...with business interruption (BI) disputes accounting for over 95 percent of the industry’s cases.
An analysis by Lex Machina of case filings from 1 March through 4 July found 1,536 federal district court cases that included one or more of the terms “covid”, “coronavirus” or “pandemic”.
Analysing these cases revealed that the contracts practice area accounted for 522 of them while insurance had 438 cases, with employment far behind with 197.
However, Lex Machina did a deeper review of each of the 1,536 cases identified by the keyword search to verify whether the case was filed as a direct result of the Covid-19 crisis.
This review was to find cases that would not have been filed but for the pandemic because the allegations brought are tied explicitly to circumstances created by the pandemic and/or have claims substantially exacerbated by the pandemic.
It found that 1,137 cases were caused by the Covid-19 crisis while 399 cases merely mentioned a Covid-19 keyword as a preface or procedural recitation.
When analysed by practice area, insurance had the most cases caused by Covid-19, with 424. It was followed by contracts with 397 cases and employment with 102 cases.
Overall case filings increased in March and April then levelled off in May and plateaued in June.
Insurance had more new cases resulting from Covid-19 in May, with 153, compared to March (4) and and April (94) and then had fewer cases in June (131).
Commenting on case filing generally, Lex Machina commented: “We expect that filings will continue at least at the present rate, if not increase, as more businesses face continued economic disruption and may resort to litigation to pursue business interruption claims or handle disputes around contract fulfilment.”
BI dominates insurance filings
The analytics firms noted that the influx of new insurance cases related to Covid-19 was dominated by claims for BI losses.
“While there were a handful of cases involving travel insurance, season ski lift ticket insurance, and homeowners’ losses affected by Covid-19, over 95 percent of the cases involved business interruption claims,” it said.
The wide variety of types of businesses that filed claims reflects the broad effects of Covid-19 on the US economy, Lex Machina said. The named plaintiffs in many of the insurance cases were small businesses or professional practices, and over half the cases purported to be class actions.
“While restaurants, bars, day care centres, salons, doctors, and lawyers continued to bring claims, larger businesses such as minor league baseball leagues, Las Vegas casinos, marketing firms, event planners, and commercial property owners also sued for coverage for their losses,” Lex Machina noted.
BI claims are pending throughout the country but five jurisdictions accounted for almost 40 percent of the filings: Eastern District of Pennsylvania, District of New Jersey, Northern District of Illinois, Western District of Washington and Southern District of Florida.
As this publication has reported, the Judicial Panel on Multidistrict Litigation (JPMDL) is considering a petition to create an MDL to handle some or all of the BI claims.
Lex Machina noted that over 200 pending cases have been associated to the MDL, with oral argument before the JPMDL scheduled for 30 July.
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