Boarded-up Perry's Restaurant along San Francisco's Embarcadero. (Photo: Jason Doiy/ALM)

Anticipating a flood of business-interruption lawsuits against insurance firms in the wake of COVID-19, two groups of lawyers have sought to create a multidistrict litigation proceeding that would coordinate all the cases.

Dozens of small businesses have sued a spate of insurance firms, including Certain Underwriters of Lloyd's of London and Admiralty Indemnity Co., alleging they rejected coverage for economic losses caused by government shutdowns over coronavirus.

"This issue—whether business interruption insurance policies will cover losses incurred by businesses forced to shutter their business as a result of the governmental orders—is one of national importance and great significance to the ultimate survival of many businesses," wrote plaintiffs attorney Richard Golomb, in a motion filed on Monday before the U.S. Judicial Panel on Multidistrict Litigation. "This is a monumental issue."

Golomb's firm, Golomb & Honik, and Levin Sedran & Berman, which joined in the motion, represent Philadelphia eateries River Twice and Chops in two lawsuits. They want to coordinate all the cases in the Eastern District of Pennsylvania and have suggested Judge Timothy Savage, who has not handled multidistrict litigation before.

"The Covid-19 business interruption litigation is obviously a complex case that has national ramifications and requires a national solution," Golomb said in an email. "As a result, we believe there is no better method than multi-district litigation to efficiently work toward a fair and timely resolution for all small businesses involved."

On Tuesday, attorneys Adam Levitt, of Chicago's DiCello Levitt Gutzler, and Mark Lanier, of The Lanier Law Firm, who filed six class actions against insurance firms, filed a motion that sought a multidistrict litigation proceeding in the Northern District of Illinois before Judge Matthew Kennelly, who sits on the MDL panel. Joining them were Burns Bowen Bair in Madison, Wisconsin, and Daniels & Tredennick in Houston.

The cases are in federal courts in Illinois, Florida, Pennsylvania, New York, Wisconsin, Ohio, California, Oregon and Texas. One motion references another nine lawsuits in state courts in Oklahoma, Louisiana, California, Texas, Indiana, Wisconsin and Washington, D.C.

The motions focus on 16 cases so far filed in federal courts against eight insurance firms, but Golomb predicted an "avalanche of cases." Tuesday's motion referenced statements from The Hartford and Travelers, neither of which is one of the defendants, insisting that their business-interruption coverage included losses from physical damage caused by hurricanes, fires, winds or theft—not a virus. They also noted that Allstate, Zurich and Allianz, none of which is named in the suits, have headquarters in Illinois.

Acknowledging the potentially large number of defendants in such an MDL, both motions said the cases were all about the common issue of business-interruption insurance policies. They also referenced other cases, like those brought against more than a dozen companies that distribute and manufacture opiate pharmaceuticals. More than 2,700 lawsuits over the opioid crisis are coordinated in multidistrict litigation in the Northern District of Ohio.

"While there is a multiplicity of parties across these litigations, the panel—in cases like Opioids, Chinese Drywall, TVM, and the like—has repeatedly demonstrated its belief that, even in the most sprawling actions, coordinating pretrial processes in a single court, before a single judge, is preferable to any alternative approach," Levitt said in an email. "Further, we believe that the Northern District of Illinois is the appropriate transferee venue for these cases because of Chicago's position as a major U.S. insurance hub, as well as its central location, which is needed for this nationwide litigation."

Insurance defendants are due to respond to the MDL panel next month.