Plaintiffs' Omnibus Response to Supplemental Authority — In re Society Insurance COVID-19 MDL

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Plaintiffs' omnibus response to Society Insurance's currently-cited supplemental authority, filed November 9, 2020 in In re: Society Insurance Co. COVID-19 Business Interruption Protection Insurance Litigation, MDL No. 2964, Master Docket No. 20 C 5965, in the U.S. District Court for the Northern District of Illinois before Judge Edmond E. Chang. It is submitted under the Court's November 2, 2020 Minute Order (Doc. No. 69) and gives five reasons the Court should give little weight to the defendant's supplemental filings. The response argues that Society should be estopped by positions it took before the Judicial Panel on Multidistrict Litigation in MDL No. 2942, that no state appellate court has ruled on the coverage question, and that the cited trial court decisions involve different policy language. It attaches as Exhibit A Society's opposition to the motion for transfer.

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UNITED STATES DISTRICT COURT 
FOR THE NOTHERN DISRTRICT OF ILLINOIS 
EASTERN DIVISION 
 
 
IN RE: SOCIETY INSURANCE CO. COVID-
19 BUSINESS INTERRUPTION 
PROTECTION INSURANCE LITIGATION 
 
 
 
 
This Document Relates to All Cases 
 
 
 
MDL No. 2964 
 
Master Docket No. 20 C 5965 
 
Judge Edmond E. Chang 
 
Magistrate Judge Jeffrey I. Cummings 
 
 
PLAINTIFFS’ OMNIBUS RESPONSE TO SOCIETY INSURANCE’S 
CURRENTLY-CITED SUPPLEMENTAL AUTHORITY  
 
INTRODUCTION 
 
In accordance with the Court’s November 2, 2020 Minute Order (Doc. No. 69), Plaintiffs, 
by their undersigned counsel, respectfully submit this omnibus response to Defendant Society 
Insurance’s (“Society”) currently-cited supplemental authority.  There are at least five reasons why 
the Court should, as it indicated at the November 2, 2020 Initial Pretrial Conference, give little 
weight to Society’s supplemental filings.  First, Society’s reliance on these “supplemental 
authorities” directly conflicts with the position that Society recently took before the Judicial Panel 
on Multidistrict Litigation (“JPML”).  See Society’s Opposition to Mot. for Transfer, attached hereto 
as Exhibit A. Second, not a single one of the purported “supplemental authorities” that Society cites, 
which reach the opposite conclusion of other courts reviewing similar language and applying the 
same rules of policy interpretation, is the final decision on the law of any state with respect to 
business interruption insurance coverage for COVID-19 related losses under any insurance policy, 
because no state appellate court has ruled on that issue—let alone any state court of last resort.  Third, 
as demonstrated in additional detail herein, the supplemental decisions are distinguishable from this 

2 
 
case because they are based on the application of different policy language to different factual 
allegations.  Indeed, many of the dismissal motions ruled on thus far in the more than 1,300 COVID-
19 business interruption cases pending across the United States contain contractual language that the 
Society policies plainly do not contain—namely, a virus exclusion.  Fourth, the trial court decisions 
on which Society relies not only are wrongly decided, they are readily distinguishable, because 
among other things, Plaintiffs expressly allege many forms of direct physical loss of or damage to 
covered property, including structural alterations of that property.  Fifth, numerous trial courts have 
correctly concluded that allegations of direct physical loss of or damage to property, such as those 
contained in Plaintiffs’ bellwether complaints, are sufficient to state a claim under insurance policy 
language similar to or identical to the language in Society’s policies, especially when black-letter 
rules of insurance policy interpretation are properly applied.  For these reasons, the Court should 
reject Society’s supplemental authority in its entirety.  
ARGUMENT 
I. 
Society Should Be Estopped From Presenting Supplemental Authority 
Based on the positions that Society has previously argued before another judicial panel, 
Society should be estopped from presenting the supplemental authorities that it has periodically filed 
in this litigation. Indeed, in its recent filings before the JPML in In re COVID-19 Business 
Interruption Protection Insurance Litigation, MDL No. 2942, Society asserted that centralizing the 
various actions against those insurers who have denied coverage for business interruption losses due 
to the COVID-19 pandemic would be improper, because, as Society argued: 
The non-Society cases consist of the 128 other lawsuits filed against 49 other insurers. 
Some are putative class actions, others are not.  The suits assert various causes of 
action under numerous theories of liability under many different states’ laws. 
Society is not a party in any of those cases, and its insurance policies and coverage 
decisions are not at issue in any of them.  The transfer request is based on the 
superficial “commonality” that all plaintiffs allegedly suffered economic losses due 
to government orders issued to combat the spread of COVID-19 and that their claims 

3 
 
for those losses have been, or are expected to be, denied by their insurers. Plaintiffs 
in these cases “span the entire economy” of the United States, and the request for 
collective adjudication glosses over the different coverages and insurance policy 
language at issue, grounds for recovery being asserted, facts of each claim, 
individual damages allegedly suffered, and the differing state law applicable to 
each claim. 
 
