IN RE: ERIE COVID-19 BUSINESS INTERRUPTION PROTECTION INSURANCE LITIGATION

Filing 1

MULTIDISTRICT LITIGATION TRANSFER ORDER. (map)

Case 1:21-mc-00001-MRH Document 1 Filed 01/07/21 Page 1 of 6

UNITED STATES JUDICIAL PANEL
on
MULTIDISTRICT LITIGATION

IN RE: ERIE COVID-19 BUSINESS INTERRUPTION
PROTECTION INSURANCE LITIGATION

MDL No. 2969

TRANSFER ORDER
Before the Panel: Plaintiffs in five actions1 listed on Schedule A move under 28 U.S.C.
§ 1407 to centralize pretrial proceedings in this litigation in the Eastern District of Pennsylvania.
This litigation consists of thirteen actions pending in five districts, as listed on Schedule A. The
parties have notified the Panel of twelve related actions pending in eight districts.2 Plaintiffs in six
actions and potential tag-along actions support centralization in either the Eastern District of
Pennsylvania, the Western District of Pennsylvania, or both. Plaintiffs in three actions and potential
tag-along actions oppose centralization or, alternatively, ask that their actions be excluded from any
MDL. Plaintiffs in two of these actions alternatively suggest either the Western District of New
York or the Southern District of West Virginia as potential transferee districts. The Erie defendants3
likewise oppose centralization. Alternatively, Erie suggests the Western District of Pennsylvania
should serve as the transferee district.
This is the latest motion seeking centralization of litigation involving insurance claims for
coverage of business interruption losses caused by the COVID-19 pandemic and the related
government orders suspending, or severely curtailing, operations of non-essential businesses. At
our July 2020 hearing session, we denied two motions seeking centralization on an industry-wide
basis as to all insurers, concluding that the differences among the many insurers would overwhelm
any common factual questions and hinder the transferee court’s ability to efficiently manage the
litigation. See In re COVID-19 Bus. Interruption Prot. Ins. Litig., MDL No. 2942, __ F. Supp. 3d
__, 2020 WL 4670700 (J.P.M.L. Aug. 12, 2020). We found the arguments of several parties for
insurer-based MDLs more persuasive and issued orders directing the parties to show cause why

1

These five actions are the LA Campagna Inc., High Tech Hair, and Sulimay’s Hair Design
actions in the Eastern District of Pennsylvania; the Laser Spa of Rochester action in the Western
District of New York; and the Close Enterprises action in the Western District of Pennsylvania.
2

These and any other related actions are potential tag-along actions. See Panel Rules 1.1(h),
7.1, and 7.2.
3

The Erie defendants include: Erie Insurance Company; Erie Insurance Exchange; Erie
Indemnity Company; and Erie Insurance Property & Casualty Company.

Case 1:21-mc-00001-MRH Document 1 Filed 01/07/21 Page 2 of 6

-2actions against certain insurers should not be centralized. 4 Id. at *3.
At our September 2020 hearing session, we considered show cause orders with respect to
five insurers. With respect to Lloyd’s of London, we denied centralization because the structure of
the London market would complicate pretrial management and likely would lead to the MDL
expanding to encompass other insurers who participated in this market. See In re Certain
Underwriters at Lloyd’s, London, COVID-19 Bus. Interruption Prot. Ins. Litig., MDL No. 2961, __
F. Supp. 3d __, 2020 WL 5887416, at *2 (J.P.M.L. Oct. 2, 2020). We also denied centralization
with respect to Cincinnati Insurance Company, The Hartford, and Travelers, though those litigations
presented “a close question.” In re Cincinnati Ins. Co. COVID-19 Bus. Interruption Prot. Ins. Litig.,
MDL No. 2962, __ F. Supp. 3d __, 2020 WL 5884791, at *1 (J.P.M.L. Oct. 2, 2020). We found that
the actions presented “common legal and factual questions that could, in other circumstances,
support centralization.” Id. We concluded, though, that the actions could more timely be resolved
in the transferor courts because centralization would require the time-consuming establishment of
a pretrial structure to account for the many different state insurance laws, closure orders, and policy
variations presented by the actions. Id. at *2; In re Hartford COVID-19 Bus. Interruption Prot. Ins.
Litig., MDL No. 2963, __ F. Supp. 3d __, 2020 WL 5884782, at *2–3 (J.P.M.L. Oct. 2, 2020); In
re Travelers COVID-19 Bus. Interruption Prot. Ins. Litig., MDL No. 2965, __ F. Supp. 3d __, 2020
WL 5884785, at *1–2 (J.P.M.L. Oct. 2, 2020).
In contrast, centralization of the fifth show cause litigation—involving Society Insurance
Company—was warranted. See In re Society Ins. Co. COVID-19 Bus. Interruption Prot. Ins. Litig.,
MDL No. 2964, __ F. Supp. 3d __, 2020 WL 5887444 (J.P.M.L. Oct. 2, 2020). Society’s status as
a regional insurer operating in only six states was a critical factor, as it meant the transferee judge
would be tasked with a more manageable litigation than an MDL with a potentially nationwide
scope. Id. at *2. Whether the Erie litigation is sufficiently similar to the Society litigation to merit
centralization is the focus of much of the parties’ arguments on the present motion.
After considering the arguments of counsel,5 we conclude that centralization of the Erie
actions listed on Schedule A will serve the convenience of the parties and witnesses and further the
just and efficient conduct of this litigation. Erie is a regional carrier that operates in a somewhat

