Final Opinion Granting Dismissal — In re Society Insurance COVID-19 MDL

Record facts

U.S. District Court for the Northern District of Illinois · No. 1:20-cv-05965 · Doc. 398 · 2025-07-30 · Docket on CourtListener

Summary

A Memorandum Opinion and Order entered July 30, 2025 as Document 398 in In re: Society Insurance Co. COVID-19 Business Interruption Insurance Litigation, MDL No. 2964, Master Docket No. 20 C 5965, in the U.S. District Court for the Northern District of Illinois. The opinion grants Society's renewed motions to dismiss and for summary judgment on the remaining Business Income coverage claims and claims under Section 155 of the Illinois Insurance Code, 215 ILCS 5/155. It recounts three bellwether cases brought against Society Insurance by Big Onion Tavern Group, LLC, Valley Lodge Corp. and Rising Dough, Inc. Judge Edmond E. Chang follows decisions issued since the earlier ruling, including Sandy Point Dental, P.C. v. Cincinnati Insurance Company, which holds that direct physical loss requires physical alteration to property. The 23-page opinion states that final judgment shall be entered.

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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 the   
) 
Following Cases: 
 
 
 
) 
 
 
 
 
 
 
 
) 
VALLEY LODGE CORP., 
 
) 
 
 
 
 
Plaintiff, 
 
 
 
) 
No. 20 C 02813 
 
 
 
 
 
 
) 
v. 
 
 
 
 
 
) 
 
 
 
 
 
 
 
 
 
 
 
) 
SOCIETY INSURANCE,   
 
) 
a Mutual Company, 
 
 
) 
 
Defendant.  
 
 
) 
 
 
 
 
 
 
) 
 
 
 
 
 
 
) 
RISING DOUGH, INC. (d/b/a 
 
) 
MADISON SOURDOUGH), et al. 
) 
individually and on behalf of all  
) 
others similarly situated,  
 
) 
 
Plaintiffs, 
 
 
 
) 
No. 20 C 05981 
 
 
 
 
 
 
) 
v. 
 
 
 
 
 
)  
 
 
 
 
 
 
) 
SOCIETY INSURANCE,  
 
) 
 
Defendant.  
 
 
) 
 
 
 
 
 
 
) 
BIG ONION TAVERN  
 
 
) 
GROUP, LLC, et al., 
 
 
)  
 
Plaintiffs, 
 
 
 
) 
No. 20 C 02005 
 
 
 
 
 
 
) 
v.  
 
 
 
 
 
) 
 
 
 
 
 
 
) 
SOCIETY INSURANCE, INC.,  
) 
 
Defendant.  
 
 
) 
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MEMORANDUM OPINION AND ORDER 
 
This multi-district litigation addresses Society Insurance’s denials of business-
income interruption coverage for a variety of restaurants (as well as other businesses 
in the hospitality industry) whose operations were affected by the COVID-19 pan-
demic. For the reasons detailed in this Opinion, Society’s motion to dismiss the cases 
is granted.  
I. Procedural Background 
After appointing counsel to lead the litigation on the Plaintiffs’ behalf, and af-
ter conferring with the parties on which motions to decide as bellwethers, the Court 
picked three cases: Big Onion Tavern Group, LLC, et al. v. Society Insurance, No. 
1:20-cv-02005; Valley Lodge Corp. v. Society Insurance, No. 1:20-cv-02813; and Rising 
Dough, Inc. et al. v. Society Insurance, No. 1:20-cv-05981. See R. 69. Society filed a 
motion to dismiss for failure to state a claim in the Rising Dough action, R. 19, No. 
1:20-cv-05981, and a motion to dismiss for failure to state a claim or, in the alterna-
tive, for summary judgment in the Big Onion and Valley Lodge actions. R. 112, No. 
1:20-cv-02005; R. 16, No. 1:20-cv-02813. 
 
