On Monday, Oceana Grill, a restaurant in New Orleans, Louisiana, became the first to file a lawsuit over coverage for COVID-19 business interruption losses. The lawsuit, styled Cajun Conti, LLC, et al. v. Certain Underwriters at Lloyd’s of London, et al. (La. Dist. Court, Orleans Parish), seeks a declaratory judgment that an “all risks” property insurance policy issued by Lloyd’s of London must cover losses resulting from the closure of the restaurant following an order by the Governor of Louisiana restricting public gatherings and the Mayor of New Orleans’ order closing restaurants.
In a prior post, we predicted that novel coronavirus (COVID-19) risks could implicate D&O and similar management liability coverage arising from so-called “event-driven” litigation, a new kind of securities class action that relies on specific adverse events, rather than fraudulent financial disclosures or accounting issues, as the catalyst for targeting both companies and their directors and officers for the resulting drop in stock price. It appears that ship has sailed, so to speak, as Kevin LaCroix at D&O Diary reported over the weekend that a plaintiff shareholder had filed a securities class action lawsuit against Norwegian Cruise Line Holdings, Ltd. alleging that the company employed misleading sales tactics related to the outbreak.
Timing is everything. Just as conference season is getting into full swing, COVID-19 has lashed out in force. In the past 24 hours alone, we have received numerous calls from clients about annual meetings, trade shows and speaking engagements they have been compelled to cancel, all on short notice, due to the novel coronavirus. Continue Reading Cancelled Due To COVID-19? Look Closely At Your Event Cancellation Policy
Social engineering attacks, particularly fraudulent transfers, are becoming one of the most utilized cyber scams. As a result, there has been a flurry of litigation, and a patchwork of decisions, concerning coverage disputes over social engineering losses. Most recently, the United States District Court for the Eastern District of Virginia found in Midlothian Enterprises, Inc. v. Owners Insurance Company, that a so-called “voluntary parting” exclusion provision in a crime policy should exclude coverage for a fraudulent transfer social engineering scheme. The decision illustrates why policyholders must vigilantly analyze their insurance policies to ensure that their coverages keep pace with what has proven to be a rapidly evolving risk landscape.
The members of Hunton’s Insurance Recovery group present regularly on today’s hot topic insurance coverage issues. Upcoming insurance presentations for March 2020 include:
- Andrea DeField will be presenting on “Ensuring Insurance Coverage Success in Litigation: Tips and Best Practices for Young Lawyers” at the ABA’s Insurance Coverage Litigation Committee CLE Seminar in Tucson, Arizona on Wednesday, March 4, 2020.
- Lorelie S. Masters will be presenting on “The Restatement of the Law of Liability Insurance in the Courts” at the ABA’s Insurance Coverage Litigation Committee CLE Seminar in Tucson, Arizona on Friday, March 6, 2020.
- Michael S. Levine will be presenting on “Autonomous Vehicles and Artificial Intelligence; Just Who Is Driving That Ship, Anyhow???” at the ABA’s Insurance Coverage Litigation Committee CLE Seminar in Tucson, Arizona on Friday, March 6, 2020.
- Andrea DeField and Latosha M. Ellis will be teaming up with Hunton partners Brittany M. Bacon, Jamie Zysk Isani and Ann Marie Mortimer on a panel titled, “Like a Breach Over Troubled Waters: How to Navigate a Cyber Incident,” in Hunton’s Miami office on Thursday, March 12, 2020.
- Michael S. Levine, Lawrence J. Bracken II and Brittany Bacon will be presenting on “Cyber: Dissecting Risk Through a Table-Top Exercise and Insurance Analysis” at the RIMS Atlanta Chapter March Luncheon in Dunwoody, Georgia on March 19, 2020.
- Andrea DeField and Michael Levine will be presenting a Lawline webinar on “Managing Cyber Risk Through Insurance” on March 23, 2020.
