Pa. Judge Defends Coordinating Erie Insurance Virus Suits

By Matthew Santoni
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Law360 (November 20, 2020, 6:36 PM EST) -- A Pennsylvania state court judge defended her order coordinating all current and future cases over Erie Insurance's coverage denials for pandemic-related business losses, writing in an opinion Friday that her court could easily weigh common issues via videoconference.

Erie is appealing Allegheny County Court of Common Pleas Judge Christine Ward's July order grouping together all current and future Pennsylvania lawsuits against the insurer in her Pittsburgh courtroom, so Judge Ward issued an opinion laying out her reasons for making and sticking to the order.

"While Erie is correct to point out that the individual claims are, to a certain extent, factually unique, all of them nonetheless require this court to resolve common issues regarding the same causes of action, which involve the same insurance policy contracts, the same insurance policy language, and the same insurance company," Judge Ward wrote.

Judge Ward's order initially grouped a series of cases from Allegheny, Philadelphia and Lancaster counties from businesses claiming the insurer wrongfully denied their claims for losses related to the COVID-19 pandemic and its associated shutdown orders. The order said that Erie would be responsible for notifying the court of any additional lawsuits filed against it in Pennsylvania so those cases could be transferred to Judge Ward.

Attorneys representing multiple businesses — including restaurants and a car dealership in Pittsburgh, a pair of Philadelphia restaurants and a group of Lancaster County floral shops — had requested the coordination order in June, after the Supreme Court of Pennsylvania declined to exercise its "King's Bench" jurisdiction and issue a statewide ruling on whether the pandemic and its subsequent closure orders were a "physical loss" that should be covered.

Numerous businesses objected or took advantage of an opt-out provision the judge wrote into the order, but Erie filed an appeal to the Superior Court of Pennsylvania, contending that coordination was improper for such disparate circumstances, inconvenient for plaintiffs in counties far from Pittsburgh and that the court was unable to rope in future cases without accounting for the parties' cost of coordination.

Judge Ward said the Rules of Civil Procedure for grouping together similar cases included a clause that said judges may "make any other appropriate order" for "creative judicial management," noting that her order bringing in yet-to-be-filed cases against Erie fell under that catch-all in the interest of streamlining future litigation.

She countered Erie's objection that not all parties were given notice of the coordination order or an opportunity to object by pointing to parts of her order directing the insurer to pass word of the coordination to all the businesses suing it and giving those businesses the chance to object before the transfer.

As for Erie's contention that every business's circumstances and insurance contracts were unique, Judge Ward wrote that there were still common issues the court could address.

"These actions all require the court to determine whether Erie breached its standard contracts of insurance through its uniform denial of all claims for business losses related to COVID-19, and/or the related actions of civil authorities taken in response to COVID-19," the opinion said. "The initial determination of whether Erie's standard business insurance contracts cover business losses suffered as a result of COVID-19 can and should be determined by one court."

Once the overarching questions were answered, damages or other issues unique to each business in the coordinated action could be split into separate cases or sent back to their home counties, the judge said.

"Should any plaintiff desire to try their individual cases in another county after this court resolves the common issues in the coordinated proceeding, this court can … 'make any other appropriate order,' including one permitting certain plaintiffs to try their cases in separate counties," the opinion said.

While Erie and some of the businesses that had initially objected said it would be difficult to advance their cases in Pittsburgh from across the state, Judge Ward noted that the pandemic had already forced her courtroom to do its work mainly by videoconference, so all the parties involved could participate remotely without travel.

Judge Ward also pointed to her court's experience with insurance issues, which are usually automatically assigned to her as one of two judges in Allegheny County's Commerce and Complex Litigation Center.

"This court is especially positioned to handle this matter in a just and efficient manner," the opinion said. "Given the court's familiarity with insurance disputes, and its ability to conduct proceedings remotely, this court correctly determined that coordination in Allegheny County would promote the efficient utilization of judicial facilities and personnel, and the just and efficient conduct of the actions."

"Judge Ward's opinion is precisely correct," said Scott Cooper of Schmidt Kramer, one of the firms representing the businesses. "She authored a thorough and well-reasoned opinion, and we hope the Superior Court will expedite the hearing of the appeal so we can press forward with the cases for these businesses who paid for this coverage and need it badly."

Counsel for Erie did not immediately respond to requests for comment Friday.

Erie Insurance is represented by Richard DiBella, Paul K. Geer and Tara Maczuzak of DiBella Geer McAllister Best PC, and Matthew B. Malamud of Timoney Knox LLP.

The businesses are represented by James Haggerty of Haggerty Goldberg Schleifer & Kupersmith PC; Scott Cooper of Schmidt Kramer PC; John Goodrich and Lauren Nichols of Jack Goodrich & Associates PC; Michael Boni, Joshua Snyder and John Sindoni of Boni Zack & Snyder LLC; and Jonathan Shub and Kevin Laukaitis of Shub Law Firm LLC.

The case is Joseph Tambellini Inc. v. Erie Insurance Exchange, case number GD-20-005137, in the Court of Common Pleas of Allegheny County, and case number 903 WDA 2020 in the Superior Court of Pennsylvania.

--Editing by Steven Edelstone.

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