Amicus Curiae Brief — Mama Jo’s, Inc., dba Berries, Petitioner v. Sparta Insurance Company
Supreme Court briefFeb 25, 2021
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No. 20-998
IN THE
Supreme Court of the United States
MAMA JO’S, INC., DBA BERRIES,
v.
SPARTA INSURANCE CO.,
Petitioner,
Respondent.
ON PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
ELEVENTH CIRCUIT
AMICUS CURIAE BRIEF OF
UNITED POLICYHOLDERS
IN SUPPORT OF PETITIONER AND REVERSAL
Lorelie S. Masters
Counsel of Record
HUNTON ANDREWS KURTH LLP
2200 Pennsylvania Avenue, NW
Washington, DC 20037
(202) 955-1851
lmasters@huntonAK.com
Dated: February 25, 2021
— Additional Counsel Listed on Following Page —
BATEMAN & SLADE, INC.
STONEHAM, MASSACHUSETTS
Walter J. Andrews
Andrea DeField
HUNTON ANDREWS KURTH LLP
333 SE 2nd Avenue, Suite 2400
Miami, FL 33131
(305) 810-2500
wandrews@huntonAK.com
adefield@huntonAK.com
Michael S. Levine
HUNTON ANDREWS KURTH LLP
2200 Pennsylvania Avenue, NW
Washington, DC 20037
(202) 955-1857
mlevine@huntonAK.com
Nicholas D. Stellakis
Shauna R. Twohig
HUNTON ANDREWS KURTH LLP
60 State Street, Suite 2400
Boston, MA 02109
(617) 648-2800
nstellakis@huntonAK.com
stwohig@huntonAK.com
Cameron L. Davis
HUNTON ANDREWS KURTH LLP
500 West 5th Street, Suite 1530
Austin, TX 78701
(214) 979-2905
cdavis@huntonAK.com
Amy Bach
UNITED POLICYHOLDERS
917 Irving Street, Suite 4
San Franciso, CA 94122
(415) 393-9990
TABLE OF CONTENTS
TABLE OF AUTHORITIES ..................................... iii
INTEREST OF AMICUS CURIAE ............................1
I.
The importance of judicial
oversight of the insurance
industry. .................................................1
II.
The interest of United
Policyholders. .........................................2
III.
United Policyholders’ role as
amicus here. ...........................................4
INTRODUCTION .......................................................4
SUMMARY OF ARGUMENT.....................................6
ARGUMENT ...............................................................8
I.
This case raises issues of
national importance for coverage
of COVID-19 claims. ..............................8
II.
State law requires detailed
evaluation of policy language in
the context of the entire policy
and the factual details of the
claim, but insurers have issued
blind and blanket denials of
coverage..................................................9
A.
The phrase “direct
physical loss of or damage
to” supports coverage of
COVID-19 claims. .......................9
i
B.
III.
IV.
Insurers have deployed an
industry-wide strategy to
deny coverage regardless
of policy language, state
law, or facts. ..............................13
The Eleventh Circuit erred in its
application of Erie and Daubert. .........14
A.
The Eleventh Circuit
failed to apply state law. ...........14
B.
The Eleventh Circuit erred
in its application of
Daubert......................................17
The Eleventh Circuit’s errors are
being applied nationwide. ...................19
A.
Federal courts are
backsliding into a federal
general common law of
insurance coverage. ...................19
B.
