The Goldilocks Rule: Panel Rejects Proposed Insurer-Specific MDL Proceedings for Four Large Insurers, but Establishes MDL Proceeding for the Smallest

Rules word on side of notebook

By choosing these five carriers and not others for further argument, the Panel seemed to be suggesting a formula.

November 16, 2020
Eric B. Hermanson & Konrad R. Krebs - White and Williams

It is an outcome few people expected. Back in August, the Judicial Panel on Multidistrict Litigation (Panel) refused plaintiffs’ requests to set up a single industry-wide multi-district litigation, which would have consolidated — in a single massive proceeding — all federal lawsuits seeking COVID-related business interruption coverage from insurers. The Panel acknowledged common legal issues, and potential benefits of coordinated management, but it balanced those benefits against the numerous factual differences between policies, carriers, and insureds, and noted that “[t]hese differences will overwhelm any common factual questions.”

Then, after lengthy argument, the Panel ordered further briefing as to whether separate, company-specific MDL proceedings might be appropriate against five specific insurance carriers: specifically, the five carriers against whom the largest numbers of federal claims were pending.

By choosing these five carriers and not others for further argument, the Panel seemed to be suggesting a formula: the larger the carrier, and the greater the number of claims against it, the greater the potential benefit from coordinated management, and the stronger the plaintiffs’ case for pre-trial consolidation.

Mr. Hermanson may be contacted at hermansone@whiteandwilliams.com



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