MDL Panel Denies Consolidation for COVID-19 Insurance Cases

As we reported in a previous weblog, on August 14, the Judicial Panel on Multidistrict Litigation rejected plaintiffs’ request for a consolidation of all COVID-19 insurance coverage federal litigation, agreeing to contemplate mini-MDLs as respects 5 particular insurers, which accounted for roughly one-third of the federal circumstances. On October 2, the Panel rejected the idea of mini-MDLs as respects 4 of those 5 insurers and accepted an MDL for the fifth insurer.

On the outset, the Panel agreed with plaintiffs that every of the proposed mini-MDLs offered frequent authorized and factual questions concerning the drafting and interpretation of the respective insurer’s insurance coverage coverage varieties. Nonetheless, the Panel finally concluded that consolidation wouldn’t be essentially the most environment friendly plan of action for federal fits in opposition to The Hartford, Vacationers, Cincinnati Insurance coverage Co., and Lloyd’s of London. Because it defined, as a result of COVID-19 and the ensuing authorities closures have positioned many policyholders getting ready to chapter, effectivity wanted to be the litigation’s main aim. The time it could take a transferee court docket to prepare a centralized motion accommodating legal guidelines of a mess of states would undermine that aim, particularly the place dispositive motions addressing coverage interpretation questions are already briefed and pending. The Lloyd’s fits confronted the extra effectivity hurdle of a number of syndicates with a number of coverage varieties, placing a single, discrete query of coverage interpretation out-of-reach.

Nonetheless, the Panel did see match to centralize over 30 lawsuits in opposition to Society Insurance coverage Co. The Panel based mostly its deviation on the restricted geographical scope of the lawsuits in opposition to Society, which solely implicated insurance coverage legislation of six states, making the motion extra manageable than the nationwide circumstances dealing with the opposite insurers. The Panel left the door open for additional streamlining measures within the Society case, like establishing “state-specific tracks” or selecting already-briefed motions as “bellwether motions” upon which to determine threshold coverage interpretation points. The Panel transferred the Society fits to Decide Edmond E. Chang within the Northern District of Illinois, who was already dealing with quite a lot of these circumstances.

The Panel’s ruling brings to an in depth the COVID-19 MDL saga for a minimum of 5 insurers and their policyholders, because the actions will proceed individually in courts nationwide. To the extent different federal courts had been delaying proceedings pending the Panel’s choice, these actions must also resume.