The Eleventh Circuit’s
decision is deepening this
dangerous trend, which is
amplified by the Daubert
error. ..........................................21
CONCLUSION ..........................................................22
ii
TABLE OF AUTHORITIES
CASES:
10012 Holdings, Inc. v. Sentinel Ins. Co.,
No. 20 CIV. 4471 (LGS), 2020 WL 7360252
(S.D.N.Y. Dec. 15, 2020) .................................20
Ambrosini v. Labarraque,
101 F.3d 129 (D.C. Cir. 1996) ........................18
Ashcroft v. Iqbal,
556 U.S. 662 (2009) ....................................7, 22
Atma Beauty, Inc. v. HDI Glob. Specialty SE,
No. 1:20-CV-21745, 2020 WL 7770398
(S.D. Fla. Dec. 30, 2020) .................................21
Auto-Owners Ins. Co. v. Anderson,
756 So. 2d 29 (Fla. 2000) ................................16
Azalea, Ltd. v. Am. States Ins. Co.,
656 So. 2d 600 (Fla. Dist. Ct. App. 1995) 16, 17
Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007) ..........................................7
Blue Springs Dental Care, LLC v. Owners Ins. Co.,
No. 20-CV-00383-SRB, 2020 WL 5637963
(W.D. Mo. Sept. 21, 2020)...........................9, 13
Cherokee Nation v. Lexington Ins. Co.,
No. CV-2020-150, 2021 WL 506271
(Okla. Dist. Ct. Jan. 14, 2021) .......................20
iii
Columbiaknit, Inc. v. Affiliated FM Ins. Co.,
No. CIV. 98-434-HU, 1999 WL 619100
(D. Or. Aug. 4, 1999).......................................10
Comm’r v. Bosch’s Estate,
387 U.S. 456 (1967) ........................................15
Correa v. Cruisers, a Div. of KCS Int’l, Inc.,
298 F.3d 13 (1st Cir. 2002) .............................19
Daubert v. Merrell Dow Pharm., Inc.,
509 U.S. 579 (1993) .................. 6, 17, 18, 19, 21
Dino Palmieri Salons, Inc. v. State Auto. Mut. Ins.
Co., No. CV-20-932117
(Ohio Ct. Co. Pl. Nov. 17, 2020) .....................13
Drama Camp Prods., Inc. v. Mt. Hawley Ins. Co.,
2020 WL 8018579
(S.D. Ala. Dec. 30, 2020).................................20
Elegant Massage, LLC v. State Farm Mut. Auto.
Ins. Co., No. 2:20-CV-265,
2020 WL 7249624
(E.D. Va. Dec. 9, 2020) .............................13, 14
Ellis v. Gallatin Steel Co.,
390 F.3d 461 (6th Cir. 2004) ..........................18
Erie R. Co. v. Tompkins,
304 U.S. 64 (1938) .................................. passim
Essex Ins. Co. v. BloomSouth Flooring Corp.,
562 F.3d 399 (1st Cir. 2009) ...........................10
iv
Farmers Ins. Co. of Oregon v. Trutanich,
858 P.2d 1332 (Or. App. 1993) .......................10
Foremost Ins. Co. v. Medders,
399 So. 2d 128 (Fla. Dist. Ct. App. 1981) ......16
German All. Ins. Co. v. Lewis,
233 U.S. 389 (1914) ..........................................1
Gooding v. Wilson,
405 U.S. 518 (1972) ........................................15
Goodwill Indus. of Orange Cnty. v. Philadelphia
Indem. Ins. Co., No. 30-2020-01169032-CUIC-CXC, 2021 WL 476268
(Cal. Super. Ct. Jan. 28, 2021) .......................20
Graspa Consulting, Inc. v. United Nat’l Ins. Co.,
No. 1:20-cv-23245, 2020 WL 7062449
(S.D. Fla. Nov. 17, 2020) ................................21
Gregory Packaging, Inc. v. Travelers Prop.
