Federal Court in Illinois Rules Bellwether Cases of Restaurants Suffering Due to Pandemic May Move Forward to Determine if Insurance Apply

Restaurant in the Wells Street Market closed. File photo. Chicago, Illinois, December, 2018. Editorial credit: Steve Hamann / Shutterstock.com, licensed.
Defendant Insurance Company’s Summary Judgment Motion and Motion to Dismiss are Denied. File photo. Restaurant in the Wells Street Market closed. Chicago, Illinois, December, 2018. Editorial credit: Steve Hamann / Shutterstock.com, licensed.

CHICAGO, IL – A federal district court judge presiding over the Society Insurance Business Interruption Coverage MDL, which involves the potential applicability of insurance coverage for restaurants suffering financial losses due to COVID, ruled late Monday (February 22, 2021) that the cases may move forward in determining whether their insurance policies cover such losses.

The Hon. Edmond E. Chang, U.S. District Court Judge of the Northern District of Illinois, ruled in a 31-page written opinion that plaintiffs in the consolidated bellwether cases survive defendant’s motions to dismiss and for summary judgment. The court granted summary judgment only as to the coverage theories under the Civil Authority and the Contamination provisions of the policies. All of the restaurants in the MDL maintain coverage by Society Insurance, headquartered in Wisconsin.

Shannon M. McNulty, partner at Clifford Law Offices who heads the class action/mass torts practice area at the firm and a co-lead counsel of one of the bellwether cases, said,

“This decision is highly significant for businesses, particularly here in the Midwest, who have suffered financial losses due to the pandemic and paid insurance premiums to protect against those losses. We will continue to work on behalf of our client in the bellwether case, Valley Lodge Corp., as well as all of the businesses with claims pending in the MDL, to see that justice is carried out to the end under their insurance policies.”



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Valley Lodge has two restaurants in Illinois in the northern suburbs of Chicago.

In its decision, the court recognized that, “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 alleged that they have lost significant revenue as a result” in the past year since the pandemic took hold. 

After quoting significant and relevant passages from plaintiffs’ insurance policies, the court found at the very least that its “policy does not contain a specific exclusion of coverage for losses due to a virus or pandemic … a standard exclusion in the insurance industry.”  [Italics in original] In fact, the court held that, “Exclusions are narrowly or strictly construed against the insurer if their effect is uncertain” and “a reasonable jury can find that the Plaintiffs did suffer a direct ‘physical’ loss of property on their premises.” 

Notably, the court stated that Society Insurance may have acted in bad faith in denying coverage to the Illinois plaintiffs and that issue may be litigated as the bellwether cases of Valley Lodge Corp. and Big Onion Tavern Group, LLC, move forward. The court, citing to Plaintiffs’ arguments that “Society, which denied coverage across-the board, allegedly misrepresented the true scope of the insurance policies; failed to investigate individual claims, as required, and instead issued hasty denials not based on individual claims; and Society’s actions have caused an improper and lengthy delay in receiving payment,” ruled that these matters  must be decided by a jury and not as a matter of law at the pleadings stage.

For further information or to speak to Clifford Law Offices’ Partner Shannon M. McNulty, please contact Clifford Law Offices Communications Partner Pamela Sakowicz Menaker at 847-721-0909 or visit www.CliffordLaw.com. Case: In Re: Society Insurance Co. COVID-19 Business Interruption Protection Insurance Litigation, MDL No. 2964, Master Docket No. 20 C 5965

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