By way of background, the Plaintiffs brought claims alleging coverage under a 
variety of Society’s insurance-policy provisions, including coverages for the interrup-
tion of Business Income and, separately, for Civil Authority and Contamination. The 
Illinois-based Plaintiffs (in the Big Onion and Valley Lodge actions) also brought 
claims under Section 155 of the Illinois Insurance Code, 215 ILCS 5/155, for various 
“vexatious and unreasonable” insurance-claims practices. The substance of these 
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allegations is discussed in much greater detail in, among other orders, the prior opin-
ion on the bellwether motions. R. 131 at 3–10. Society communicated the denial of 
the Plaintiffs’ claims for coverage in several ways: preemptively, by circulating a 
memorandum to its insurance-agency partners on March 16, 2020, implying that its 
policies would not cover any pandemic-related claims; by denying individual claims 
filed by certain Plaintiffs; and in a March 27, 2020 memorandum to all policyholders 
declaring that “pandemic events” are generally excluded from insurance coverage. 
See id. at 8–10. 
The Court denied, for the most part, Society’s motions to dismiss and its alter-
native summary judgment motions. R. 131. The Court agreed with Society that the 
claims under the Civil Authority and Contamination coverages, as well as the Sue 
and Labor provision of Society’s standard policy, could not proceed. Id. at 24–29. No 
civil authority had prohibited access to the premises nor to the immediate surround-
ing area, both of which were required to trigger Civil Authority coverage. Id. at 24–
25. Nor had the Contamination coverage been triggered, because the limitation on 
the insureds’ business operations was not caused by contamination of the premises 
(or equipment) themselves (and indeed, the insureds had continued to operate their 
businesses in limited form). Id. at 26–27. And the Sue and Labor provision was not 
even an independent basis for coverage, but instead set forth the steps that the in-
sured had to take to mitigate losses and to track expenses. Id. at 28–29.  
But the Court determined that the claims under the policy’s Business Income 
coverage and Illinois Insurance Code Section 155 survived the motions. Id. at 12–24, 
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29–31. Each side then brought a motion following up on the summary judgment de-
cision, seeking to consolidate and streamline the litigation. R. 152, Pls.’ Mot. for 
Leave to File Master Cons. Am. Compl.; R. 175, Defs.’ Mot. to Dismiss All Claims 
Premised upon Civil Authority/Contamination. The Court granted the Plaintiffs’ mo-
tion in part and denied Society’s motion as unnecessary, though the Court allowed 
further motion practice against the Master Consolidated Amended Complaint. 
R. 229, Memorandum Opinion and Order.  
 
Afterwards, however, decisions in other cases interpreting similar (and indeed 
mostly identical) business-income coverage provisions were issued concluding that 
the key requirement for coverage—“direct physical loss”—was not satisfied by the 
mere loss of the use of the business premises. Instead, as detailed further below, the 
decisions almost uniformly held that there must be some physical effect or alteration 
to the insured property, not just a loss of its use. So Society moved to dismiss all of 
the actions against it. 
II. Analysis 
A. Standard of Review 
 
“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to 
state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police 
of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[A] complaint must contain 
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible 
on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. 
at 570). These allegations “must be enough to raise a right to relief above the 
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speculative level.” Twombly, 550 U.S. at 555. The allegations that are entitled to the 
assumption of truth are those that are factual, rather than mere legal conclusions. 
Iqbal, 556 U.S. at 678-79. 
 
Summary judgment must be granted “if the movant shows that there is no 
genuine dispute as to any material fact and the movant is entitled to judgment as a 
matter of law.” Fed. R. Civ. P. 56(a). A genuine issue of material fact exists if “the 
evidence is such that a reasonable jury could return a verdict for the nonmoving 
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating sum-
mary judgment motions, courts must view the facts and draw reasonable inferences 
in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 
(2007). The Court may not weigh conflicting evidence or make credibility determina-
tions, Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011), 
and must consider only evidence that can “be presented in a form that would be ad-
missible in evidence.” Fed. R. Civ. P. 56(c)(2). The party seeking summary judgment 
has the initial burden of showing that there is no genuine dispute and that they are 
entitled to judgment as a matter of law. Carmichael v. Village of Palatine, 605 F.3d 
451, 460 (7th Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); 
Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this burden is met, the ad-
verse party must then “set forth specific facts showing that there is a genuine issue 
for trial.” Anderson, 477 U.S. at 256. 
 
 
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B. Business Income Coverage 
 
As relevant now, with the Business Income coverage as the sole remaining ba-
sis for coverage, Society renews the dismissal motion given the contrary weight of 
authority that has been issued since the initial opinion. Society is correct: the weight 
of authority, including state court opinions that bear on each of the state jurisdictions 
at issue in these cases, now demands dismissal.  
 
Remember that the Business Income coverage arises from a specific part of the 
policies issued by Society: the Businessowners Special Property Coverage Form, sec-
tion 5, Additional Coverages. Amongst the additional coverages is coverage for the 
loss of Business Income during a suspension of operations, and it reads as follows1:  
g. Business Income 
 
(1) Business Income 
 
 
 
(a) We will pay for the actual loss of Business Income you sustain 
due to the necessary suspension of your “operations” during the “period of res-
toration.” The suspension must be caused by direct physical loss of or damage 
to covered property at the described premises. The loss or damage must be 
caused by or result from a Covered Cause of Loss…. 
 
 
 
(b) We will only pay for loss of Business Income that you sustain 
during the “period of restoration” and that occurs within 12 consecutive 
months after the date of direct physical loss or damage. 
 
