Insurer Seeks To Ax 'Unwieldy' Outback Steakhouse Virus Suit

By Lauren Berg
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Law360 (October 16, 2020, 10:27 PM EDT) -- Affiliated FM Insurance Co. urged a California federal judge Friday to toss a lawsuit brought by the operators of 100 Outback Steakhouse locations seeking coverage for coronavirus-related losses on a $100 million policy, saying the complaint is "cumbersome and unwieldy" and includes improper case citations.

Affiliated FM said the 170-page complaint, including exhibits, filed by Out West Restaurant Group Inc. — which operates 100 of the chain steakhouse restaurants in California, Arizona, Colorado, Nevada and New Mexico — is filled with irrelevant allegations and should be cut down to the straightforward coverage dispute.

Along with the allegations that Affiliated FM has denied claims for COVID-19-related losses despite several provisions granting coverage, the insurer said the complaint includes irrelevant claims about the "beloved" and "famous" nature of Outback Steakhouse's Bloomin' Onion and the "warm welcoming environment" of the restaurants.

"This is an insurance coverage case. The complaint is prolix, cumbersome, unwieldy, repetitive, unclear as to what facts plaintiffs rely on, and, ultimately, vague," the company said. "The pleading reads more like a self-indulgent press release than a short, plain statement of the claim showing that the pleader is entitled to relief."

The complaint also includes improper citations of case law and 39 seemingly irrelevant footnotes that incorporate 38 websites with links to news articles and papers ranging from Centers for Disease Control and Prevention statistics and stories about coronavirus patients being released from the hospital to whether certain Disney employees have tested positive for the novel coronavirus, according to Affiliated FM.

The insurer said the complaint violates the Federal Rules of Civil Procedure, which require that a complaint contain only a "short and plain statement" of the claims and that each allegation is "simple, concise and direct."

Affiliated FM said it would be unreasonable and prejudicial to require the insurer to spend time and money admitting or denying each of the complaint's 194 paragraphs of "mostly irrelevant allegations" or conducting discovery on the mass of information.

Out West sued the insurer last month, 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.

Now, after many of the restaurants were forced to shut down or limit operations because of the pandemic and government orders closing nonessential businesses, Out West said Affiliated FM is trying to "shoehorn" the claim into a more narrow and limited area of coverage while contending it's excluded from other areas.

According to the complaint, Affiliated FM is attempting to limit the restaurants' recovery to that offered under the "communicable disease" riders, but Out West said those clauses are in addition to, not limiting, the physical loss or damage clause in the policy.

The restaurants further argued that the policy refers to communicable diseases like COVID-19 as damaging to property, so the presence of the virus at the Outback Steakhouse locations triggers the all-risks policy, which allows full recovery. In addition, Out West argued that the government shutdown orders explicitly note that COVID-19 causes physical damage to property.

On Friday, Affiliate FM said the suit should either be dismissed, stricken or ordered to be made more clear.

Counsel for Out West declined to comment Friday and counsel for Affiliated FM did not immediately respond to a request for comment.

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 Mike Curley. Editing by Peter Rozovsky.

For a reprint of this article, please contact reprints@law360.com.

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