Ex. A, Society’s Opp. To Mot. to Transfer at 2 (emphasis added); see also id. at 3 (describing the 
other COVID-19 coverage actions as involving “different parties, different insurance policy 
language, and different facts”); id. at 4 (characterizing the other cases as bearing only “a superficial 
resemblance” to the actions filed against Society); and id. at 6 (arguing that “[t]he legal issues 
presented, moreover—the interpretation of insurance contracts—are governed by state law, making 
them particularly unsuitable for transfer and centralization”). 
 
In those same JPML filings, Society further argued that centralization would be inappropriate 
because of what Society conceded are the “different insurance contracts” with “distinct policy 
provisions” at issue in the cases.  Id. at 7.  As Society explained, “[t]here are important differences 
in policy provisions and exclusions, and as a result, individual consideration of policy language 
will be required for each case.”  Id. at 7 (emphasis added); see also id. at 7-8 (listing particular policy 
provisions contained in certain insurers’ policies but not in Society’s policies).  And, even when 
policy provisions do have the same name, Society claimed that “there are often differences in those 
policy terms.”  Id. at 8.  As Society argued, “[e]ach insurance contract must be considered on its own 
merit and, where entire coverage parts differ from policy to policy, even the legal issues presented 
are not the same.” Id. at 8-9 (emphasis added). 
 
Ultimately, in arguing against transfer and centralization, Society described substantial 
differences between the actions filed against Society and the actions filed against other insurers: 
There is also no common core of defendants, with 50 separate insurers sued in the 
actions proposed for transfer.  Nor are there common theories of recovery, with 
plaintiffs in various cases alleging claims arising from at least six different types 
of insuring agreements issued by different insurers, including Business 

4 
 
Interruption, Civil Authority, Extra Expense, Sue and Labor, Ingress and Egress, and 
Preservation of Property insuring agreements. Christine Jo Br. at 5.  The need to 
reconcile the unique underlying facts of each case including the nature of the 
plaintiff’s businesses, the type of coverage at issue, the varying degrees of damages 
suffered, and the geographic locality of the parties and corresponding applicable 
state law all disfavor centralization. 
 
Id. at 10 (emphasis added); see also id. (arguing that “contract interpretation demands individual 
consideration of the applicable terms and conditions of each agreement”). 
 
Given the litany of contrary positions that Society argued before the JPML on this very issue, 
Society should be estopped from relying on its previously submitted “supplemental authority,” 
which consists of trial court decisions involving different policies, issued by different insurers, to 
different policyholders, in different states, when Society itself represented to the JPML that such 
cases are completely dissimilar to the actions filed against Society, and, ultimately, prevailed before 
the JPML on that very point. 
 
As the Seventh Circuit has explained, “[j]udicial estoppel is a flexible equitable doctrine 
designed to prevent ‘the perversion of the judicial process,’” by protecting courts from being 
“‘manipulated 
by 
chameleonic 
litigants 
who 
seek 
to 
prevail, 
twice, 
on 
opposite 
theories.’” Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 795 (7th Cir. 2013) 
(internal citations omitted).1  The doctrine is applied where “intentional self-contradiction is being 
used as a means of obtaining unfair advantage in a forum designed for suitors seeking justice. Matter 
of Cassidy, 892 F.2d 637, 641 (7th Cir. 1990) (internal citations omitted). 
Here, Society’s intentional self-contradiction, and the equities of this case, weigh in favor of 
barring Society from relying on its “supplemental authority.”  First, Society’s current position 
 
1 Although state law governs the insurance issues in this proceeding, federal law governs the issue of judicial 
estoppel. Am. Transp. Grp. LLC v. California Cartage Co., LLC, 168 F. Supp. 3d 1074, 1078 (N.D. Ill. 2016) 
(“Unlike res judicata or other preclusion doctrines, as to which the court is bound to apply state law governing 
judgments, judicial estoppel relates to the federal courts’ ability to protect themselves from manipulation and 
should not vary according to the law of the state in which the dispute arose.”). 