In case you missed it (February events):
- Sergio F. Oehninger and Rori Malech presented on the topic of “Hotel Financing in Latin America” on February 4, 2020 at the firm’s Washington, DC office. The panelists discussed financing, real estate, surety, and cross-border insurance considerations for ground-up hotel and hospitality development deals in Latin America and the Caribbean.
The CDC reports that, as of the end of last week, the coronavirus disease had spread through China and to 31 other countries and territories, including the United States, which has now seen its first two related deaths. The public health response in the United States has been swift and includes travel advisories, heightened airport screening, and repatriation and quarantine of potentially infected individuals. Outside the United States, countries like China, Italy, and South Korea have implemented more severe measures to combat the disease. From smart phones to automobiles, coronavirus has major short- and long-term implications for public and private companies facing potentially significant supply chain disruptions, store and office closures, and other logistical issues. These business losses, however, may be covered by insurance. Below are several key insurance considerations for policyholders to contemplate when evaluating the availability of insurance coverage for coronavirus-driven losses.
On February 13, 2020, a Texas federal court granted summary judgment in favor of coverage, finding the policyholder provided sufficient notice to its insurer of a potential claim for damages caused by allegedly contaminated proppant used at a well site in west Texas. See Evanston Insurance Company v. OPF Enterprises, LLC, Civil Action No. 4:17-CV-2048 (S.D.T.X. Feb. 13, 2020) (Dkt. No. 51) . The Court found that the policyholder’s notice of a potential claim was effective when provided to the insurer’s agent, even though it was not provided directly to the insurer itself.
Claims stemming from the manufacture, sale, distribution and prescription of opioid products continue to proliferate, fueling opioid liability as an historic mass tort. Claims asserted in lawsuits brought by state and local governments include allegations of negligence, fraudulent misrepresentation, violation of consumer protection statutes, public nuisance, unjust enrichment, antitrust violations, and claims for medical monitoring and injunctive relief, among others. In December 2017, the U.S. Judicial Panel on Multidistrict Litigation ordered the consolidation of approximately 200 then pending opioid related cases into a multidistrict litigation before the U.S. District Court for the Northern District of Ohio, styled In Re: National Prescription Opiate Litigation (MDL No. 2804) (the “MDL”). It was recently reported that two pharmacy chains involved in the opioid MDL are suing 500 physicians alleging it is the doctors, not the pharmacists, who are to blame for faulty prescriptions. At the end of last week, the judge handling the MDL allowed claims against opioid companies by union benefit plans to proceed, concluding that the plans’ claims of harm differed from the injuries to health and safety suffered by the public at large.
Earlier last week, Hunton insurance partner Michael Levine spoke with Business Insurance about the mounting concerns over insuring Coronavirus-related business income and supply chain losses. As of today, almost 80,000 cases have been reported world-wide and more than 2,250 are confirmed to have died as a result of the disease. Companies across the globe have been impacted, with loss of materials, markets and distribution representing a common thread among reported losses and disruptions. But these “supply chain” losses may be compensable through insurance. Policyholders will be forced to evaluate complex policy provisions and endorsements to ascertain whether their insurance program should respond. In particular, policyholders must determine whether their policy wording requires some element of physical loss or damage to property to trigger business interruption or contingent business interruption coverage. Even where such a requirement exists, however, some policies are written so that loss of use of property is sufficient to implicate coverage. Likewise, questions exist concerning contamination to property, and whether that too may constitute physical loss, damage or loss of use. For these reasons, among others, Levine explained to Business Insurance that “contingent business interruption . . . is going to be one of the battlegrounds, if not the main battleground, particularly in the supply chain area.” Levine further noted that claims could be complicated by the physical damage requirement.
Hunton Insurance attorneys Syed Ahmad and Geoffrey Fehling provided several updates on recent recall insurance disputes in the most recent edition of the Recall Roundup, posted on the Hunton Retail Law Resource Blog.