The task of interpreting this Business Income coverage provision, like other 
interpretive endeavors on insurance policy-coverage questions, generally speaking 
can be resolved as a matter of law—if there are no textual ambiguities as applied to 
 
 
1The text of the policies (including the Business Income coverage provision) is 
identical across all of the plaintiffs. R. 14, 20 C 5981, Exh. A; R. 1, 20 C 2813, Exh. B; 
R. 29, 20 C 2005, Exh. D.  
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the facts. Roman Catholic Diocese of Springfield in Ill. v. Maryland Cas. Co., 139 F.3d 
561, 565 (7th Cir. 1998) (applying Illinois law); American Family Mut. Ins. Co. v. 
American Girl, Inc., 673 N.W.2d 65, 73 (Wis. 2004) (applying Wisconsin law). Under 
Illinois law, absent ambiguity, insurance policies are given “their plain, ordinary 
meaning ….” Zurich Am. Ins. Co. v. Infrastructure Eng’g, Inc., 248 N.E.3d 1072, 1082 
(Ill. 2024). And insurance policies are construed “as a whole,” id. at 1082–83. The 
same principles apply under Wisconsin law: insurance-policy text is given its “com-
mon and ordinary meaning it would have in the mind of a lay person.” Secura Su-
preme Ins. Co. v. Estate of Huck, 986 N.W.2d 810, 815 (Wisc. 2023) (cleaned up).2 
Also, “[i]f possible, a court should interpret a contract so that all parts are given 
meaning.” Id. (quoting Whirlpool Corp. v. Ziebert, 539 N.W.2d 883, 886 (Wisc. 1995)). 
So too for Indiana, where insurance terms are given “their clear and ordinary mean-
ing” absent ambiguity, Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249, 251 (Ind. 
2005) (citing Am. States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind. 1996)), and policy 
provisions are read together “to harmonize” them, “rather than place them in con-
flict.” Dunn, 836 N.E.2d at 252.  
The same two interpretive principles apply under Iowa law. Undefined insur-
ance-policy terms take their “ordinary meaning.” Postell v. American Family Mut. 
Ins. Co., 823 N.W.2d 35, 41 (Iowa 2012) (citing Interstate Power Co. v. Ins. Co. of N. 
Am., 603 N.W.2d 751, 754 (Iowa 1999)). And, not surprisingly, the policy is construed 
 
