Given the nationwide momentum in COVID-19 related BI claims, it is important to keep an eye on the classes on-file and how courts deal with the insurers’ arguments to strike them. In Germack v. The Dentists Insurance Co., case number 2:20-cv-00661, in the U.S. District Court for the Western District of Washington, the insurer, The Dentists Insurance Company, moves to strike class action business interruption claims from a group of dentists who were denied coverage for COVID-19 related losses.
By way of background, for a successful motion to strike, Germack must plead facts sufficient to demonstrate that all the prerequisites of Rule 23(a) are met, as well as facts showing a class action is maintainable under Rule 23(b). Rule 23(a) requires that one or more members of a class can represent the class only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
Rule 23(b)(3) also requires that “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”
The insurer in Germack argues against the class by noting that the “these are highly individualized inquiries that will depend on the individual facts of each insured’s coverage situation and lost business income…” The insurer further argues that the shutdown orders are too different, noting “the differing manner in which various states and municipalities have limited the practice of dentistry and the different legal standards for the construction of insurance policies in each jurisdiction…” With regard to damages, the insurer notes “[t]here is simply no way that the court can determine the amount of damages that each dentist insured by TDIC suffered as a result of the COVID-19 related partial closures without an individual assessment of the complete financial records of each individual dentist/insured.”
The insurer argues that “[t]hese different laws, standards and tests will necessarily require different discovery, evidence and arguments, and will likely yield different results. Based on the numerous legal standards that the Plaintiff is inviting this Court to apply to the facts of each individual dentist/insured’s situation, the commonality and typicality elements of Rule 23(a) are impossible for the Plaintiff to establish in this matter.”
Importantly, the insurer argues that competing standards for coverage law prevent the class from proceeding. Specifically, the insurer explains that “[i]n light of these competing standards, coverage for Business Interruption could potentially exist – assuming each insured could meet their burden on the other elements necessary to trigger the Insuring Agreement – in certain states that allow coverage for limited suspensions of operations, while insureds in other states would not be entitled to coverage.”
The response to the insurer’s motion to strike is forthcoming. The arguments made in opposition to the motion to strike and the court’s ruling on the issue will certainly help to set the stage for the way in which business interruption classes will be filed going forward.
The lawyers of LeMaster & Ahmed PLLC are here to help businesses nationwide present the best available arguments for business interruption coverage related to COVID-19 business income and extra expense losses. Contact us at our Houston location at 832-356-7983 or our DFW location at 972-483-0410. You can also message us any inquiries directly on our website.
***The foregoing is not meant to serve as legal advice relating to your insurance coverage issue. Please contact one of our lawyers if you have questions specific to your particular insurance issue.