4

Movants here sought reconsideration of our order denying industry-wide centralization in
MDL No. 2942, seeking a show cause order as to actions involving the Erie defendants. We denied
this motion because the window for briefing an additional docket before the September 2020 hearing
session had closed. See In re COVID-19 Bus. Interruption Prot. Ins. Litig., MDL No. 2942
(J.P.M.L. Aug. 21, 2020), ECF No. 779. The present motion was filed shortly thereafter.
5

In light of the concerns about the spread of COVID-19 virus (coronavirus), the Panel heard
oral argument by videoconference at its hearing session of December 3, 2020. See Suppl. Notice
of Hearing Session, MDL No. 2969 (J.P.M.L. Nov. 16, 2020), ECF No. 87.

Case 1:21-mc-00001-MRH Document 1 Filed 01/07/21 Page 3 of 6

-3larger geographic area than Society, encompassing thirteen jurisdictions.6 Policyholders bring
individual and putative nationwide and statewide class actions against Erie. These actions share
common factual allegations that Erie wrongfully denied policyholders’ claims for business
interruption protection insurance. Plaintiffs contend that Erie preemptively decided to deny their
claims, which are brought under various property insurance policies that, depending on the
provisions plaintiff has purchased, provide: (1) business income coverage, (2) civil authority
coverage, and (3) extra expense coverage. The actions therefore will require an assessment of
whether COVID-19 caused any “loss” or “damage” to property, and whether any of Erie’s policy
exclusions apply to preclude plaintiffs’ claims. If discovery of Erie regarding the drafting and
interpretation of it policies is needed, it will be common to all actions. Thus, these actions present
common factual and legal questions that support centralization.
In addition to requiring common factual questions, Section 1407 also requires that
centralization promote the just and efficient conduct of the actions. As we noted in the prior
business interruption protection insurance dockets, this litigation demands efficiency. Many
plaintiffs are on the brink of bankruptcy as a result of business lost due to the COVID-19 pandemic
and the government closure orders. The most pressing question before us in these business
interruption protection insurance cases, then, is whether centralization presents the most efficient
means of advancing these actions towards resolution. As with the Society litigation, we find that
centralization offers the most efficient route to resolution. There are 25 total actions pending in six
states and the District of Columbia. At most, this litigation will expand to encompass six additional
states. Furthermore, it appears that Erie employs a small number of substantially similar
policies—the only difference among the policies that Erie identified in its briefing and oral argument
is that some policies include a virus exclusion, while others do not. This suggests to us that this
litigation presents a manageable controversy that can be best streamlined by proceeding before a
single judge.
Erie argues that centralization is not appropriate because the actions involve different claims
and different types of business. The presence of additional or differing legal theories is not
significant, however, when the actions arise from a common factual core. See In re Oxycontin
Antitrust Litig., 542 F. Supp. 2d 1359, 1360 (J.P.M.L. 2008). Likewise, Section 1407 does not
require a complete identity or even majority of common factual and legal issues as a prerequisite to
transfer. See In re Satyam Computer Servs., Ltd., Sec. Litig., 712 F. Supp. 2d 1381, 1382 (J.P.M.L.
2010).
The opposing plaintiffs additionally argue that centralization is not appropriate because the
actions likely will involve primarily legal questions. It is possible that plaintiffs’ claims can be
decided on motions to dismiss without need for discovery into, for example, the drafting of the
policies at issue or epidemiological modeling of the spread of COVID-19. But centralization may
be warranted even where common questions of law are prominent, as long as common factual issues

6

These jurisdictions include the District of Columbia, Illinois, Indiana, Kentucky, Maryland,
New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin.

