Businesses in eight states and the District of Columbia had their individual and potential class-action cases consolidated into a multidistrict litigation (MDL) in December 2020, but Chief U.S. District Judge Mark Hornak rejected their arguments.
As devastating as COVID-19 has been from a health and safety standpoint, property has not been lost or damaged by the presence of the virus, in the sense that people cannot access, use, or inhabit it due to its impaired physical condition,” Chief U.S. District Judge Mark Hornak wrote Friday, granting Erie’s motion to dismiss the policyholders’ breach of contract claims.Given the lack of coverage, Hornak believes Erie did nothing wrong by using form letters to deny policyholder claims in a "blanket" manner.
Given the lack of coverage, the plaintiffs' additional claims for bad faith and unfair trade practices "likely... fail as a matter of law," according to the judge. He did, however, give both sides until November 3 to respond to that question.
Adam Kaiser of Alston & Bird, an attorney for Erie Insurance, declined to comment on Monday because the case is still being litigated.
The MDL plaintiffs' leadership team, which includes co-lead counsel Kelly Iverson of Lynch Carpenter and Adam Moskowitz of the Moskowitz Law Firm, did not respond to requests for comment right away.
The Judicial Panel on Multidistrict Litigation established the Erie MDL as the second for Covid-19-related business income interruption claims. The first case, filed against Society Insurance, is currently pending in federal court in Chicago.
The JPML determined that MDL treatment was appropriate for the Erie litigation because it involved only two policy forms - one with and one without a virus exclusion - and a defined geographical scope. Plaintiffs filed claims under the laws of the District of Columbia, Illinois, Maryland, New York, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia, in particular.
The Virginia Supreme Court has ruled that COVID contamination does not constitute property loss or damage, and cases are pending in the high courts of Maryland, Ohio, and Washington, D.C.
However, almost all state and federal court rulings have sided with the insurers, including every federal appellate decision so far. Hornak stated that the Erie policyholders had provided no "persuasive basis" for deviating from the majority position.