Consolidation of Pennsylvania Business Interruption Suits Has Opposition, Even From Insureds

Faegre Drinker Biddle & Reath LLP
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Faegre Drinker Biddle & Reath LLP

Business interruption suits against an insurer filed in Allegheny, Philadelphia and Lancaster Counties in Pennsylvania, will be coordinated and will proceed before Judge Ward of the Allegheny County Court of Common Pleas. The consolidation will provide plaintiff insureds from across Pennsylvania with a single, streamlined forum to proceed against the insurer.

This consolidation is the latest in a series of efforts to streamline business interruption insurance cases that have been filed across the state since March. In April, several plaintiff insureds who filed suit against the same insurer requested that the Pennsylvania Supreme Court exercise its’ Kings Bench power and issue a determinative ruling on the question of whether COVID-19 related closures constituted “physical losses.” The Court declined to exercise its King’s Bench jurisdiction in May.

Two Pittsburgh-area restaurants requested the consolidation on July 24 to coordinate actions against their insurer. They argued coordination was necessary to facilitate resolution of these cases, and that Allegheny County provided an ideal forum to do so, due to its structured case management program for complex and class cases. The insurer argued against the consolidation, emphasizing the inherent differences in each filed case and asserting that it would not be more efficient to have all cases proceed together.

The court ultimately ordered that the insurer must notify the court of any similar actions, so that the court could have them consolidated. Plaintiff insureds have 30 days from the date of the order, or 14 days from the date they are notified of the consolidation, to file any objections to the cases being consolidated. If no objections are filed and the case raises common questions of law or facts, the action will be transferred automatically.

It’s not just the insurer who objects to consolidation. Rather, several plaintiff insureds have already voiced their objections to having their cases consolidated in the Allegheny County court. Nearly 30 such plaintiffs, who have filed actions against the insurer in northeast Pennsylvania, have asked to have their cases excluded from the consolidated action due to differences in the respective insurance policies and alleged damages. These plaintiff insureds also cited the difficulty in forcing a plaintiff to litigate in a foreign forum as a basis for their objections. The objection emphasized that “each case must be tried on its own merit with its own evidence of financial losses that were actually sustained.”

The objecting plaintiff insureds also requested that, if consolidation continued in Allegheny County, their existing counsel be allowed to join in the leadership of the consolidated suit.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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