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Eagles Say COVID Insurance Spat Belongs In State Court

By Max Jaeger · May 3, 2021, 4:18 PM EDT

The Philadelphia Eagles asked a federal judge on Friday to send their pandemic insurance case against Factory Mutual back to state court to address what the team called novel legal questions, a move that could also give the football franchise higher odds of avoiding dismissal.

The Eagles say Factory Mutual is refusing to honor their contract and pay up to $1 billion in coverage for lost revenue after they had to limit attendance at the Lincoln Financial Field stadium under COVID-19 restrictions, according to a one-count complaint seeking a declaratory judgment on the matter that was first filed in the Philadelphia Court of Common Pleas in March.

At Factory Mutual's request, Court of Common Pleas Judge Ramy I. Djerassi removed the case to the Eastern District of Pennsylvania last month. But the Eagles say there is no federal question at hand and argue that the matter should go to the state, where numerous similar COVID-19 insurance disputes are playing out.

"Declining federal jurisdiction over this declaratory judgment action would allow the state courts to carefully develop state law governing Coronavirus insurance coverage," reads a motion to remand the case filed Friday by the Eagles.

The team added that it was seeking a remand order "so that the state court can resolve the novel questions of state insurance law at issue, and so that this Court can avoid interference in the delicate state regulatory issues involved and give appropriate respect to the important state interests implicated by this action."

Factory Mutual argued in an April motion for removal that federal court was appropriate because the company is headquartered out of state in Rhode Island, and because a judgment in favor of the Eagles would lead to insurance payouts greater than the $75,000 threshold required to bring a case to federal court.

The insurer claims the Eagles have failed to show physical loss or damage to the stadium. Rather, Factory Mutual says that the stadium sat empty under government orders in what amounts to a "loss of use" claim that is excluded from the team's contract.

Whether business lost to COVID-19 can be counted as physical damage has emerged as a thorny question in cases playing out nationwide.

The Eagles' play on Friday comes as organizations battle insurers over revenue lost to social-distancing requirements in more than 1,000 cases across the country, according to a database maintained by the University of Pennsylvania. Factory Mutual alone is combating at least 39 cases as of early May, including one by the Sacramento Kings NBA franchise in California.

But the Eagles say in their motion Friday that Pennsylvania appellate courts have had little chance to shape COVID-19 related insurance coverage because most cases are removed to federal courts.

The University of Pennsylvania found that federal courts are friendlier to insurers when it comes to motions to dismiss, while state courts tend to side with plaintiffs. States dismiss COVID-19 coverage cases at a rate of a little over 52 percent, while federal courts toss just over 92 percent of claims, the school found. Federal courts are also more likely to dismiss permanently, according to the research.

"Federal district courts in Pennsylvania have repeatedly and unanimously held that the presence of COVID-19 — whether present at a specific insured property or supposedly 'ubiquitous' in a general area — is not physical loss or damage," Factory Mutual said in its motion to dismiss.

According to a court filing Monday, the parties have agreed that U.S. District Judge Michael M. Baylson should address the remand motion before the motion to dismiss.

Lawyers for the Eagles declined to comment on pending litigation.

Representatives for Factory Mutual did not immediately respond to a request for comment.

The Philadelphia Eagles Limited Partnership is represented by Linda Kornfeld, Charles A. Fitzpatrick IV, James T. Giles and James R. Murray of Blank Rome LLP.

Factory Mutual Insurance Company is represented by Richard D. Gable, Jr. of Butler Weihmuller Katz Craig LLP.

The case is Philadelphia Eagles Limited Partnership v. Factory Mutual Insurance Company, case number 2:21-cv-01776, in the U.S. District Court for the Eastern District of Pennsylvania.

--Additional reporting by Melissa Angell and Shawn Rice. Editing by Peter Rozovsky.

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