Well, Francis Albert, maybe it was a very good year for city girls who lived up the stairs, with all that perfumed hair, but not so much for the world of liability insurance coverage. Quite simply, it was a very blah year. There wasn’t a single case in 2021 that really rocked the insurance coverage world.
That’s not to say that there weren’t many significant decisions handed down. Of course there were. There always are. And I was still able to find ten particularly significant ones (although, some gave me pause). Look, it happens. It’s just the way the chips fall. It’s too bad. I was hoping that the 21st annual Top 10 coverage cases article would have a little more of a champagne-like pop to it.
As always, there were a few cases that generated a fair amount of buzz, but, for various reasons, didn’t meet the strict Top 10 selection process.
The decision by the Illinois Supreme Court, in West Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., that coverage is owed, under a commercial general liability policy, for violation of the Illinois Biometric Information Privacy Act (BIPA), was met with hyperventilation in some coverage circles over its significance. But its impact is limited to Illinois. As far as I know, BIPA-type statutes do not exist in other states. So Krishna Schaumburg, with no ability to have wide-spread influence, is not the kind of coverage decision that would be selected as one of the year’s ten most significant. My favorite part of the decision – BIPA is a fun word to say.
In Landry’s, Inc. v. Ins. Co. of the State of Pa., the Fifth Circuit held that coverage was owed under a commercial general liability policy, for losses sustained when an unauthorized program was installed on a restaurant’s payment processing devices that enabled card numbers and customer names and other important information to be taken. Since most businesses have a CGL policy and not a cyber policy, any decision that finds coverage for a data breach, under a CGL policy, is quite a big deal. However, the case involved a breach that occurred in 2014-2015 and the policies at issue did not include a data breach exclusion. Given how prevalent these exclusions have been in CGL policies over the past several years, Landry’s is unlikely to have much influence. BIPA
The two biggest insurance coverage stories of the year were, first, the hundreds of opinions addressing coverage for Covid-19 business interruption losses. The second was the ALI Liability Insurance Restatement, which had been quiet since its adoption in 2018, being cited by courts, several times, for substantive purposes. While the ALI Restatement did not dictate any decisions (except, maybe, Thompson v. Widmer Construction (D. Ore. 11/10/2021)), it was cited for substantive purposes in several, i.e., not simply to state a general principle of coverage law.
While the Covid-19 business interruption cases involve property policies, which are not the subject of this annual insurance coverage best-of, the story was just too significant to ignore here. Plus, many involved in liability coverage, and not normally property coverage, all of a sudden found themselves in the thick of Covid-19 business interruption cases. Many who have spent a career thinking that BI meant “bodily injury” were now using it to mean “business interruption.” So the story is relevant to CO readers.
As widely reported, state and federal courts issued hundreds of decisions – both at the trial and appellate level – addressing coverage for Covid-19 business interruption losses. It was a landslide win for insurers. According to Penn Law School’s latest numbers, insurers won 94% of cases before federal district courts and 72% at the state trial level. Insurers have also won every decision from federal circuit courts of appeal.
This is Reagan-Carter, the Globetrotters vs. Washington Generals, Tiger at the 1997 Masters [final round on my wedding day, fyi.]. Even Ted Lasso couldn’t find anything positive in this for policyholders. While the decisions numbered in the several hundreds, I make the case here that one is worthy of being called the most significant. As an aside, I addressed the state of Covid-19 business interruption coverage in a September 29, 2021 article in The Wall Street Journal. https://www.coverageopinions.info/WSJCovidRaid.pdf.
As I set out every year, the process to choose the ten most significant coverage cases works like this. It is a one-man show, devoid of input from others, accountability or checks and balances. Like all endeavors of this sort, the conclusions are highly subjective and in no way scientific. Debate and disagreement is inevitable. In fact, it is wat makes the exercise fun.
But none of this is to say that the selection process is willy-nilly. To the contrary, it is very deliberate and involves a lot of analysis, balancing, hand-wringing and tossing and turning at night. It’s just that only one person is doing any of this.
As for the selection process, it goes throughout the year to identify coverage decisions (usually, but not always, from state high courts) that (i) involve a frequently occurring claim scenario that has not been the subject of many, or clear-cut, decisions; (ii) alter a previously held view on an issue; (iii) are part of a new trend; (iv) involve a burgeoning or novel issue; or (v) provide a novel policy interpretation. Some of these criteria overlap. Admittedly, there is also an element of “I know one when I see one” in the process. In addition, cases that meet the selection criteria are usually (but not always) not included when the decision is appealed. In such situation, the ultimate significance of the case is up in the air.
In general, the most important consideration, for selecting a case as one of the year’s ten most significant, is its potential ability to influence other courts nationally. Many courts in coverage cases have no qualms about seeking guidance from case law outside their borders. In fact, it is routine--especially so when in-state guidance is lacking. The selection criteria operates to identify the ten cases most likely to be looked at by courts on a national scale and influence their decisions.
That being said, the most common reason why many unquestionably important decisions are not selected is because other states do not need guidance on the particular issue, or the decision is tied to something unique about the particular state. Therefore, a decision that may be hugely important for its own state – indeed, it may even be themost important coverage decision of the year for that state – nonetheless will be passed over, as one of the year’s ten most significant, if it has little chance of being called upon by other states at a later time. Similarly, some decisions are not selected because they involve narrow issues that rarely arise.
For example, consider a state high court that issues its first decision addressing the scope of the pollution exclusion. The case answers whether the pollution exclusion should be interpreted broadly, applying to all hazardous substances, or narrowly, applying solely to so-called traditional environmental pollution. This would be a very significant decision for that state. However, given the enormous body of case law nationally, addressing the pollution exclusion, such a decision would be very unlikely to have any influence nationally. It would be just one decision in an ocean of many on the issue. Thus, the decision would not be selected for inclusion here.
If you think I missed a case, tell me. I’ll be the first to admit that I goofed (and I have). It is impossible to be aware of every coverage case decided nationally.
The ten most significant insurance coverage decisions are listed in the order that they were decided.
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