Cas. Co. of Am., No. 2:12-CV-04418 WHW,
2014 WL 6675934 (D.N.J. Nov. 25, 2014) .....10
Guar. Tr. Co. of N.Y. v. York,
326 U.S. 99 (1945) ..........................................14
Hampton Foods, Inc. v. Aetna Cas. & Sur. Co.,
787 F.2d 349 (8th Cir. 1986) ..........................10
Hancock Labs., Inc. v. Admiral Ins. Co.,
777 F.2d 520 (9th Cir. 1985) ............................2
v
Homeowners Choice Prop. & Cas. v. Maspons,
211 So. 3d 1067 (Fla. Dist. Ct. App. 2017) ....16
Humana Inc. v. Forsyth,
525 U.S. 299 (1999) ..........................................4
Infinity Exhibits, Inc. v. Certain Underwriters at
Lloyd’s, London, No. 8:20-CV-1605-T30AEP,2020 WL 5791583
(M.D. Fla. Sept. 28, 2020) ..............................21
JGB Vegas Retail Lessee, LLC v. Starr Surplus
Lines Ins. Co., No. A-20-816628-B
(Nev. Dist. Ct. Dec. 1, 2020) .....................13, 20
Johnson v. Mead Johnson & Co.,
754 F.3d 557 (8th Cir. 2014) ..........................18
Julian v. Hartford Underwriters Ins. Co.,
110 P.3d 903 (Cal. 2005) ..................................4
Karen Trinh, DDS, Inc. v. State Farm Gen. Ins. Co.,
No. 5:20-CV-04265-BLF, 2020 WL 7696080
(N.D. Cal. Dec. 28, 2020) ................................20
Karmel Davis & Assocs. v. Hartford Fin’l Svcs.
Grp., Inc., No. 1:20-CV-02181-WMR,
2021 WL 420372 (N.D. Ga. Jan. 26, 2021) ....22
KD Unlimited Inc. v. Owners Ins. Co.,
No. 1:20-CV-2163-TWT,
2021 WL 81660 (N.D. Ga. Jan. 5, 2021) ........21
Keene Corp. v. Ins. Co. of N. Am.,
667 F.2d 1034 (D.C. Cir. 1981) ........................2
vi
Kumho Tire Co. v. Carmichael,
526 U.S. 137 (1999) ........................................20
Largent v. State Farm Fire & Cas. Co.,
842 P.2d 445 (Or. App. 1992) .........................10
Matzner v. Seaco Ins. Co.,
No. CIV. A. 96-0498-B, 1998 WL 566658
(Mass. Super. Aug. 12, 1998) .........................10
McKinley Dev. Leasing Co. v. Westfield Ins. Co.,
No. 2020CV00815, 2021 WL 506266
(Ohio Com. Pl. Feb. 9, 2021) ..........................21
Mena Catering, Inc. v. Scottsdale Ins. Co.,
No. 1:20-CV-23661, 2021 WL 86777
(S.D. Fla. Jan. 11, 2021) .................................22
Metro. Lloyds Ins. Co. of Texas v. Werkstell,
No. 416CV00280ALMCAN,
2017 WL 2901700
(E.D. Tex. May 16, 2017) ................................10
Motorists Mut. Ins. Co. v. Hardinger,
131 F. App’x 823 (3d Cir. 2005) .....................10
Murray v. State Farm Fire & Cas. Co.,
203 W. Va. 477 (1998) ....................................10
O’Gorman & Young, Inc. v. Hartford Fire Ins. Co.,
282 U.S. 251 (1931) ..........................................1
vii
Oregon Shakespeare Festival Ass’n v. Great
Am. Ins. Co., No. 1:15-CV-01932-CL,
2016 WL 3267247
(D. Or. June 7, 2016) ........................................9
P.F. Chang’s China Bistro, Inc. v. Certain
Underwriters at Lloyd’s, London,
No. 20STCV17169,
(Cal. Super. Ct. Feb. 4, 2021) .........................20
Perry St. Brewing Co. v. Mut. of Enumclaw Ins. Co.,
No. 20-2-02212-32
(Wash. Super. Ct. Nov. 23, 2020) .............13, 20
Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co.,
311 F.3d 226 (3d Cir. 2002) ............................10
Promotional Headwear Int’l v. Cincinnati Ins. Co.,