5 
 
(attempting to rely on cases involving different insurers who issued different policies) is 
demonstrably inconsistent with the earlier position that it took on this same issue before the JPML, 
where Society argued that the other cases were completely dissimilar from the pending cases against 
Society.  E.g., Ex. A at 4 (characterizing the other cases as bearing only “a superficial resemblance” 
to the actions filed against Society); see also id. at 10 (arguing that “contract interpretation demands 
individual consideration of the applicable terms and conditions of each agreement”).  Second, in its 
order denying transfer, the JPML cited many of the reasons advanced by Society and other insurance 
companies regarding the purported dissimilarities of the various lawsuits against other insurers.  E.g., 
Order Denying Transfer and Directing Issuance of Show Cause Orders, attached hereto as Exhibit 
B, at 3 (“While the policy language for business income and civil authority coverages may be very 
similar among the policies, seemingly minor differences in policy language could have significant 
impact on the scope of coverage.”). Finally, Society would derive an unfair advantage if it were 
allowed to rely on decisions involving different insurers, different policies, and different factual 
allegations, because Society used those purported differences in the cases filed against other insurers 
to argue against the creation of a multidistrict litigation that would have adjudicated all COVID-19 
business interruption cases in one proceeding.  
For these reasons, Society’s prior positions before the JPML estop it from relying on its 
supplemental authority here. 
II. 
Society’s Cited Decisions Should be Given Little, If Any, Weight 
Even if Society were not estopped from relying on its supplemental authority (which, as 
explained above, it should be), this Court should give little, if any, weight to these cases.  
Presumably, Society has cherry-picked the cases it filed as “supplemental authority” because it 
deems them persuasive; however, any perceived value of these cases is suspect at this stage of the 
litigation for two reasons.  First, some courts have granted motions to dismiss, but many have not.  

6 
 
As this Court noted during the November 2, 2020 Initial Pretrial Conference, it is likely that these 
cases will continue to be decided one after another with decisions being handed down going both 
ways on whether motions to dismiss should be granted.  See Nov. 2, 2020 Hr’g. Tr. at 30:21 – 31:22, 
attached hereto as Exhibit C.  Second, none of Society’s proffered decisions are binding on this 
Court.  Indeed, all of the business interruption litigation is at its earliest stages.  Most, if not all, of 
the cases cited by Society were decided without the benefit of discovery.  And, none of the decisions 
have weathered review by an appellate court.  Moreover, the inferences Society has drawn from 
these few select cases adds no substantive value to this Court’s treatment of the Society policies at 
issue in the case sub judice.  For these reasons, even if Society were not estopped from presenting 
these authorities, the Court should give them little, if any, weight. 
III. 
Some of Society’s Cited Decisions Contain Virus Exclusions, While Others Dismissed 
Complaints That Failed to Allege Physical Loss of or Damage to Property 
 
Pointedly, some of the decisions that Society cites as relevant involve insurance policies that, 
unlike Society’s policies, contain an express exclusion for loss or damage resulting from a virus. 
(See Doc. No. 121-1, Gavrilides Mgmt., at 36:21 – 38:8; Doc. No. 121-2, Doc. No. 121-4, Diesel 
Barbershop, at 15 (“Even if the Court had found that the language within the Policies was ambiguous 
and/or that Plaintiffs properly plead direct physical loss to the Properties, the Court finds that the 
Virus Exclusion bars Plaintiffs’ claims.”)). Notably, in pleading the issue of “direct physical loss of 
or damage to” property in those cases, the presence of the virus exclusion may have led some 
litigants to forego some of the strongest allegations of “direct physical loss of or damage”—namely, 
that the virus was present on their property and infested the air in and surface of the property or that 
the immediate threat or presence of the virus and the ensuring government shutdown orders impaired 
the function and diminished the usable space in the property.  Despite the efforts of Society’s CEO 
at the outset of the pandemic to dissuade Society policyholders from submitting claims by falsely 

7 
 
stating that “pandemic events are excluded,”2  the Society policies do not include a virus or pandemic 
exclusion.  Thus, the persuasive value of cases involving virus exclusions is negligible.3  
Moreover, in the cases at bar, Plaintiffs have made physical loss and damage allegations, 
which is important because the decisions cited by Society as supplemental authority also contain a 
finding that the plaintiffs in those cases did not state a claim under the policies at issue because the 
plaintiffs did not actually allege “physical loss” or “physical damage” to their property due to the 
coronavirus in the narrow sense that the courts construed those terms. Those cases stand in stark 
contrast to the allegations contained within the bellwether complaints currently under consideration 
by the Court.  
For example, in the bellwether motions selected by this Court, Plaintiffs alleged their claims 
as follows:  
• Big Onion (20-cv-2005): “Plaintiffs have alleged a physical deprivation of property as a 
result of the ‘continuous presence of the coronavirus on or around Plaintiffs’ premises 
[which] has created a dangerous condition and rendered their premises unsafe and unfit for 
their intended use.’ Specifically, Plaintiffs have alleged that ‘COVID-19 strains physically 
infect and can stay alive on surfaces for at least 17 days, a characteristic that renders 
property exposed to the contagion potentially unsafe and dangerous.’”  (Doc. No. 124-1, 
at 12-13) (internal citations omitted).   
 