 
2This opinion uses (cleaned up) to indicate that internal quotation marks, alterations, 
and citations have been omitted from quotations. See Jack Metzler, Cleaning Up Quotations, 
18 Journal of Appellate Practice and Process 143 (2017). 
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“as a whole.” Postell, 823 N.W.2d at 41 (citing Greenfield v. Cincinnati Ins. Co., 737 
N.W.2d 112, 118 (Iowa 2007)). Minnesota applies the same tools of construction: pol-
icy terms are interpreted “as a whole, and unambiguous language must be given its 
plain and ordinary meaning.” Wesser v. State Farm Fire and Cas. Co., 989 N.W.2d 
294, 299 (Minn. 2023) (quoting Henning Nelson Constr. Co. v. Fireman’s Fund Am. 
Life Ins. Co., 383 N.W.2d 645, 652 (Minn. 1986)). Lastly, the same goes for Tennessee: 
“An insurance contract must be interpreted fairly and reasonably, giving the lan-
guage its usual and ordinary meaning.” Travelers Indem. Co. of Am. v. Moore & As-
socs., Inc., 216 S.W.3d 302, 306 (Tenn. 2007) (cleaned up) (citing Naifeh v. Valley 
Forge Life Ins. Co., 204 S.W.3d 758, 768 (Tenn. 2006)). And “insurance policies should 
be construed as a whole in a reasonable and logical manner.” Moore & Assocs., 216 
S.W.2d at 306 (cleaned up) (citing Standard Fire Ins. Co. v. Chester O’Donley & As-
socs., Inc., 972 S.W.2d 1, 7 (Tenn. Ct. App. 1998)).   
Returning to the specific policy here, the prior opinion in this case concluded 
that there was ambiguity in the key operative text of the Business Income coverage 
provision, R. 131 at 4–5 (quoting Business Income coverage provision), specifically 
whether the loss suffered by the policyholders was “caused” by “direct physical loss,” 
Businessowners Special Property Coverage Form, A.3. The opinion reasoned that the 
coronavirus and the shutdown orders could be interpreted, by a reasonable jury, to 
be the “cause” of the loss of business income. R. 131 at 15–19. Likewise, the prior 
opinion held that, when viewed in the Plaintiffs’ favor, a jury could conclude that the 
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businesses suffered a direct “physical” loss of property given the limits placed on their 
usage of each business’ physical space. Id. at 19–23.  
1. Illinois Law 
But the weight of authority decided after the initial opinion dictates interpret-
ing the key terms—loss caused by direct physical loss—as excluding the loss of income 
from the pandemic interruption. First amongst the controlling and pertinent author-
ities is Sandy Point Dental, P.C. v. Cincinnati Insurance Company, 20 F.4th 327, 331–
34 (7th Cir. 2021). In Sandy Point, the Seventh Circuit concluded that, under Illinois 
law, the term “direct physical loss” in the applicable insurance policy required some 
“physical alteration to property” for coverage to apply. Id. at 332–33. The Seventh 
Circuit reasoned that the term “physical” required that the loss at issue “must be 
physical in nature” and must actually work an “alteration” to the property. Id. at 332. 
This interpretation does preclude from its scope the notion that the loss of physical 
space qualifies as a “physical loss,” at this Court previously reasoned, R. 131 at 19–
23. Sandy Point acknowledged that in past cases, some courts had held that a gas 
infiltration of business space “might cause loss of use without any accompanying 
physical alteration.” 20 F.4th at 334. But the disruption in those cases went beyond 
mere “diminished ability to use the property” and instead was so “severe that it led 
to complete dispossession,” which more readily fits as a “direct physical loss.” Id. 
There—like here—though the businesses “preferred use” of the premises was par-
tially limited, “other uses remained possible.” Id. Absent rendering the property itself 
“completely uninhabitable,” the coronavirus did not cause a “direct physical loss.” Id.  
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Likewise, Sandy Point buttressed the interpretation of “direct physical loss” to 
require a physical alteration to property based on the “textual clue[]” that the time 
period of the business-income coverage lasts during the time when property is being 
“repaired, rebuilt, or replaced.” 20 F.4th at 333 (emphasis omitted). The Seventh Cir-
cuit reasoned that “[w]ithout a physical alteration to property, there would be nothing 
to repair, rebuild, or replace.” Id. This point, which gave the Court pause in the earlier 
decision, R. 131 at 22, also undermines the Court’s prior reasoning: in Society’s in-
surance policies, the definition of “Period of Restoration” says that coverage for loss 
of business income “ends on the earlier of” “the date when the property at the de-
scribed premises should be repaired, rebuilt[,] or replaced with reasonable speed and 
similar quality; or the date when business is resumed at a new permanent location.” 
Businessowners Special Property Coverage Form, A.5.g(1)(b); H.12 (emphasis added). 
The prior decision noted that the restoration defined the time period for coverage, 
rather than directly define what is a direct physical loss. R. 131 at 22–23. But the 
operative terms in the restoration period in Society’s policies—repaired, rebuilt, re-
placed—mirror the terms at issue in Sandy Point, which means that they too are 
textual clues to defining direct physical loss as requiring a physical alteration to prop-
erty.  
With the fountainhead of Sandy Point in place for Illinois law, Illinois state 
appellate courts adopted the Seventh Circuit’s reasoning. State & 9 Street Corp. v. 
Society Ins., 2022 WL 2379361, at *8–9, 2022 IL App (1st) 211222-U, ¶¶ 36–39 (Ill. 
App. Ct. June 30, 2022) (unpublished order); JCJ Rest. Co. v. Society Ins., 2022 WL 
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3581726, at *3, 2022 IL App (1st) 211225-U, ¶ 14 (Ill. App. Ct. Aug. 19, 2022) (un-
published order); Lodge Mgmt. Corp. v. Society Ins., 2022 WL 4286341, at *3, 2022 IL 
App (1st) 211133-U, ¶ 14 (Ill. App. Ct. Sept. 16, 2022) (unpublished order). In trying 
to predict the Illinois Supreme Court’s view on this issue, the Illinois Appellate 
Courts held that a direct physical loss must present a “physical alteration” of prop-
erty. E.g., State & 9, 2022 WL 2379361, at *9. Although the decisions were issued as 
unpublished orders under Illinois Supreme Court Rule 23(e), and thus did not have 
binding precedential effect (even on Illinois trial courts), still the decisions could be 
cited for “persuasive purposes.” Ill. S. Ct. R. 23(e)(1). Given the uniformity of holdings 
and reasonings, there is no reason at this point to predict anything other than that 
the Illinois Supreme Court would require a physical alteration of property in order to 
qualify a loss as a “direct physical loss.”3  
The Seventh Circuit also followed suit for Michigan law in Paradigm Care & 
Enrichment Center, LLC v. West Bend Mutual Insurance Company, 33 F.4th 417, (7th 
Cir. 2022). Paradigm Care drew on Michigan Court of Appeals decision, as well as 
other circuit authority, to arrive at the same conclusion as Sandy Point: direct phys-
ical loss requires an alteration of property or complete dispossession of the business 
premises (that is, the loss of all uses for the premises). 33 F.4th at 421–22 (citing 
Gavrilides Mgmt. Co. v. Mich. Ins. Co., .985 N.W.2d 919, 928–28 (Mich. Ct. App. 
 
