From afar it may seem that any large number of federal cases can garner MDL status, but it only seems that way.  Recently, for example, the Judicial Panel on Multidistrict Litigation rejected petitions to coordinate multiple cases filed by businesses seeking insurance coverage for alleged losses during the COVID-19 pandemic.  There were two groups of policyholder plaintiffs, one seeking to centralize the business interruption cases in the Northern District of Illinois in Chicago, and the other requesting they be centralized in the Eastern District of Pennsylvania in your humble blogger’s home town of  Philadelphia.

The Panel concluded that the industry-wide centralization requested by movants will not serve the convenience of the parties and witnesses or further the just and efficient conduct of this litigation. That’s the test under the statute. The proponents of centralization identified three allegedly core common questions: (1) do the various government closure orders trigger coverage under the policies; (2) what constitutes “physical loss or damage” to the property; and (3) do any exclusions (particularly those related to viruses) apply. These questions, said the JPML, share only a “superficial” commonality. There is no common defendant in these actions—indeed, there are no true multidefendant cases, as the actions involve either a single insurer or insurer-group (i.e., related insurers operating under the same umbrella or sharing ownership interests). Thus, there is little potential for common discovery across the litigation, observed the Panel. Furthermore, these cases involve different insurance policies with different coverages, conditions, exclusions, and policy language, purchased by different businesses in different industries located in different states. These differences would overwhelm any common factual questions.

Moreover, the proposed MDL raised significant managerial and efficiency concerns, concluded the Panel. A transferee court would have to establish a pretrial structure to manage the hundreds of plaintiffs—many with disparate views of the litigation—and more than one hundred insurers. The court also would have to identify common policies with identical or sufficiently similar policy language and oversee discovery that likely will differ insurer-to-insurer. “To say this litigation would result in a complicated MDL seems an understatement.”

Interestingly, the Panel seemed to reflect on one of the main controversial aspects of an MDL – time. Managing such litigation would be an ambitious undertaking for any jurist, and implementing a pretrial structure that yields efficiencies will take time. “As counsel emphasized during oral argument, however, time is of the essence in this litigation.” Many plaintiffs are on the brink of bankruptcy as a result of business lost due to the COVID-19 pandemic and the government closure orders. An industry-wide MDL in this instance will not promote a quick resolution of these matters, admitted the Panel.

In sum, said the JPML. the MDL that movants request entails very few common questions of fact, which
are outweighed by the substantial convenience and efficiency challenges posed by managing a
litigation involving the entire insurance industry. The proponents’ arguments that these problems
can be overcome were not persuasive.  Motions for centralization denied.

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Photo of Sean Wajert Sean Wajert

Sean P. Wajert is a partner at Shook, Hardy & Bacon LLP, and the Managing Partner of Shook’s Philadelphia office.  He concentrates his complex litigation practice on the defense of companies from a variety of industries, including the chemical, consumer product, drug and…

Sean P. Wajert is a partner at Shook, Hardy & Bacon LLP, and the Managing Partner of Shook’s Philadelphia office.  He concentrates his complex litigation practice on the defense of companies from a variety of industries, including the chemical, consumer product, drug and medical device industries.  His practice focuses on complex commercial litigation, mass tort, toxic tort and product liability litigation, and appellate work. For a decade he served as Chair of the Products Liability Group of his prior firm.  Sean also taught complex litigation issues for ten years as a Lecturer-in-Law at the University of Pennsylvania Law School.