Litigation strategy

Observations on Complaint Writing Styles

Author: Madison Kirton Date: 06.30.20

Observations on Complaint Writing Styles

Writing an effective, persuasive and well-pleaded complaint can be one of the most important stages of the litigation process. The complaint provides the plaintiff the first opportunity to craft a compelling narrative to justify the remedies sought. Writing is an individualized process, of course, and thus approaches to writing a complaint can vary by industry, law firm, or individual.

Having now read about 90 Covid-19 coverage complaints, I have noticed a marked difference in the way restaurants and dental offices express their grievances through writing. For example, in LJ New Haven LLC v. AmGUARD Insurance Company, in which a local seafood restaurant seeks coverage, the introduction not only introduces the parties to the case, but also observes how “in addition to their contribution to the national economy…restaurants are also vital to the national spirit because shared meals are an important mental relief.” The introduction goes on to incorporate quotes from Oscar Wilde declaring that “after a good dinner, one can forgive anybody, even one’s relations,” and from Anthony Bourdain noting that “food is everything we are. It’s an extension of nationalist feeling, ethnic feeling, your personal history, your province, your region, your tribe, your grandma.” These embellishments continue throughout the complaint, bolstering the plaintiff’s desire for relief.

Conversely, in Cascadia Dental Specialists Inc v. American Fire and Casualty Company, the introduction comprises just six lines. Unlike in LJ New Haven these six lines do not explicitly elicit an emotional or sentimental response, but rather adhere to the standard protocol of presenting the parties to the case. Moreover, the bulk of Cascadia Dental Specialists’ complaint remains true to the mechanical nature of the introduction, with every sentence conforming to a strict and compact pattern that relates directly back to the plaintiff’s allegations. The straightforward approach of the complaint leaves no room for ambiguity, and ultimately could afford the reader with a more candid assessment of the case.

While both complaints include a standard factual background of Covid-19 (detailing state-ordered mandated closures and specific insurance company denial responses), LJ New Haven has taken more creative liberties when writing their complaint – to evoke a more emotional appeal from the reader. Perhaps the food industry more highly values the expressive aspects of life, evidenced here in writing (i.e. the inclusion of vivid detail to enhance and illuminate the facts), while the dental industry prioritizes the mechanical (i.e. the inclusion of succinct phrasing as to not deflect from the facts)?

I don’t mean to suggest that one complaint writing style trumps the other; or that this stylistic decision will apply to every case involving restaurant owners and dental practices. The observation merely denotes a particular writing style an individual or law firm may be inclined to follow when dealing with these particular industries.

Business Income Cases

Minor League Baseball

Author: Jordan Einstein Date: 06.29.20

Minor League Baseball

Covid-19 has forced businesses of all industries and sizes around the country to overhaul their operations to minimize human contact and curtail transmission of the novel virus. Businesses deemed “essential” swiftly implemented new safety and operating protocols necessary to remain open, while “non-essential” businesses largely shut down immediately. Professional sports leagues are among the “non-essential” businesses.  As fans anxiously await their return, along with a sense of normalcy and hope, leagues and player associations have gone back-and-forth over the logistics of starting back up.

Major League Baseball has been at the forefront of recent discussions with seemingly every detail of the league’s negotiations with the MLB Players Association being publicized and scrutinized. By contrast, there has been little discussion about Minor League Baseball (“MiLB”), which is unlikely to see a single game played in 2020.

Unlike Major League Baseball, where players can earn millions of dollars and clubs are owned by billionaires, MiLB organizations are more akin to small businesses—at least from a financial perspective. As detailed in a complaint recently filed in the Eastern District of Pennsylvania by a collection of minor league organizations, minor league teams incur considerable fixed costs in the form of lease payments to municipal ballpark owners and salaries to permanent employees responsible for handling business operations year-round. Yet their revenue varies significantly, because most minor league teams depend on ticket sales as their primary revenue (as opposed to MLB clubs who earn revenue from a variety of sources including advertising and television contracts, among others).

Because of the shut-down, minor league teams across the country are struggling to stay afloat financially, as attendance plummets from a record-setting 40 million fans last year to zero this season. Similar to many other small businesses, minor league organizations are seeking coverage from insurance companies under the business income, extra expense, and civil authority provisions of their businessowner policies.