3Given the Seventh Circuit’s express holding and discussion in Sandy Point, it 
is not surprising that the Seventh Circuit did not certify the question to the Illinois 
Supreme Court. Nor is this district court authorized to do so. Ill. S. Ct. Rule 20(a) 
(authorizing certification of questions only from the Supreme Court of the United 
States and the Seventh Circuit).  
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2022); Brown Jug, Inc. v. Cincinnati Ins. Co., 27 F.4th 398, 403 (6th Cir. 2022); and 
Uncork & Create LLC v. Cincinnati Ins. Co., 27 F.4th 926, 931–34 (4th Cir. 2022)).  
2. Wisconsin Law 
So too with the case law in the other States at issue in this MDL. First, the 
Supreme Court of Wisconsin held, in Colectivo Coffee Roasters, Inc. v. Society Insur-
ance, 401 Wis.2d, 660, 671–74, 974 N.W.2d 442, 447–449 (2022), that the term “direct 
physical loss,” though not defined in Society’s policy, did require some degree of “tan-
gible” harm to the property in light of prior Wisconsin precedent. 974 N.W.2d at 670–
71. Just like Sandy Point, the Wisconsin high court also reasoned that the policy’s 
reference to a restoration period cabined by the property being “repaired, rebuilt, or 
replaced” was a textual clue that the loss in question must “alter the property’s tan-
gible characteristics.” Id. at 671. This definition would exclude, then, the mere loss of 
the business premises for its typical use, because no physical alteration had been 
inflicted on the property. Id. at 673.  
3. Indiana Law 
The same goes for Indiana case law. In Indiana Repertory Theatre v. Cincinnati 
Casualty Company, 180 N.E.3d 403, 410 (Ind. Ct. App. 2022), the Court of Appeals of 
Indiana held that the term “direct physical loss” required that the building premises 
suffer some sort of “alteration.” The Indiana court in turn relied on a New York state 
appellate decision, Roundabout Theatre Co. v. Cont’l Cas. Co., 302 A.D.2d 1, 6–7, 751 
N.Y.S.2d 4, 8 (N.Y. App. Div. 2002), which held that an insured’s premises had not 
suffered a direct physical loss when access to the premises had been cut off by a 
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nearby construction accident—but the accident caused no alteration to the premises. 
Just so with the coronavirus shutdown orders and procedures that cut off access to 
businesses without directly altering the premises. Indiana Repertory Theatre, 180 
N.E.3d at 410 (also citing Oral Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141, 
1145 (8th Cir. 2021)). And, again, the Indiana appellate court pointed to the restora-
tion period’s time limits as a textual clue. Although the Indiana court did not cite 
Sandy Point for the proposition, the point was the same: the confinement of the res-
toration period as the time during which the premises is “repaired, rebuilt, or re-
placed” was another reason to limit coverage for losses to those that cause a “physical 
alteration or impact” to the premises. 180 N.E.3d at 410.  
4. Iowa Law 
 
Next, the Supreme Court of Iowa arrived at a similar conclusion in Wakonda 
Club v. Selective Insurance Company of America, 973 N.W.2d 545, 552–54 (Iowa 
2022); see also Jesse’s Embers, LCC v. Western Agricultural Ins. Co., 973 N.W.2d 507, 
510 (Iowa 2022) (applying Wakonda Club and also denying coverage under the Civil 
Authority provision). The insurance policy at issue there also defined business-in-
come coverage as limited to loss caused by “direct physical loss” of property. Wakonda 
Club, 973 N.W.2d at 549. In interpreting the term for the first time in the context of 
commercial-property policy, the Iowa Supreme Court held that coverage is triggered 
if there is some “physical aspect to the loss of the property.” Id. at 552. Although the 
state high court did not directly frame the definition as requiring a physical alteration 
to the property, the holding of Wakonda Club carried the same core meaning: the 
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“mere loss of use of property, without more, does not meet the requirement for a direct 
physical loss of property.” Id. Even if an alleged “contamination” is the source of the 
loss, there still must be a contamination that is “physical in nature” as to the prop-
erty—loss of use does not suffice. Id. This holding was consistent, the Iowa Supreme 
Court pointed out, with the reasoning of the Eighth Circuit decision that applied Iowa 
law to a pandemic-based business-income claim. Id. at 553 (citing Oral Surgeons, P.C. 
v. Cincinnati Ins. Co., 2 F.4th 1141, 1145 (8th Cir. 2021) (rejecting coverage, under 
Iowa law, pursuant to a policy provision that covered “direct loss” and that defined 
“loss” as “accidental physical loss”)). Applying the definition to the alleged facts, Wa-
konda Club held that the lack of physical harm to the business premises meant that 
the insured’s claim was, at bottom, a request for coverage for mere loss of use of prop-
erty—and thus had to be rejected. Wakonda Club, 973 N.W.2d at 554.  
5. Minnesota Law 
  