• Valley Lodge (20-cv-2813): “[T]he persistence of contamination resulting from COVID-
19 constitutes a ‘loss’ within the meaning of the insurance policy … Specifically, … when 
an object or surface contains live virus, the virus is physically present on surfaces and 
objects, but imperceptible to the human eye, and the objects and surfaces should not be 
used. … [T]he presence of virus on objects and surfaces cannot be reliably eliminated 
because these surfaces will continue to become contaminated as people spread the virus 
throughout their dining experience.”  (Doc. No. 32, at 10-11) (internal citations omitted).  
 
2 See Big Onion Amended Complaint (20-cv-2005) (Doc. No. 29), ¶ 16, Ex. C.  The Insurance Services Office 
(“ISO”) drafted a virus exclusion in the wake of the SARS epidemic in 2003 that is found in many insurers’ 
policies, but that exclusion is indisputably absent from the policies issued by Society Insurance, even though 
the Society Insurance policy form appears to have drawn heavily from ISO form language.  See Big Onion 
Opposition (Doc. No. 124-1) at 7 n.2.  
3 See also, e.g., Tom Baker, “Motion to Dismiss Box Score Update,” COVID Coverage Litigation Tracker, 
https://cclt.law.upenn.edu/2020/10/29/motion-to-dismiss-box-score-update/ (last visited Nov. 6, 2020) 
(noting that with respect to cases lacking a virus exclusion, such as Society’s policies, more motions to dismiss 
have been denied than granted).   

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As the Court observed during the November 2, 2020 Initial Pretrial Conference, the Valley 
Lodge plaintiffs also have submitted an expert affidavit regarding that physical spread of 
the virus that stands unrebutted. Ex. C, Nov. 2, 2020 Hr’g. Tr. at 10:18-24. 
 
• Rising Dough (20-cv-0623): “Because the Restaurants have alleged that (1) COVID-19 
presented a dangerous physical condition on property, (2) the presence of COVID-19 
renders property impure, (3) the presence changes the property’s substance and 
contaminates interior building surfaces, and (4) the presence and threat of COVID-19 
forced the Restaurants to reduce business on their property to avoid further harm, the 
Restaurants sufficiently allege ‘direct physical loss or damage.’” (Doc. No. 26 at 16) 
(internal citations omitted).   
 
Thus, unlike the plaintiffs in the cases that Society cites as “supplemental authority,” Plaintiffs in the 
bellwether cases have not limited their allegations to loss of use of their property due to the executive 
orders, and they have alleged “physical loss of” or “physical damage to” their premises due to the 
presence and spread of the coronavirus.   
IV. 
The Cases Offered by Society Are Distinguishable for the Reasons Outlined Above and 
in the Bellwether Plaintiffs’ Response Briefs 
 
Based on a review of the various notices of supplemental authority,4 Society has offered the 
following supplemental authority, all of which is distinguishable:   
• Gavrilides Mgmt. Co., et al. v Mich. Ins. Co., Case No 20-258-CB-C30 (Cir. Ct. Mich.) 
(applying Michigan law): This bench ruling from a state court judge in Michigan is inapt 
 
4 Society filed Notices of Supplemental Authority in each of the cases in which the Court is considering 
bellwether motions (see Big Onion Tavern Group, LLC, et al. v. Society Ins. (“Big Onion”) (20-cv-2005) 
(Doc. Nos. 120, 133); Valley Lodge Corp. v. Society Ins. (“Valley Lodge”) (20-cv-02813) (Doc. Nos. 43, 55); 
Rising Dough, Inc., et al. v. Society Ins. (“Rising Dough”) (20-cv-00623) (Doc. No. 35)), as well as over a 
dozen other cases. See Kedzie Boulevard Café, Inc., et al. v. Society Ins. (20-cv-02692) (Doc. Nos. 26, 38); 
Peg Leg Porker Restaurant, LLC v. Society Ins. (3:20-cv-00337) (Doc. No. 28); The Barn Investment LLC, 
et al. v. Society Ins. (20-cv-03142) (Doc. Nos. 27, 38); 351 Kingsbury Corner, LLC v. Society Ins. (20-cv-
02589) (Doc. Nos. 34, 40); Dunlays Management Services LLC v. Society Ins. (20-cv-2524) (Doc. Nos. 37, 
40); Roscoe Same LLC, et al. v. Society Ins. (20-cv-02641) (Doc. Nos. 38, 47); Biscuit Café Inc., et al. v. 
Society Ins. (20-cv-02514) (Doc. Nos. 42, 55); Ciao Baby on Main LLC v. Society Ins. (20-cv-03251) (Doc. 
Nos. 21, 26); Cardelli Enterprise, LLC v. Society Ins. (20-cv-03251) (Doc Nos. 28, 33); Deerfield Italian 
Kitchen, Inc. v. Society Ins. (20-cv-03896) (Doc. Nos. 25, 31); Billy Goat Tavern I, Inc. v. Society Ins. (20-
cv-02068) (Doc. Nos. 54, 58); Riverside Enterprises, LLC v. Society Ins. (20-cv-04178) (Doc. No. 23); Purple 
Pig Cheese Bar & Pork Store, LLC v. Society Ins. (20-cv-03164) (Doc. No. 24); The Whistler LLC v. Society 
Ins. (“Whistler”) (20-cv-03959) (Doc. No. 26); 726 West Grand LLC v. Society Ins. (20-cv-03432) (Doc. No. 
43). 
  