No. 20-CV-2211-JAR-GEB,
2020 WL 7078735
(D. Kan. Dec. 3, 2020)............................... 13-14
Rococo Steak, LLC v. Aspen Specialty Ins. Co.,
No. 8:20-CV-2481-VMC-SPF,
2021 WL 268478 (M.D. Fla. Jan. 27, 2021) ...22
Roy H. Johnson, DDS v. Hartford Fire Ins. Co.,
No. 1:20-cv-02000, 2020 WL 2392784
(N.D. Ga. May 8, 2020) ...................................20
Santo’s Italian Cafe LLC v. Acuity Ins. Co.,
No. 1:20-CV-01192, 2020 WL 7490095
(N.D. Ohio Dec. 21, 2020) ...............................20
viii
Seabulk Offshore, Ltd. v. Am. Home Assur. Co.,
377 F.3d 408 (4th Cir. 2004) ............................2
Sentinel Mgmt. Co. v. N.H. Ins. Co.,
563 N.W.2d 296 (Minn. Ct. App. 1997)..........10
Studio 417, Inc. v. Cincinnati Ins. Co.,
478 F. Supp. 3d 794 (W.D. Mo. 2020) ............13
Sullivan v. Standard Fire Ins. Co.,
956 A.2d 643 (Del. 2008) ................................10
Sun Cuisine, LLC v. Certain Underwriters at
Lloyd’s, London, No. 1:20-CV-21827,
2020 WL 7699672 (S.D. Fla. Dec. 28, 2020) ..21
Swift v. Tyson,
41 U.S. 1 (1842) ..........................................7, 20
T&E Chicago LLC v. Cincinnati Ins. Co.,
No. 20 C 4001, 2020 WL 6801845
(N.D. Ill. Nov. 19, 2020) .................................21
Tappo of Buffalo, LLC v. Erie Ins. Co.,
No. 20-CV-754V(SR), 2020 WL 7867553
(W.D.N.Y. Dec. 29, 2020) ...............................22
Terry Black’s Barbecue, LLC v. State Auto. Mut.
Ins. Co., No. 1:20-CV-665-RP,
2020 WL 7351246
(W.D. Tex. Dec. 14, 2020) ......................... 20-21
Three Palms Pointe, Inc. v. State Farm Fire &
Cas. Co., 250 F. Supp. 2d 1357
(M.D. Fla. 2003) ..............................................17
ix
TRAVCO Ins. Co. v. Ward,
715 F. Supp. 2d 699 (E.D. Va. 2010),
aff’d, 504 F. App’x 251 (4th Cir. 2013) ...........10
Unmasked Mgmt., Inc. v. Century-Nat’l Ins. Co.,
No. 3:20-CV-01129-H-MDD, 2021 WL 242979
(S.D. Cal. Jan. 22, 2021).................................22
Vazquez v. Citizens Prop. Ins. Corp.,
304 So. 3d 1280
(Fla. Dist. Ct. App. 2020) ......................... 15-16
W. Fire Ins. Co. v. First Presbyterian Church,
437 P.2d 52 (Colo. 1968) .................................10
Washington Nat’l Ins. Corp. v. Ruderman,
117 So. 3d 943 (Fla. 2013) ..............................17
West v. Am. Tel. & Tel. Co.,
311 U.S. 223 (1940) ........................................15
Widder v. Louisiana Citizens Prop. Ins. Corp.,
82 So. 3d 294 (La. App. 2011) ........................10
OTHER AUTHORITIES:
2020 Small Business Profile, U.S. Small
Business Administration Office of
Advocacy (2020) ................................................8
American Law Institute, Restatement of the
Law, Liability Insurance § 2, cmt. c
(2019) ................................................................2
x
Amy Bach, Co-Founder & Exec. Dir., UP,
Business Interruption Policies and
Claims, Presentation at NAIC Summer
Nat’l Mtg. of Prop. & Cas. Ins. Comm.
(Aug. 12, 2020) ..................................................3
Amy Bach, Co-Founder & Exec. Dir., UP,
COVID-19 Related Business
Interruption Claims, Coverage Issues,
Disputes and Litigation, NAIC Summer
Nat’l Mtg. of Consumer Liaison Comm.