There does not appear to be a directly applicable decision from the Supreme 
Court of Minnesota on the definition of direct physical loss. Having said that, the 
Eighth Circuit has thrice held, under Minnesota law, that the term “direct physical 
loss” requires more than loss of use of business premises in this specific context. First, 
in Olmsted Medical center v. Continental Casualty Company, 65 F.4th 1005, 1009 (8th 
Cir. 2023), the insurance policy there provided business-income coverage for “direct 
physical loss.” The appellate court analogized the business interruption arising from 
the coronavirus to a prior case in which a factory sought coverage for losses caused 
by electrical-power outages. Id. (citing Pentair, Inc. v. Am. Guarantee & Liab. Ins. 
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Co., 400 F.3d 613, 616 (8th Cir. 2005)). That prior case too applied Minnesota law, see 
Pentair, 400 F.3d at 614, 616, and held that the factory’s mere inability to function 
did not qualify as a “direct physical loss,” id. at 616. Although Minnesota appellate 
court opinions had allowed coverage for losses caused by contamination, Pentair dis-
tinguished those cases by emphasizing the need for a threshold finding (or, at the 
pleading stage, an allegation) that the contamination was itself physical. 400 F.3d at 
616 (distinguishing Sentinel Mgt. v. N.H. Ins. Co., 563 N.W.2d 296, 300 (Minn. App. 
Ct. 1997) (asbestos fibers); General Mills, Inc. v. Gold Medal Ins. Co., 622 N.W.2d 
147, 152 (Minn. App. Ct. 2001) (pesticide). In line with Pentair, the Eighth Circuit in 
Olmsted Medical likewise distinguished those same two appellate court cases on the 
same grounds, that is, the contamination in those cases “were permanent absent 
some intervention.” Olmsted Medical, 65 F.4th at 1011.  
The opinion also distinguished a Minnesota Supreme Court decision that was 
relied on by the insured. Olmsted Medical, 65 F.4th at 1011 (distinguishing Marshal 
Produce Co. v. St. Paul Fire and Marine Ins. Co., 98 N.W.2d 280, 285–86 (Minn. 
1959)). The Eighth Circuit explained that Marshall Produce involved an insurance 
policy that insured against “all loss or damage by fire,” and thus did not present the 
question of interpreting the key term “physical.” 65 F.4th at 1010–1011. Lastly, the 
Eighth Circuit pointed out, as the Seventh Circuit in Sandy Point and other courts 
had as well, that the time limit on restoration—the time to rebuild, repair, or re-
place—again suggested that the loss had to have some kind of “effect on the underly-
ing property.” Id. at 1012.  So Olmsted Medical concluded that the Minnesota 
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Supreme Court would not interpret direct physical loss to cover a loss that was caused 
only by the loss of use of the property. Id.  
In addition to Olmsted Medical, the Eighth Circuit has two other times rejected 
overage for business-income loss due to the coronavirus. One decision predated 
Olmsted Medical and held (albeit with less discussion than Olmsted Medical) that, 
absent “some physicality to the loss,” there was no direct physical loss to the property. 
Torgerson Props., Inc. v. Cont’l Cas. Co., 38 F.4th 4, 6 (8th Cir. 2022) (citing Oral 
Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141, 1144 (8th Cir. 2021) (as noted 
above, Oral Surgeons applied Iowa law)).  
The third case is Armory Hospitality, LLC v. Philadelphia Indemnity Insur-
ance Company, 87 F.4th 928, 929–30 (8th Cir. 2023). The insured in Armory Hospital 
added one new argument, namely, that the policy there covered (as it does here) not 
just “damage to” property but also “loss of” property, and thus physical damage is not 
needed. Id. at 930. This Court too relied on that textual distinction in the earlier 
opinion. See R. 131 at 20, 22 (relying on disjunctive “or” and separate terms for “dam-
age to” and “loss of”). But, in Armory Hospital, the Eighth Circuit reasoned that the 
distinction did not overcome the requirement that the loss still must involve “physi-
cality.” 87 F.4th at 930 (citing Planet Sub Holdings, Inc. v. State Auto Prop. & Cas. 
Ins. Co., 36 F.4th 772, 775–76 (8th Cir. 2022) (applying Kansas, Missouri, and Okla-
homa law); Monday Restaurants. v. Intrepid Ins. Co., 32 F.4th 656, 658 (8th Cir. 2022) 
(applying Missouri law). Because the pandemic-shutdown orders did not present a 
physical element, the insured had not suffered a loss caused by a direct physical loss. 
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All in all, then, even without a Minnesota Supreme Court decision directly on point, 
the uniform authority points in only one direction: direct physical loss requires more 
than mere loss of the use of property.  
6. Tennessee Law 
 