Despite the unique nature of their industry, the organizations’ insurance policies are unremarkable. In total, the fifteen organizations are insured under nine separate businessowner package policies issued by five different insurance companies—Philadelphia Indemnity Insurance Company, Acadia Insurance Company, National Casualty Company, Scottsdale Indemnity Company, and Scottsdale Insurance Company. All but two of the nine policies—both issued by Philadelphia Indemnity—contain the same Building And Personal Property Coverage (CP 00 10 10 12), and Causes Of Loss – Special (CP 10 30 09 17), forms. Five of those seven policies also contain the same Business Income And Extra Expense Coverage form (CP 00 30 10 12), while the other two use an older edition of the same form (CP 00 30 06 07). Moreover, eight of the nine policies include the same virus exclusion form (CP 01 40 07 06), the lone exception being the sole policy issued by Acadia.

Perhaps more surprising than the similarities between organizations’ policies is the similarity between their policies and those from businesses in other industries. For instance, all the forms listed above are standard ISO coverage forms and endorsements, which are routinely included in businessowner and commercial property policies issued by a variety of insurance companies. Interpreting the language and causal requirements in those standard ISO forms will be a focal point of Covid-19 insurance coverage litigation for all policyholders, not just minor league teams.

Nonetheless, the nine policies are not identical, so there may be some variation in what is ultimately covered and excluded. For example, the Philadelphia Indemnity policies contain an advisory notice (CP P 003 07 06) regarding the applicability of the included virus exclusion form; the other six policies with the same virus exclusion form (CP 01 40 07 06) do not include advisory notices. Moreover, Acadia used a different virus exclusion form authored by the AAIS (CL 0700 02 07). The Philadelphia policies also contain a Sports And Entertainment Event Protection endorsement (PI-AM-072 (06/09)), which is not included elsewhere. It is unclear how courts will interpret those variances, but given the technical nature of insurance litigation, they are notable.

In summary, Chattanooga Professional Baseball LLC et al v. Philadelphia Indemnity Insurance Co. et al is a relatively unremarkable case from an insurance coverage perspective, despite its connection to professional baseball. Because minor league organizations are more comparable to small businesses than billionaire-owned Major League clubs, the outcome will be incredibly significant to the financial viability of the clubs and their owners, no matter how boring insurance coverage litigation may be for typical baseball fans to follow. Instead of the more exciting legal discussions about player contracts and a potential grievance against the league, this case compares more closely to other Covid-19 business interruption insurance cases, which will turn on legal details like the difference between “direct physical loss or damage” and “direct physical loss or direct physical damage,” what qualifies as “physical damage,” and whether the “efficient proximate cause” of business closures was the novel coronavirus itself or the civil authority orders forcing businesses to shut down.


Nat Cat Business Interruption Claims: How does Covid-19 compare?

Author: Sean Bissey Date: 06.26.20

Nat Cat Business Interruption Claims: How does Covid-19 compare?

To compare the impact of Covid-19 with that of other recent catastrophic claim events within the property insurance industry, I analyzed business interruption claims in federal courts from 2009 through the present day using LexMachina’s Insurance Litigation Analytics.  My results appear in the graph below.

BI claims over time showing nat cat and Covid 19 spikes

This graph shows (a) the number of business interruption cases filed in or removed to federal courts, by quarter, during the years 2009-2020 and, (b) beginning in 2014, the rolling, previous five-year average of business interruption court cases.  (I selected 2009 for the initial year because that is the earliest year for which Lex Machina has the complete universe of federal cases.)

As the graph shows, previous natural disasters produced noticeable spikes in the number of business interruption claims in federal court. But none of these spikes is as dramatic as that for Covid-19.  Covid-19 has already produced more “excess” business interruption cases than Hurricanes Ike, Irma, and Harvey and Superstorm Sandy combined. Notably, the graph shows that filings typically do not reach their peak until at least a year after the catastrophic event. Hurricane Ike, for example, made landfall in September 2008. Of the 180 federal cases filed, 33 cases were opened in 2008/2009, while 150 were opened in 2010/2011. This could indicate that we are just seeing the first wave of these business interruption claims. This is especially worrying considering Q2 filings of business interruption claims are already more than five times the normal level.

Unlike previous natural disasters, the impact of COVID-19 is not limited by a regional zone of impact.  This national character is reflected in the federal case filings.  The top five courts for Covid coverage cases range from the E.D.Pa. to W.D.Wash.  By contrast, Hurricane Ike caused spikes in business interruption claims in the S.D.Tex. while Superstorm Sandy caused a sharp rise in these case type filing in the federal district courts of New York, consistent with the geographic impact of those storms.

Beyond the U.S.

