
For its part, Society counters that these losses, whether caused by the coronavirus directly or by the government orders, simply do not fall within the plain language of the policy invoked by the Plaintiffs. In particular, the Plaintiffs allege that coverage applies under the following policy provisions, common to all plaintiffs (although each group of plaintiffs has sought recovery under different subsets of these provisions)1 :
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