For the sixth and final State at issue, Tennessee, there do not appear to be 
directly applicable state court decisions. But there is at least one decision from each 
of the three federal district courts in that State holding that similar business-income 
provisions did not cover pandemic-shutdown losses under Tennessee law. In SFDG 
LLC v. Cincinnati Insurance Company, 558 F.Supp.3d 590, 594, 595–96 (E.D. Tenn. 
2021), the Eastern District of Tennessee considered a business-income coverage pro-
vision that required “physical loss.” After canvassing dictionary definitions for the 
meaning of “physical,” the district court held that coverage was limited to “material, 
perceptible harm” to the insured property, “whether in whole or in part.” Id. at 595. 
Put another way, there must be “some form of tangible harm” to the property for 
coverage to apply. Id. Like other cases discussed above, SFDG also relied on the res-
toration-period definition in the policy to delimit the meaning of “physical” loss. Id. 
at 596. The policy at issue there set the restoration time limit to when the premised 
was being “repaired, rebuilt, or replaced.” Id. Those restoration-period terms, the 
court reasoned, suggest that there first must be a “tangible” harm to property what 
would need repair, rebuilding, or replacement. Id. Applied to the pandemic-shutdown 
orders, no “physical” loss had occurred given the absence of tangible harm to the in-
sured property. Id. at 599.  
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Similarly, in Creative Business, Inc. v. Covington Specialty Insurance Com-
pany, 559 F.Supp.3d 660, 668–71 (W.D. Tenn. 2021), the Western District of Tennes-
see held that pandemic-shutdown and limitation orders did not cause a “direct phys-
ical loss,” which was the operative phrase in the coverage provision. The district court 
first noted that a pre-pandemic decision of the Tennessee Court of Appeals suggested 
that “direct physical loss” requires “tangible damage or destruction” of the insured 
property. Id. at 668. Specifically, in Great River Insurance Company v. Edison Auto-
mation, Inc., 2004 WL 892528, at *3 (Tenn. Ct. App. Apr. 23, 2004) (unpublished 
opinion), the Tennessee appellate court rejected coverage for insured property (there, 
electrical-control products) that had “suffered no damage, and no physical loss,” and 
thus did not qualify as “direct physical loss.” Id. at *1, *3. Applying that principle to 
the pandemic-shutdown orders, the district court in Creative Business held that the 
insured (a restaurant) had not suffered a “direct tangible impact” to its premises. 559 
F.Supp.3d at 671 (emphasis added). Consistent with other state decisions discussed 
above, Creative Business also relied on the restoration-period definition, which said 
that the coverage ends when the premises should have been “repaired, rebuilt, or 
replaced.” Id. at 667, 669. A repair or replacement would be needed “only after phys-
ical, tangible injury,” which had not happened to the restaurant’s premises. Id. at 
669. The district court also rejected the insured’s argument that “loss of” property 
had a broader meaning than “damage to” property, at least broader in the sense that 
physical damage to the property was not required. Id. at 670. Creative Business ex-
plained that accepting that proposition would be the near-equivalent of allowing 
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19 
 
coverage for “purely economic losses,” which was generally not allowed under cover-
age for direct physical loss. Id. So the pandemic-shutdown orders did not trigger cov-
erage for the interruption of business income. Id. at 670–71. 
The final example is from the Middle District of Tennessee and deployed simi-
lar reasoning in rejecting coverage. In 1210 McGavock St. Hospitality Partners, LLC 
v. Admiral Indemnity Company, 509 F.Supp.3d 1032, 1042 (M.D. Tenn. 2020), the 
business-income coverage required a “direct physical loss” of property. Id. at 1041. 
The district court reasoned that although the insured had suffered economic loss, it 
had not alleged a direct physical loss. Id. at 1042. The opinion concluded that there 
must be a “physical alteration” of the insured property. Id. (citing Newchops Rest. 
Comcast LLC v. Admiral Indem. Co., 507 F.Supp.3d 616, 623–24 (E.D. Pa. 2020) (ap-
plying Pennsylvania law)). And, again, the district court approvingly quoted and cited 
a case that relied on the restoration-period definition that turned on when the in-
sured’s premises was “repaired, rebuilt, or replaced.” Id. at 1042. Although the opin-
ion did not explicitly quote the restoration-period definition in the policy, presumably 
the text of the definition was the same or similar, because 1210 McGavock reasoned 
that only if the “structure” of a premises were to be “affect[ed]” would there be a need 
to repair, rebuild, or replace. Id. The district court also rejected the proffered distinc-
tion between “loss of” property and “damage to” property, because both clauses still 
required more than just “economic” loss. Id. at 1042–43. The pandemic-suspension 
orders in Tennessee did not cause a direct physical loss of property, so the business-
income coverage did not apply. Id. at 1043. With these cases on the books, and no 
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20 
 
Tennessee authority—whether federal court or state court—pointing the other way, 
the better prediction is that the Tennessee Supreme Court would apply the ordinary-
meaning principle that applies to insurance-coverage questions, see Travelers Indem. 
Co. of Am. V. Moore & Assocs., Inc., 216 S.W.3d 302, 306 (Tenn. 2007), the same way 
as SFDG, Creative Business, and 1210 McGavock.  
 