The UK’s Financial Conduct Authority Test Case

Author: Jordan Einstein Date: 06.24.20

The UK’s Financial Conduct Authority Test Case

As the individual claims and class action complaints we are collecting pile up in the U.S. court system, attention in the UK has turned to a test case between the Financial Conduct Authority (“FCA”) and eight large insurance companies. The FCA is an independent financial regulatory body responsible for protecting consumers and financial markets, as well as promoting competition.

In mid-March, the FCA sent letters to insurance companies outlining expectations for handling COVID-related business interruption claims, followed in mid-April with a letter to insurance company CEOs. On May 1st, the FCA announced its intention to bring a test case in the High Court in London.  The FCA collected and analyzed information from insurance companies about their business interruption policies and wordings, as well as their intentions and decisions to approve or deny related claims. From those submissions, the FCA identified a representative sample of policy wordings and solicited arguments from policyholders about why particular wordings should provide coverage. The FCA then compiled and released a list of 17 commonly used policy wordings from policies issued by 8 leading insurers that, in the FCA’s view, encompassed a majority of the key disputed issues.  The FCA also released a proposed set of assumed facts, proposed questions for determination, and a proposed issues matrix.

Proceedings in the High Court officially began on June 10th when the FCA filed its Claim Form and Particulars of Claim, which serve as its pleading. The first case management conference took place on June 16th, at which the Justice ordered that the case be expedited. Insurers are expected to file defenses on June 23rd, with a second case management conference set on the 26th to resolve any outstanding procedural matters before trial. Replies and skeleton arguments are scheduled for the first half of July, followed by an 8-day court hearing on July 20-23 and 27-30.

As of now, the closest parallel to the FCA test case in the U.S. are the competing MDL aggregation applications in Philadelphia and Chicago. While the procedure is completely different, the benefits of case aggregation through the MDL process overlap with the benefits of the UK test case (i.e., efficiency, timeliness, lower litigation costs). It will be interesting to see if either MDL application gets approved and if so, which will prevail. A subsequent blog post will compare and contrast the UK test case procedure with the MDL procedure in the U.S.

Unusual cases

Quarantine Insurance: Does It Exist?

Author: Maham Usman Date: 06.24.20

Quarantine Insurance: Does It Exist?

As nearly every Covid-19 coverage litigation complaint alleges, the current pandemic was, for most people at least, an unexpected and unprecedented phenomenon. As a result, almost none of the insurance policies currently being litigated contain express references related to this kind of event.  Instead, they simply contain the provisions commonly found in standard Business Income, Extra Expense, and Civil Authority forms.

For example, in Project Lion LLC v. Badger Mutual Insurance, the insurance policy contains a form for Business Income and Extra Expense coverage, which is typical in most policies cited in Covid-19 business interruption cases. It also contains a Virus and Bacteria endorsement that excludes losses resulting from contamination or denial of property access due to any virus. This is also common in many Covid-19 coverage litigation cases. As plaintiffs’ counsel for many of those cases argue, here counsel also argues that this exclusion does not apply because the business income losses were not caused directly by the virus, but rather were caused by precautionary measures to prevent the spread of the virus. Project Lion stands out as a unique case, however, because, according to the complaint filed in the case, it has one of the only policies that contains an exclusion for civil authority rather than coverage for it, stating “[w]e do not cover loss caused by order of civil authority, including seizure, confiscation, destruction or quarantine of property.” Also notable about this particular policy, this civil authority exclusion specifically mentions the term “quarantine.” Therefore, a major aspect of the case will turn on the definition of “quarantine” and whether the allegedly precautionary stay-at-home and shelter-in-place orders fall under this definition. Since Project Lion is a proposed class action case with both a nationwide class and a Nevada state class, the definition determined by the court could have far-reaching impact.

Another policy that contains specific mention of the word “quarantine” is found in Bauer v. AGA Service Company, another proposed class action with a nationwide class. The policy here deals with travel insurance rather than business interruption.  It provides affirmative Trip Cancellation Coverage if the traveler or someone in their group is quarantined. Unlike the Project Lion case, “quarantine” is defined in the Bauer policy as, “mandatory confinement, intended to stop the spread of contagious disease to which you or a traveling companion may have been exposed.” This definition encompasses the precautionary aspect of the stay-at-home order that the Project Lion plaintiffs used to argue against the application of the Virus and Bacteria exclusion. Still, it remains to be seen whether the court will agree with the Bauer plaintiffs that the stay-at-home orders fall within either policy’s definition of quarantine.