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Law360 (November 2, 2020, 4:06 PM EST ) The operators of 100 Outback Steakhouse restaurants are pushing back against a bid to dismiss their suit alleging Affiliated FM Insurance Co. is systematically denying COVID-19 coverage, saying the insurer's participation in other, similar suits belies its argument that the complaint here doesn't make the restaurants' claims clear.
In a response filed Friday, Out West Restaurant Group — which operates Outback locations in California, Arizona, Colorado, Nevada and New Mexico — said that Affiliated FM seems to be simultaneously arguing that the complaint is too long and detailed and that it does not give enough detail to allow the insurer to properly defend the case. This contradictory position undermines its bid to dismiss, the restaurateurs asserted.
And the insurer has been party to numerous cases involving the same issues, Out West said, and has answered other cases with affirmative defenses, so they cannot claim they are ignorant of the issues in this case.
"AFM seeks dismissal of Out West's complaint on many divergent, but non-substantive, bases, arguing ... it does not say enough, it says too much, they do not understand what is being said, and it would be unduly burdensome to respond," the restaurateurs said. "These varying and inconsistent positions misstate the word and purpose of the federal rules, and they mischaracterize the complaint."
The 36-page complaint follows court rules by directly and concisely stating the case, Out West said, adding that the allegedly "irrelevant" information is important to the case, such as the terms of the policy and the exclusions Affiliated FM used to justify denying coverage.
While Affiliated FM cited a number of cases to show that the court can dismiss a complaint for being unwieldy, Out West argued those cases don't fit the circumstances here, as they contain long and rambling complaints without being able to state a claim.
The restaurants also pointed to a similar case that relied on the same citations as Out West and made many of the same claims, but which Affiliated FM chose to answer, rather than push to dismiss, showing that the insurer is familiar with the claims at issue.
Out West sued the insurer in September, claiming that Affiliated FM distributed "talking points" to its insurance adjusters in a scheme to blanket deny all coverage for losses stemming from the COVID-19 pandemic before it even issued its policy to the steakhouses in February. Affiliated FM also misled Out West into believing it would be covered, according to the complaint.
About two weeks ago, Affiliated FM pushed to dismiss the "unwieldy" complaint — which contains over 100 pages of attached exhibits — saying it is filled with irrelevant allegations and should be cut down to the straightforward coverage dispute.
In Friday's response, Out West said that Affiliated FM "conveniently fail[ed] to mention" that of the 124 pages of exhibits, 112 were written by Affiliated FM, including the 83-page policy, the talking points memo, its denial letter to Out West and 20 pages from its regulatory filing.
"Since AFM created these documents, they necessarily are familiar with them and cannot present any burden," Out West said.
Other information that Affiliated FM wants stricken — such as descriptions of Out West's operations, the effect of COVID-19 on the country and references to other sites closed down — is not redundant or irrelevant, but key to explaining the core issues in the suit, Out West said.
Representatives for Affiliated FM and Out West declined to comment Monday.
Out West is represented by Scott P. DeVries, Michael L. Huggins, Walter J. Andrews and Andrea DeField of Hunton Andrews Kurth LLP.
Affiliated FM is represented by Steven D. Turner and Mariyetta A. Meyers-Lopez of Jones Turner LLP and Joyce C. Wang of Carlson Calladine & Peterson LLP.
The case is Out West Restaurant Group Inc. et al. v. Affiliated FM Insurance Co., case number 3:20-cv-06786, in the U.S. District Court for the Northern District of California.
--Additional reporting by Lauren Berg. Editing by Daniel King.
For a reprint of this article, please contact reprints@law360.com.