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and distinguishable for the reasons stated in the Big Onion Opposition (20-cv-2005) (Doc. 
No. 124-1) at 10 n.3&4.    
 
• Rose’s 1, LLC v. Erie Ins. Exch., Case No. 2020 CA 002424B (Sup. Ct. D.C.) (applying 
District of Columbia law): This ruling from a state court judge in the District of Columbia 
is inapt and distinguishable for the reasons stated in the Big Onion Opposition (Doc. No. 
124-1) at 10 n.3&4.  See also, Valley Lodge Motion for Leave, No. 1:20-cv-02813 Doc. 
No. 50-1).  
 
• Diesel Barbershop LLC, et al. v. State Farm Lloyd’s, Case No. 5:20-cv-461-DAE (W.D. 
Tex.) (applying Texas law): This ruling  involves materially different policy language that 
covers “accidental direct physical loss of insured property” rather than “direct physical 
loss of or damage to property” and is further inapt and distinguishable for the reasons 
stated in the Big Onion Opposition (Doc. No. 124-1) at 10 n.3&4. See also, Valley Lodge 
Motion for Leave, No. 1:20-cv-02813 Doc. No. 50-1).  
  
• Inns by the Sea v. California Mut. Ins. Co., 20-cv-1274 (Sup. Ct. Ca.) (applying California 
law): This ruling from a California state court judge is a one-sentence order that contains 
no analysis.   
 
• 10E, LLC v. Travelers Indemnity Co. of Connecticut, et al., Case No. 2:20-cv-04418-
SVW-AS, 2020 WL 5095587 (C.D. Cal. Aug. 28, 2020) (applying California law):  This 
ruling is based on the holding that “’[d]etrimental economic impact’ does not suffice” to 
allege “direct physical loss of or damage to” property and that “[a]n insured cannot 
recover by attempting to artfully plead temporary impairment to economically valuable 
use of property as physical loss or damage.” Id., at *5.  Based on this holding, the Court 
found: “Plaintiff's FAC attempts to make precisely this substitution of temporary impaired 
use or diminished value for physical loss or damage in seeking Business Income and Extra 
Expense coverage.” Id. Specifically, the court rejected the insured’s claim for “diminished 
value” to its property due to the executive orders and the “labeling of the insured property 
as non-essential.”  Id. at 2. Therefore, this case is distinguishable because Plaintiffs here 
allege both “physical loss of” and “physical damage to” its premises due to the presence 
of a harmful condition. This case is further distinguishable because, unlike the Society 
policies, the policy at issue contained a virus exclusion. Id.  
 
• Sandy Point Dental, P.C. v. The Cincinnati Ins. Co., Case No. 20-cv-2160 (N.D. Ill. Sep. 
21, 2020) (applying Illinois law):  This case is distinguishable for at least four reasons. 
First, the “critical policy language” at issue in Sandy Point—“direct physical loss to 
property at the premises”—is more narrow than the language in the Society policies, 
which covers “direct physical loss of or damage to” property.  Id. at 2, 4. Second, unlike 
the Plaintiffs here, Sandy Dental “fail[ed] to allege” the “presence of the virus on its 
physical surfaces,” id. at 4, leading the court to hold: “In essence, plaintiff seeks insurance 
coverage for financial losses as a result of the closure orders.”  Id. at 5.  Thus, instead of 
also alleging “physical damage” due to the presence of a harmful condition, as the 
Plaintiffs have done here, Sandy Dental’s claim was predicated solely on the “partial loss 
to the properties from loss of use” caused by the executive orders. Id. at 3. Third, the 

10 
 
court’s conclusion that the phrase “direct physical loss” (which again is materially 
different than the language in the Society policies) requires “physical alteration” of 
property is contrary to the decision of courts following black-letter insurance law on 
policy interpretation and holding that the presence of a harmful element, such as asbestos 
fibers, on or around the insured premises constitutes property damage because it is 
harmful to occupants of the building, not because it physically alters the building 
necessitating repair or replacement of any altered part of the building.  Fourth, the Sandy 
Point opinion is predicated on the finding that Sandy Dental “need not make any repairs 
or change any part of the building to continue its business.”  Id. at 5.  But, unlike a dental 
office, the bars and restaurants operated by the Plaintiffs did have to physically alter and 
change the structure and layout of their indoor dining and bar areas to continue to operate 
safely and in compliance with the executive orders. See, e.g., Big Onion Opposition (20-
cv-2005) (Doc. No. 124-1, at 18) (“While some businesses that do not depend on indoor 
gatherings in confined spaces have been able to reconfigure their properties to make them 
safe during the pandemic, it is possible that Plaintiffs, whose business models do depend 
on in-person gatherings, will not be able to do so until the COVID-19 pandemic is over.”)   
 