(Aug. 14, 2020) ..................................................3
A. Bartik et al., How Are Small Businesses
Adjusting to COVID-19? Early Evidence
from a Survey (Harvard Law Sch.
Working Paper Summary, 2020) .....................8
Broward County, Florida Administrator’s
Emergency Order 20-03, “Directing
Shelter-in-Place: Safer at Home Policy”
(Mar. 26, 2020) ...............................................11
CDC, “How COVID-19 Spreads” (updated Oct.
28, 2020)..........................................................12
City of Miami Beach Declaration of a State of
Emergency, Extended Through 11:59
P.M. on February 17, 2021 (Feb. 10,
2021)................................................................11
J.M. Draper, 30 A.L.R.5th 170 (originally
published in 1995) ............................................8
xi
B.J. Ennis, Effective Amicus Briefs, 33 Cath.
U. L. Rev. 603 (1984) ........................................4
Harris County Order of County Judge Lina
Hidalgo, “Stay Home, Work Safe” (Mar.
24, 2020)..........................................................11
M. Jayaweera et al., Transmission of COVID-
19 Virus by Droplets and Aerosols: A
Critical Review on the Unresolved
Dichotomy, Environ. Res. (June 13,
2020)................................................................12
G. Kampf et al., Persistence of Coronaviruses
on Inanimate Surfaces and Their
Inactivation with Biocidal Agents, J.
Hosp. Infection (Jan. 31, 2020) ......................11
Jianyun Lu et al., COVID-19 Outbreak
Associated with Air Conditioning in
Restaurant, Guangzhou, China, 2020,
26 Emerging Infectious Diseases 7 (July
2020)................................................................12
M. Marques et al., Contamination of Inert
Surfaces by SARS-CoV-2: Persistence,
Stability and Infectivity. A Review,
Environ. Research Vo. 193, 110559
(Feb. 2021) ......................................................12
S.L. Miller et al., Transmission of SARS-CoV-
2 by Inhalation of Respiratory Aerosol
in the Skagit Valley Chorale
Superspreading Event, Indoor Air
(Sept. 26, 2020) ...............................................12
xii
New Hampshire Emergency Order # 17
Pursuant to Executive Order 2020-04
(Mar. 26, 2020) ...............................................11
New York City Emergency Executive Order
No. 100 (Mar. 16, 2020) ..................................11
Orange County, Florida Emergency Executive
Order No. 2020-04 Regarding COVID19 (Mar. 24, 2020) ..........................................11
Public Order Under City of Los Angeles
Emergency Authority, “SAFER AT
HOME” (Revised Apr. 10, 2020) ....................11
Special Session One: COVID-19: Lessons
Learned, NAIC (Aug. 10, 2020) .......................3
R.L. Stern et al., Supreme Court Practice 570
(6th ed. 1986) ....................................................4
West Virginia Executive Order No. 9-20 (Mar.
23, 2020)..........................................................11
WHO, “Transmission of SARS-CoV-2:
Implications for Infection Prevention
and Precautions” (July 9, 2020) .....................12
xiii
INTEREST OF AMICUS CURIAE1
I.
The importance of judicial oversight of the
insurance industry.
Policyholders across the country—businesses and
individuals alike—buy “all-risk” insurance policies for
protection against unexpected disaster. Confidence
that insurance will pay spurs growth of our economy
and encourages people and businesses to take risks
and pursue innovation. Insurance therefore is a
crucial engine of the economy and, given its protective
purpose, is imbued with a public purpose.2
At the same time, insurance is woven into the
fabric of our economy through mandatory purchase
requirements,
personal
and
business
risk
management, and pricing of goods and services. Each
jurisdiction regulates insurance contracts and
transactions separately; yet most insurers operate
across jurisdictions. Most insurers serve three
masters—reinsurers, policyholders, and investors
and shareholders—meeting their own revenue
objectives, reasonable expectations of policyholders,
and demands of their investors and shareholders.
