May 18, 2020

Pennsylvania Supreme Court Rejects Emergent Application to Consolidate COVID-19 Business Interruption Claims

On May 14, 2020, the Supreme Court of Pennsylvania rejected a request by a group of Pennsylvania attorneys that the Court use its King’s Bench power in connection with a case seeking a determination of whether an insurer owed coverage to a restaurant owner in connection with losses the restaurant sustained during the COVID-19 pandemic.

The Pennsylvania Supreme Court’s King’s Bench authority “is generally invoked to review an issue of public importance that requires timely intervention by the court of last resort to avoid the deleterious effects arising from delays incident to the ordinary process of law.” Commonwealth v. Willliams, 129 A.3d 199, 1205-06 (Pa. 2015). The Court has exercised King’s Bench authority in limited circumstances, and typically does so in lawsuits raising constitutional issues, lawsuits relating to elections, and in criminal cases involving imminent executions or continuing incarceration. Recently, the Court exercised its King’s Bench authority in holding that the governor of Pennsylvania acted within his authority in issuing an Executive Order requiring that all non-life-sustaining businesses close in response to the COVID-19 pandemic. See Friends of Danny DeVito v. Wolf, __ A.3d __, 2020 WL 1847100 (Pa. 2020).

In Joseph Tambellini, Inc. v. Erie Insurance Exchange, plaintiff insured filed an “Emergency Application for Extraordinary Relief” on April 29, 2020. The petition sought an order from the Pennsylvania Supreme Court expediting a decision on the insurance coverage questions, citing the “the immediate needs of citizens of the Commonwealth who need resolution of the legal insurance coverage issues facing them in an attempt to re-start their businesses and their lives in the face of the losses, damages and expenses caused by the COVID-19 pandemic and the related governmental Orders.” The petition further argued that the Court should utilize its King’s Bench and extraordinary jurisdiction powers under Pennsylvania law to establish a system for deciding these cases that would be “not unlike that utilized by the Federal Courts pursuant to 28 U.S.C. 1407 and the Rules of Procedure of the Judicial Panel on Multidistrict Litigation.” The petition posited that the hundreds, if not thousands, of insurance coverage actions that the plaintiff anticipates will be filed in Pennsylvania arising from COVID-19 would be best resolved through a streamlined process administered in a single court or by a small handful of judges.

The defendant in the underlying case, Erie Insurance Exchange, and amici curiae (including the American Property Casualty Insurance Association and the Insurance Federation of Pennsylvania) opposed the Emergency Application. In addition to arguing that the petition was premature, Erie and the amici argued that a consolidated litigation scheme would be inappropriate. They explained that, because each insurance contract is different and the facts of each claim weigh heavily into claim determinations, broad rulings on consolidated litigation could not properly address the nuances of each contract and policy holder’s situation. The opposition further argued that trial courts are the appropriate fora for litigating all insurance coverage disputes, including those arising from COVID-19, because the trial courts are able to properly develop the factual record that is vital in resolving such cases.

As noted above, the Supreme Court of Pennsylvania has now rejected the Emergency Application in a per curiam Order issued May 14, 2020. Although the order did not elaborate on the Court’s reasoning, the decision to not give COVID-19 coverage actions a fast-track to the Pennsylvania Supreme Court indicates that plaintiffs could not meet their burden of demonstrating that COVID-19 coverage actions are anything other than typical coverage actions that should be litigated like any other. Further, most COVID-19 coverage cases filed in Pennsylvania to date have sought redress in federal courts, and Plaintiff’s contention that there will be a “flood” of litigation in state court that would warrant such an extraordinary consolidation is, so far, unsupported.

As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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