• 
Pappy’s Barber Shops, Inc. v. Farmers Group, Inc., Case No. 20-cv-907-CAB-BLM 
(S.D. Cal. Sep. 22, 2020) (applying California law):  This decision is distinguishable 
because, unlike the Plaintiffs in this case, the plaintiffs in that case “focus” only on the 
alleged “direct physical loss of” due to the “loss of the ability to continue operating their 
business as a result of the government orders.”  Id. at 6-7. Specifically, the court noted 
“the complaint does not allege that COVID-19 or the coronavirus itself caused a direct 
physical loss triggering coverage under the Policy. Rather, the complaint alleges only that 
the government orders themselves caused direct physical loss and damage to Plaintiffs’ 
property. Id. at 4. The court rejected this argument, finding that “the government orders 
did not constitute direct physical loss or damage to property.”  Id. at 7.  Importantly, the 
policy at issue in Pappy’s also contained a virus exclusion, which the insured argued did 
not apply because “the efficient proximate cause of [Plaintiffs’] losses was precautionary 
measures taken by the state to prevent the spread of COVID-19 in the future, not because 
coronavirus was found on or around Plaintiffs’ insured properties.”  Id. at 4. Thus, as with 
many of the plaintiffs across the country that have had their COVID-19 business 
interruption claims dismissed, Pappy’s Barbershop failed to actually allege physical loss 
or damage to property caused by the virus in order to try to avoid the application of a virus 
exclusion.  However, again, no such exclusion is found in the Society policies.   
 
V. 
The COVID-19 Business Interruption Decisions Society Insurance Failed to Mention 
Are More Applicable to the Allegations At Issue in the Bellwether Motions and 
Underscore Why This Litigation Should Proceed  
 
Contrary to Society’s suggestion during the November 2, 2020 Initial Pretrial Conference, 
courts have not universally held that COVID-19 business interruption insurance claims fail as a matter 

11 
 
of law.  As noted in the response to the bellwether motions,5 and in the Notices of Supplemental 
Authority filed by Rising Dough6 and Valley Lodge7 several courts have already rejected the same 
types of arguments made by Society and denied similar (proffered) dispositive motions.  Importantly, 
the only court Plaintiffs are aware of (Judge Bough in the United States District Court for the Western 
District of Missouri) to consider allegations of “physical loss of or damage to” property due to the 
spread of the coronavirus similar to those alleged by Plaintiffs has repeatedly held that such 
allegations are sufficient to state a claim:  
• Studio 417, 2020 WL 4692385, at *4  (holding plaintiffs adequately alleged a direct 
physical loss because COVID-19 “is a physical substance” that “lives on and is active 
on insert physical surfaces, and is also emitted into the air,” and that “COVID-19 
allegedly attached to and deprived Plaintiffs of their property, making it unsafe and 
unusable, resulting in direct physical loss to the premises and property.”) (emphasis 
added).  
 
• K.C. Hopps, Case No. 20-cv-00437-SRB (finding that “Studio 417 involves the same 
Defendant, similar insurance provisions, and similar factual allegations” and holding 
“[f]or substantially the same reasons as those in the Studio 417 Order, the Court finds 
that Plaintiff’s claims against Defendant are adequately stated”) 
 
• Blue Springs Dental Care LLC v. Owners Ins. Co., Case No. 20-CV-00383-SRB 
(W.D. Mo. Sept. 21, 2020) (attached hereto as Exhibit D) (“Plaintiffs respond that 
they have sufficiently pled their insured properties were physically damaged, arguing 
they have adequately alleged that ‘the presence of COVID-19 on and around the 
insured property deprived Plaintiffs of the use of their property and also damaged 
it.’ Plaintiffs also contend they sufficiently allege a physical loss, arguing their 
allegations that Plaintiffs were forced to end or dramatically reduce all operations at 
 