Against all this, the Plaintiffs point to the very few cases going the other way, 
most prominently the Vermont Supreme Court’s decision in Huntington Ingalls In-
dustries, Inc. v. Ace American Insurance Company, 287 A.3d 515, 532–35 (Vt. 2022). 
In that case, the Vermont high court interpreted the policy’s coverage for “direct phys-
ical damage” to require “a distinct, demonstrable, physical change to property.” Id. at 
533. The distinct category of “direct physical loss” “means persistent destruction or 
deprivation, in whole or in part, with a causal nexus to a physical event or condition.” 
Id. But rather than decide how “direct physical loss” might (or might not) apply to 
losses caused by the pandemic, Huntington Ingalls instead focused on coverage for 
“direct physical damage.” Id. at 533–34. In the state supreme court’s view, the virus’ 
continued presence at the insured’s business premises (a shipyard) and the virus’ 
adherence to surfaces at the premises were sufficient to qualify as an “alteration” of 
the property. Id. at 534. That type of alteration was enough, the Vermont Supreme 
Court held, to qualify as direct physical damage. Id.  
 
But the persuasive force of Huntington Ingalls is largely drained by the starkly 
light touch applied at the pleading stage under Vermont procedural law. Indeed, the 
Vermont Supreme Court emphasized that it was “important” to explain that the 
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21 
 
pleading stage is just to get the case started, so Vermont had adopted an “extremely 
liberal” notice-pleading standard. 287 A.3d at 533 (quoting Mahoney v. Tara, LLC, 
107 A.3d 887, 892 (Vt. 2014)). The result is an “exceedingly low” threshold to move 
the case forward. Huntington Ingalls, 287 A.3d at 533 (quotation omitted). In some 
contrast, Civil Rule 8(a) demands “sufficient factual matter,” which if accepted as 
true, would state a plausible claim. Iqbal, 556 U.S. at 678 (emphasis added). So the 
Vermont Supreme Court set a very low bar, as a procedural matter, to surviving the 
motion for judgment on the pleadings.  
 
Just as importantly, as a substantive matter, Huntington Ingalls simply does 
not align (as this Court’s prior decision does not) with the overwhelming weight of 
authority at this point. As detailed earlier in this Opinion, the uniform case law in 
the pertinent jurisdictions requires that both direct “physical” loss of property or di-
rect “physical” damage to property requires a physical alteration to property beyond 
what Huntington Ingalls sets. The Vermont Supreme Court deemed the fact that the 
virus “adheres” to surfaces to be enough to qualify as alteration. 287 A.3d at 533–34. 
But nothing in the case law described above suggests that adherence to surfaces 
causes the type of physical alteration—rather than adherence at the “microscopic 
level,” id. at 534—required for coverage. Instead, even allowing that some forms of 
contamination might qualify as direct physical loss or damage, the contamination 
would require some “physical aspect to the loss of the property.” E.g., Wakonda Club, 
973 N.W.2d at 552. Without that physical aspect to the loss of property—rather than 
the just adherence to the property’s surfaces—the insured is at bottom asking for loss 
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22 
 
of use of the property. That is a purely economic loss, which even Huntington Ingalls 
recognizes as insufficient to trigger coverage for physical damage (or physical loss). 
287 A.3d at 526, 530, 533. So even for those States in which the state supreme court 
has not spoken, the weight of authority clearly would disagree with the proposition 
that the virus’ adherence to a surface is enough to qualify as direct physical loss. And, 
of course, the state high courts of Wisconsin and Iowa have spoken. Colectivo Coffee 
Roasters, Inc. v. Society Insurance, 401 Wis.2d, 660, 671–74, 974 N.W.2d 442, 447–
449 (2022); Wakonda Club v. Selective Insurance Company of America, 973 N.W.2d 
545, 552–54 (Iowa 2022). Plus, the Seventh Circuit has made its binding (as to lower 
federal courts in the circuit) prediction on Illinois law. Sandy Point Dental, P.C. v. 
Cincinnati Insurance Company, 20 F.4th 327, 331–34 (7th Cir. 2021). As a matter of 
law, there is no coverage under the Business Income provision based on the interrup-
tion of the insureds’ operations caused by the pandemic.  
III. Conclusion 
 
Society’s renewed motions to dismiss and for summary judgment are now 
granted also as to the claims for Business Income coverage (and, concomitantly, as to 
the claims under Section 155 of the Illinois Insurance Code, 215 ILCS 5/155). With 
the previous dismissals and summary judgment decisions against coverage under the 
Civil Authority and the Contamination provisions (in the Big Onion and Valley Lodge 
actions), and against coverage under the Sue and Labor clause (in the Rising Dough 
case), all coverage theories have been rejected. The uniformity of the policy text 
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requires dismissal of the claims in the Master Consolidated Amended Complaint and 
the actions assigned to this MDL. Final judgment shall be entered.  
 
ENTERED:  
 
 
 
 
 
 
 
 
 
 
s/Edmond E. Chang 
 
 
 
 
 
 
 
 
 
Honorable Edmond E. Chang 
 
 
 
 
 
 
 
 
United States District Judge 
 
DATE: July 30, 2025 
Case: 1:20-cv-05965 Document #: 398 Filed: 07/30/25 Page 23 of 23 PageID #:7255

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