By Jeff Sistrunk

Law360 (December 15, 2020, 6:39 PM EST ) A judicial panel on Tuesday centralized in Pennsylvania more than a dozen cases alleging Erie Insurance Group has wrongfully refused to cover businesses' lost income due to COVID-19 stay-at-home orders, making Erie the second insurer to face multidistrict litigation over its rejection of policyholders' claims for pandemic-related losses.

The seven-member Judicial Panel on Multidistrict Litigation granted a transfer petition filed in August by several groups of Erie policyholders and sent 13 COVID-19 coverage actions pending against the insurer across four states to Chief U.S. District Judge Mark R. Hornak in Pittsburgh, where Erie is headquartered.

The panel's order created the second MDL to manage COVID-19 business interruption insurance cases against a single insurer.

In early October, the JPML centralized more than 30 coverage suits against Society Insurance Co. before a federal judge in Chicago. At the same time, it refused to create MDLs for COVID-19 coverage actions pending against Travelers, The Hartford, Cincinnati Insurance Co. and underwriters at Lloyd's of London, all of which are facing many more cases than Society. The JPML declined in August to create a nationwide, industrywide MDL to centralize pandemic coverage cases against all insurance carriers. 

The JPML followed largely the same rationale it applied to the Society matter in deciding to centralize the COVID-19 cases against Erie. Like Milwaukee, Wisconsin-based Society, Erie is a smaller regional insurer, although Erie does business in more jurisdictions — 12 states and the District of Columbia, versus six states for Society, according to the order.

Despite Erie's slightly broader geographic reach, the JPML found that centralization will promote efficiency because the Erie policyholders' cases — which include both individual suits and putative class action complaints — raise common factual allegations that the insurer wrongfully denied their claims for financial losses due to government orders that required them to close or reduce operations.

"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," the JPML wrote. "If discovery of Erie regarding the drafting and interpretation of its policies is needed, it will be common to all actions. Thus, these actions present common factual and legal questions that support centralization."

The panel chose Pittsburgh as the forum for the MDL because it is the "clear center of gravity for this litigation," noting that Erie is based in the city and eight cases against the insurer are already pending there.

In addition to the 13 suits identified in the August transfer petition, the JPML has been notified of at least 14 additional federal court cases against Erie that could also potentially be transferred to the MDL, according to court records.

An Erie spokesman declined to comment. Counsel for the policyholders did not immediately respond to a request for comment. 

The policyholders are represented by attorneys with Levin Sedran & Berman LLP, DiCello Levitt Gutzler LLC, The Lanier Law Firm, Golomb & Honik PC and Beasley Allen Crow Methvin Portis & Miles PC, among others.

Erie is represented by Adam J. Kaiser and Tiffany L. Powers of Alston & Bird LLP.

The case is In Re: Erie COVID-19 Business Interruption Protection Insurance Litigation, MDL No. 2969, before the Judicial Panel on Multidistrict Litigation.

--Editing by Michael Watanabe.

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