5 See Big Onion Opposition (20-cv-2005) (Doc. No. 124-1), at 9-10, 12 (citing Studio 417, Inc. v. Cincinnati 
Ins. Co., No. 20-CV-03127-SRB, 2020 WL 4692385.   
6 See Rising Dough Notice of Supplemental Authority (20-cv-00623) (Doc. No. 41) (citing Studio 417, 2020 
WL 4692385 and K.C. Hopps, LTD. v. The Cincinnati Insurance Company, Inc., Case No. 20-cv-00437-SRB 
(W.D. Mo. Aug. 12, 2020)); See Rising Dough Second Notice of Supplemental Authority (20-cv-00623) 
(Doc. No. 46) (citing Optical Services USA JC1 v. Franklin Mut. Ins. Co., No. BER-L-3681-20 (Sup. Ct. N.J. 
Aug. 13, 2020) (transcript).  
7 See Valley Lodge, 1:20-cv-02813, Notice of Supplemental Authority (Doc. No. 57) (citing Studio 417, Inc. 
v. The Cincinnati Insurance Company, Case No. 20-cv-03127-SRB; Blue Springs Dental Care, LLC, et al., 
v. Owners Insurance Company, Case No. 20-cv-00383-SRB; Urogynecology Specialists of Florida, LLC v. 
Sentinel Insurance Company, Ltd., Case No. 6:20-cv-1174-Orl-22EJK;  K.C. Hopps, Ltd. v. The Cincinnati 
Insurance Company, Inc., Case No. 20-cv-00437 SRB). 

12 
 
their clinics because of ‘actual contamination by COVID-19’ as well as related 
restrictions imposed by the Stay Home Orders that ‘prohibited the public from 
accessing Plaintiffs’ covered premises.’”) (emphasis added) (internal citations 
omitted).    
 
Other judges across the country have likewise denied motions to dismiss COVID-19 business 
interruption lawsuits based on the finding that it would be premature to resolve such claims at the 
pleading stage without discovery.  See, e.g., Urogynecology Specialist of Florida LLC v. Sentinel Ins. 
Co. Case No. 20-cv-01174 (M.D Fla. September 24, 2020) (attached hereto as Exhibit E) (“[T]his 
Court finds that Plaintiff has stated a plausible claim at this juncture. Plaintiff alleged the existence 
of the insurance contract, losses which may be covered under the insurance contract, and Sentinel’s 
failure to pay for the losses. These allegations, when read in the light most favorable to Plaintiff, are 
facially plausible”); Taps & Bourbon on Terrace, LLC v. Underwriters at Lloyds London, Case No. 
20-cv-00375 (Penn. Ct. Common Pleas. Oct. 26, 2020) (attached hereto as Exhibit F); Francois Inc. 
v. Cincinnati Ins. Co., Case No. 20-cv-201416 (Ohio Ct. Common Pleas Sept. 29, 2020) (attached 
hereto as Exhibit G) (holding the plaintiff’s “complaint states claims which arguably fit the terms 
and conditions of the insurance policy and therefore the claims and defenses need to be developed 
with a record.”).  
Moreover, one court has granted a motion for summary judgment filed by a policyholder 
seeking COVID-19 business interruption losses, holding that: “In ordinary terms, this loss is 
unambiguously a ‘direct physical loss,’ and the Policies afford coverage.”  North State Deli LLC v. 
Cincinnati Ins. Co., Case No. 20-cv-02569 (N.C. Sup. Ct. Oct. 9, 2020) (attached hereto as Exhibit 
H).   In reaching this conclusion, the Court held:  
The parties sharply dispute the meaning of the phrase “direct physical loss.” 
Cincinnati argues that “the policies do not provide coverage for pure economic harm 
in the absence of direct physical loss to property, which requires some form of 
physical alteration to property.” Even if Cincinnati’s proffered ordinary meaning is 
reasonable, the ordinary meaning set forth above is also reasonable, rendering the 
Policies at least ambiguous. Accordingly, in giving the ambiguous terms the 

13 
 
reasonable definition which favors coverage, the phrase “direct physical loss” 
includes the loss of use or access to covered property even where that property has 
not been structurally altered. 
 
Id., at 6 (emphasis added).  Further, the Court also noted that the policies at issue, like the Society 
policies here, “do not exclude virus-related causes of loss” and held that the “Ordinance or Law,” 
“Acts or Decisions” and “Delay or Loss of Use” exclusions did not apply to the plaintiff’s COVID-
19 business interruption losses “as a matter of law.”  Id. at 7.   
The decisions of these courts in favor of coverage is not surprising.  The plain language of the 
policies favor Plaintiffs, but even if the insurers could offer an alternative reasonable interpretation 
of “direct physical loss of or damage,” they would still not be entitled to deny coverage.  It is black 
letter law, as affirmed recently by the Seventh Circuit, that if insurance policy language is 
“‘susceptible to more than one reasonable meaning,’ an ambiguity exists and it will be construed 
against the insurer.” Berg v. N.Y. Life Ins. Co., 831 F.3d 426, 428-431 (7th Cir. 2016) (reversing 
summary judgment ruling for insurer and holding that, because an ambiguity existed, the policy must 
be construed in favor of coverage); See also, Ins. Co. of Pa v. Océ-USA Holdings, Inc., No. 12 C 
04713, 2012 WL 1283819, at *3 (N.D. Ill. Mar. 26, 2013) (Chang, J.) (holding “if the words in the 
policy are susceptible to more than one reasonable interpretation, they are ambiguous and will be 
construed in favor of the insured and against the insurer who drafted the policy”) (citation omitted); 
Frost ex rel. Anderson v. Whitbeck, 654 N.W.2d 225, 230 (Wis. 2002); see also Just v. Land 
Reclamation, Ltd., 155 Wis. 2d 737, 744–45, 456 N.W.2d 570, 573 (1990) (“Words or phrases in a 
contract are ambiguous when they are susceptible to more than one reasonable interpretation. If we 
determine that the phrase is ambiguous, we must construe the ambiguity in favor of coverage.”) 