Case 1:21-mc-00001-MRH Document 1 Filed 01/07/21 Page 4 of 6

-4are present. In such cases, “[t]he Panel must determine the extent of the common factual issues and
the likelihood that centralized pretrial proceedings will create important efficiencies, avoid
inconsistent rulings, and result in the overall fairer adjudication of the litigation for the benefit of
all involved parties.” In re Polar Bear Endangered Species Act Listing & § 4(d) Rule Litig., 588 F.
Supp. 2d 1376, 1377(J.P.M.L. 2008). Here, significant factual questions exist among the actions,
and centralization will create substantial efficiencies for the parties and the courts.
All opponents of centralization argue that, should plaintiffs’ claims survive dispositive
rulings on policy interpretation questions, discovery will be plaintiff- and property-specific. There
may be, by necessity, some unique aspects of each case. Were this litigation larger in geographic
scope and if it involved more state laws, this might be a more persuasive argument because the
transferee judge would be tasked with managing a much more complicated litigation. As with the
Society litigation, what sets this litigation apart from others in which we have denied centralization
is the defined geographical scope of these actions, which implicates only thirteen jurisdictions. The
transferee judge can employ any number of pretrial techniques—including establishing state-specific
tracks and selecting certain already-briefed motions in individual cases as bellwether motions—to
manage any differences that the Erie actions present.
The opposing parties also assert that informal coordination among the parties and courts is
preferable to formal centralization. We do not view alternatives to centralization to be an adequate
substitute for an MDL here. There are more than two dozen cases brought by diverse counsel before
twenty judges, which makes coordination difficult. While a few actions have been transferred to the
Western District of Pennsylvania by stipulation of the parties, Section 1404 does not offer a
reasonable prospect of eliminating the multidistrict nature of this litigation.
We are persuaded that the Western District of Pennsylvania is an appropriate transferee
district. Both plaintiffs and defendants, either in the first instance or in the alternative, suggest this
district to oversee this litigation. The Western District of Pennsylvania is the clear center of gravity
for this litigation, as the Erie defendants are headquartered there and a sizeable number of actions
are pending there. Additionally, Pittsburgh represents an accessible forum with the capacity to
efficiently manage these cases. We are confident that the Honorable Mark R. Hornak, who has not
yet had the opportunity to preside over an MDL, will steer this litigation on a prudent and
expeditious course.

Case 1:21-mc-00001-MRH Document 1 Filed 01/07/21 Page 5 of 6

-5IT IS THEREFORE ORDERED that the actions listed on Schedule A and pending outside
the Western District of Pennsylvania are transferred to the Western District of Pennsylvania and,
with the consent of that court, assigned to the Honorable Mark R. Hornak for coordinated or
consolidated pretrial proceedings with the actions pending there and listed on Schedule A.

PANEL ON MULTIDISTRICT LITIGATION

__________________________________________
Karen K. Caldwell
Chair
Catherine D. Perry
Matthew F. Kennelly
Roger T. Benitez

Nathaniel M. Gorton
David C. Norton
Dale A. Kimball

Case 1:21-mc-00001-MRH Document 1 Filed 01/07/21 Page 6 of 6

IN RE: ERIE COVID-19 BUSINESS INTERRUPTION
PROTECTION INSURANCE LITIGATION

MDL No. 2969

SCHEDULE A
Northern District of Illinois
PGB RESTAURANT, INC., ET AL. v. ERIE INSURANCE EXCHANGE,
C.A. No. 1:20-02403
MENNS INC. v. ERIE INSURANCE EXCHANGE, ET AL., C.A. No. 1:20-02895
THE ITALIAN VILLAGE RESTAURANT, INC., ET AL. v. ERIE INSURANCE
COMPANY, C.A. No. 1:20-03101
JERRY'S SANDWICHES AV, LLC, ET AL. v. ERIE INSURANCE COMPANY,
C.A. No. 1:20-03249
Western District of New York
LASER SPA OF ROCHESTER, LLC v. ERIE INSURANCE COMPANY,
C.A. No. 6:20-06308
Eastern District of Pennsylvania
LA CAMPAGNA INC. v. ERIE INSURANCE GROUP, C.A. No. 2:20-02689
SULIMAY'S HAIR DESIGN INC. v. ERIE INSURANCE EXCHANGE,
C.A. No. 2:20-02731
HIGH TECH HAIR LLC, ET AL. v. ERIE INSURANCE EXCHANGE,
C.A. No. 2:20-02895
Western District of Pennsylvania
THE LOCK LOFT, LLC v. ERIE INSURANCE EXCHANGE, C.A. No. 1:20-00122
CLOSE ENTERPRISES INC. v. ERIE INSURANCE GROUP, C.A. No. 1:20-00147
IZZY AND GAB LLC v. ERIE INSURANCE PROPERTY AND CASUALTY
COMPANY, C.A. No. 1:20-00266
HELLO HOSPITALITY IV, LLC, ET AL. v. ERIE INSURANCE PROPERTY AND
CASUALTY COMPANY, C.A. No. 1:20-00281
Middle District of Tennessee
PLEASANT FOOD, INC., ET AL. v. ERIE INSURANCE EXCHANGE,
C.A. No. 3:20-00570