Case Management Order No. 4 — In re Society Insurance COVID-19 MDL (N.D. Ill.)

Record facts

U.S. District Court for the Northern District of Illinois · No. 1:20-cv-05965 · Doc. 116 · 2021-01-11 · Docket on CourtListener

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UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF ILLINOIS 
EASTERN DIVISION 
 
IN RE: SOCIETY INSURANCE CO. 
) 
COVID-19 BUSINESS 
 
 
) 
MDL No. 2964 
INTERRUPTION PROTECTION 
) 
INSURANCE LITIGATION 
 
) 
Master Docket No. 20 C 5965 
 
 
 
 
 
 
 
 
) 
 
 
 
 
 
 
 
) 
Judge Edmond E. Chang 
 
 
 
 
 
 
) 
 
 
 
 
 
 
) 
Magistrate Judge Jeffrey I. Cummings 
This Document Relates to All Cases 
) 
 
 
CASE MANAGEMENT ORDER NO. 4 
 
This Order explains the two specific issues to address during the oral argument 
scheduled for January 14, 2021 at 9:30 a.m. on the bellwether motions. 
 
First, the parties should be prepared to discuss whether the disputed term “di-
rect” in the Society Policy’s key textual definition of coverage—“direct physical loss”—
implies a proximate-cause analysis, and (if it does) whether the novel coronavirus has 
proximately caused the Plaintiffs’ alleged loss. The Plaintiffs in the Rising Dough 
case, No. 20-cv-05981, have made some form of that argument. See R. 26 (on the Ris-
ing Dough docket) at 9–11. It appears that proximate cause in determining what has 
caused a loss is applicable under Wisconsin insurance law. See, e.g., Manpower, Inc. 
v. Ins. Co. of the State of Pennsylvania, No. 08-C-0085, 2009 WL 3738099, at *6 (E.D. 
Wis. Nov. 3, 2009); SECURA Ins. v. Lyme St. Croix Forest Co., LLC, 918 N.W.2d 885, 
890-93 (Wis. 2018); Phillips v. Parmelee, 840 N.W.2d 713, 717-19 (Wis. 2013); Fan-
drey ex rel. Connell v. American Family Mut. Ins. Co., 680 N.W.2d 345 (Wis. 2004). 
Minnesota and Tennessee cases appear to follow similar reasoning. See, e.g., 
Case: 1:20-cv-05965 Document #: 116 Filed: 01/11/21 Page 1 of 3 PageID #:2204

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Friedberg v. Chubb & Son, Inc., 691 F.3d 948, 952-53 (8th Cir. 2012) (Minnesota); 
State Bank of Bellingham v. BancInsure, Inc., 823 F.3d 456, 461 (8th Cir. 2016) (Min-
nesota); Capitol Indemnity Corp. v. Braxton, 24 Fed. Appx. 434, 440-41 (6th Cir. 2001) 
(Tennessee); Planet Rock, Inc. v. Regis Ins. Co., 6 S.W.3d 484, 491-92 (C. App. Tenn. 
1999); For Senior Help, LLC v. Westchester Fire Ins. Co., 451 F. Supp. 3d 837 (M.D. 
Tenn. Mar. 31, 2020) (Tennessee); see also Clark v. Sputniks, LLC, 368 S.W.3d 431, 
440-41 (Tenn. 2012). (Counsel need not discuss precisely this set of cases; the Court 
is providing them as an illustration.) 
 
On Illinois law, the parties should be prepared to address the following cases 
in particular (as well as any others that counsel believe are on point). On the one 
hand, Illinois law has been said to disavow a proximate-cause standard in the insur-
ance-coverage context. See, e.g., Sports Arena Mgmt., Inc. v. Great Am. Ins. Group, 
No. 06 C 788, 2007 WL 684003, at *3 (N.D. Ill. Mar. 1, 2007) (citing Transamerica 
Ins. Co. v. South, 125 F.3d 392, 398 (7th Cir. 1997)). On the other hand, some more 
recent Illinois cases (or cases interpreting Illinois law) appear to endorse the proxi-
mate-cause analysis, or at least view it as available if the policy language so specifies. 
See, e.g., Parker v. Allstate Indemnity Co., 427 F. Supp. 3d 1006, 1011 (S.D. Ill. Dec. 
16, 2019) (citing Heuer v. N.W. Nat’l Ins. Co., 33 N.E. 411, 412 (Ill. 1893)); Bozek v. 
Erie Ins. Group, 46 N.E.3d 362, 367-69 (Ill. App. 2d 2015); Moda Furniture, LLC v. 
Chicago Title Land Trust Co., 35 N.E.3d 1139, 1147, 1154-55 (Ill. App. 1st 2015). 
 
To fully address the proximate-cause argument, the parties should be prepared 
to discuss whether the novel coronavirus itself qualifies as a “physical” cause under 
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the language of the policy. Whether the requirement of “physical” loss or cause is 
satisfied might include the presence of the virus on the insured premises; the virus’s 
presence in the general area; or the risk of the virus’s presence (whether on the prem-
ises or more generally). 
 
Second, the parties should be prepared to address how the “repair, rebuild, or 
replace” language in the Policy’s Period of Restoration clause squares with the Plain-
tiffs’ interpretation of the Covered Cause of Loss text. That is, assuming for argu-
ment’s sake only that the Plaintiffs are correct that the virus or the related govern-
ment shut-down orders constitute a Covered Cause of Loss, when will the insured 
properties be “repaired, rebuilt, or replaced” such that the Period of Restoration has 
ended? In other words, what does it mean for the relevant properties to be “repaired, 
rebuilt, or replaced,” if indeed the virus has caused a loss within the meaning of the 
policy coverage? 
 
The Court appreciates counsel’s attention to these issues. 
 
 
 
 
 
 
 
 
 
ENTERED:  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Honorable Edmond E. Chang 
 
 
 
 
 
 
 
 
United States District Judge 
 
DATE: January 11, 2021  
 
Case: 1:20-cv-05965 Document #: 116 Filed: 01/11/21 Page 3 of 3 PageID #:2206

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