14 
 
(internal citations omitted).8  It also is not surprising, given the plain meaning of these terms and the 
rules of insurance policy interpretation, that courts hold that a harmful condition on insured property 
constitutes physical loss or damage.9  While Plaintiffs submit that they have offered the only 
reasonable interpretation of the plain language at issue in Society’s policies, as long as Plaintiffs’ 
interpretation is reasonable, Society’s motions must be denied. 
 
In sum, Society’s reliance on the decisions it cites should be rejected.  But to the extent the 
Court finds decisions from other jurisdictions helpful in deciding the bellwether motions, the cases 
Society has offered should be given little weight, and the court should also consider the more recent 
and more apt decisions from courts that have determined that cases like the bellwether Plaintiffs’ 
cases should proceed. 
CONCLUSION 
For all of the foregoing reasons, Plaintiffs respectfully submit that this Court should reject 
Society’s currently cited “supplemental authority” in its entirety.  
Dated:  November 9, 2020 
 
Respectfully submitted, 
 
 
 
/s/ Shelby S. Guilbert, Jr.    
 
 
 
Shelby S. Guilbert, Jr. 
KING & SPALDING LLP 
1180 Peachtree Street, NE, Suite 1600 
Atlanta, Georgia  30309 
Telephone:  404-572-4697 
 
8  For further discussion about the applicable rules of construction to the policies in this case, see Big Onion 
(20-cv-2005) (Dkt. No. 124-1) at 5-6; Rising Dough (20-cv-00623) (Doc. No. 26) at 25); Valley Lodge (20-
cv-02813) (Doc. No. 32) at 8; Whistler (20-cv-03959) (Doc. No. 24-1) at 6-7.     
9 See, e.g., U.S. Fid & Gaur. Co. v. Wilkin Insulation Co., 144 Ill. 2d 64, 76 (1991) (holding invisible 
substances like asbestos fibers that do not otherwise physically alter a structure can create a “harmful element” 
that qualifies as “property damage”); Bd. of Educ. of Twp. High Sch. Dist. No. 211 v. Int’l Ins. Co., 720 N.E.2d 
622, 625-26 (Ill. App. Ct. 1999) (coverage under all-risk property insurance policy for “all risks of physical 
loss or damage to” was triggered by alleged presence of asbestos-containing material in a “friable condition 
and emitting toxic fibers.”).  

15 
 
sguilbert@kslaw.com 
 
Shannon M. McNulty  
CLIFFORD LAW OFFICES, P.C. 
120 North LaSalle Street, #3100 
Chicago, Illinois  60602 
Telephone:  312-899-9090 
smm@cliffordlaw.com 
 
Adam J. Levitt 
DICELLO LEVITT GUTZLER LLC 
Ten North Dearborn Street, Sixth Floor 
Chicago, Illinois  60602 
Telephone:  312-214-7900 
alevitt@dicellolevitt.com 
 
W. Mark Lanier 
THE LANIER LAW FIRM PC 
10940 West Sam Houston Parkway North 
Suite 100 
Houston, Texas  77064 
Telephone:  713-659-5200 
WML@lanierlawfirm.com 
 
Timothy W. Burns 
BURNS BOWEN BAIR LLP 
One South Pinckney Street, Suite 930 
Madison, Wisconsin  53703 
Telephone: 608-286-2302 
tburns@bbblawllp.com 
 
Plaintiffs’ Interim Steering Committee  
 
 
 

16 
 
 
CERTIFICATE OF SERVICE 
 
I hereby certify that on November 9, 2020, I electronically filed the foregoing with the Clerk 
of the Court for the United States District Court for the Northern District of Illinois by using the 
CM/ECF system. I certify that all participants in the case are registered CM/ECF users and that 
service will be accomplished by the CM/ECF system.  
 
By: /s/  Shelby S. Guilbert, Jr. 
Shelby S. Guilbert, Jr.

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