Live Nation Asks Calif. Judge To Follow Cinemark's Virus Suit

By Daphne Zhang
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Law360 (May 17, 2021, 9:02 PM EDT) -- Entertainment giant Live Nation has urged a California federal judge to allow its COVID-19 business interruption suit against Factory Mutual Insurance Co. to proceed, arguing that its communicable disease coverage policy is a "different story" from typical property insurance.

Live Nation Entertainment, Inc. asked the court to reject FM's bid to toss its suit on Friday, saying its FM Global Advantage policy specifically includes a communicable disease as a covered risk and defines "the presence of communicable disease as physical loss or damage."

"FM (like almost no other property insurer) issued policies expressly covering communicable disease," Live Nation said. The carrier is trying to shirk its coverage obligation after it specifically told regulators that communicable disease constituted physical damage under its policy, Live Nation said.

The concert promoter is one of the world's largest live entertainment companies, operating more than 100 theatres and clubs and more than 50 amphitheaters in the United States. Live Nation said over 62 employees tested positive for COVID-19 in 2020 and it is almost certain that many more staff and customers must have been infected while visiting its properties.

The entertainment company said its policy does not have a virus exclusion and the contamination exclusion does not bar virus related losses arising from a communicable disease such as COVID-19. It cited Cinemark Holdings Inc. v. Factory Mutual Insurance Company in which a Texas Federal judge rejected a similar motion raised by FM to dismiss its policyholder's COVID-19 related loss suit.

Earlier this month, U.S. District Judge Amos L. Mazzant III ruled FM can't escape Cinemark's suit asserting that the coronavirus damages property by changing the content of the air, saying Cinemark's losses are potentially covered under a communicable disease provision.

Cinemark has alleged over 1,700 employees were either positive for the coronavirus, exposed to it or showed signs of COVID-19. The judge said the third-largest U.S. movie theater chain alleged a different harm from the coronavirus, in which the virus as a "deadly communicable disease" changes the content of the air at its theaters.

"Faced with a massive coverage liability, FM tries to hide behind the rulings many courts have entered precluding Covid-19 claims under less generous policies," Live Nation said on Friday.

The entertainment company contended that its policy contains much more expansive coverage than the property policies at issue in many cases that have been dismissed and that FM is trying to rewrite the policy by making it sound closer to a typical property policy that does not cover COVID-19 related losses.

Representatives for the parties could not be immediately reached for comment. 

Live Nation is represented by Leslie A Pereira, Thomas Rubinsky and Marc D. Halpern of Halpern May Ybarra Gelberg LLP.

FM is represented by Scott G Johnson and Sylvia R. Ewald of Robins Kaplan LLP.

The Live Nation Entertainment, Inc. v. Factory Mutual Insurance Company, case number 2:21-cv-00862, in the U.S. District Court for the Central District of California

--Additional reporting by Shawn Rice. Editing by Amy Rowe.

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