Counsel of record for all parties received notice of amicus
curiae’s intention to file this brief at least ten days before the due
1
date. All parties have consented to the filing of this brief. No
counsel for a party authored this brief in whole or in part, and
no person other than amicus, its members, or its counsel made a
monetary contribution intended to fund the preparation or
submission of this brief.
German All. Ins. Co. v. Lewis, 233 U.S. 389, 429-30 (1914)
(“insurance is affected with a public interest”); O’Gorman &
Young, Inc. v. Hartford Fire Ins. Co., 282 U.S. 251, 257 (1931);
(“The business of insurance is … affected with a public
interest….”).
2
1
However, it is crucial that insurance fulfill its
“dominant purpose of indemnity.”3
Judicial oversight is essential to maintain the
purpose and value of insurance in this complex
system. Courts require insurance, the classic
adhesion contract, to pay pursuant to the plain
meaning of the policy language, and they put the
burden on insurers, as the drafters of the boilerplate
language, to show that theirs is the only reasonable
interpretation of the contract terms. If it is not, the
language is ambiguous as a matter of law and must
be construed against the insurer as the drafter, and
in favor of coverage.
II.
The interest of United Policyholders.
Founded in 1991, United Policyholders (“UP”) has
served as a respected voice for the interests of
consumers and policyholders across the country for 30
years. Individual policyholders routinely call upon UP
for help after large-scale national disasters such as
hurricanes in the Gulf and across the Eastern
Seaboard; floods and windstorms in the Midwest; and
wildfires in the West.
In 2020 and 2021, UP has assisted business owners
whose operations have been impacted by COVID-19
and governmental orders. UP has educated
policyholders on COVID-19 insurance issues and
Seabulk Offshore, Ltd. v. Am. Home Assur. Co., 377 F.3d 408,
419 (4th Cir. 2004); Hancock Labs., Inc. v. Admiral Ins. Co., 777
F.2d 520, 523 n.5 (9th Cir. 1985); Keene Corp. v. Ins. Co. of N.
Am., 667 F.2d 1034, 1041 (D.C. Cir. 1981); see also American
Law Institute, Restatement of the Law, Liability Insurance § 2,
cmt. c (2019) (insurance-policy interpretation helps “effect[ ] the
dominant protective purpose of insurance”).
3
2
maintains
a
library
of
resources
at
uphelp.org/COVID. UP routinely engages in nationwide policy work to assist and educate the public,
governmental agencies, legislators, and the courts on
policyholders’ insurance rights. Grants, donations,
and volunteers support UP’s work in three program
areas: Roadmap to Recovery, Roadmap to
Preparedness, and Advocacy and Action.
Public officials, regulators, legislators, academics,
and journalists routinely seek UP’s input on
insurance and related legal matters. UP serves on the
Federal Advisory Committee on Insurance, which
briefs the Federal Insurance Office and U.S. Treasury
Department. UP has been an official consumer
representative to the National Association of
Insurance Commissioners (“NAIC”) since 2009,
monitoring policy language and claim practices and
developing model laws and regulations.
UP has advocated the rights of policyholders and
consumers across the country throughout the
pandemic, addressing coverage related to COVID-19
and governmental orders.4
UP has filed amicus briefs in federal and state
appellate courts across 42 states and in more than 450
cases. This Court and state supreme courts have cited
See Special Session One: COVID-19: Lessons Learned, NAIC
(Aug.
10,
2020),
https://tinyurl.com/yof29m5q,
and
https://tinyurl.com/7beh54o6 (speakers’ biographies); Amy Bach,
Co-Founder & Exec. Dir., UP, Business Interruption Policies and
Claims, Presentation at NAIC Summer Nat’l Mtg. of Prop. &
Cas. Ins. Comm. (Aug. 12, 2020), https://tinyurl.com/41lw1ek9;
Amy Bach, Co-Founder & Exec. Dir., UP, COVID-19 Related
Business Interruption Claims, Coverage Issues, Disputes and
Litigation, NAIC Summer Nat’l Mtg. of Consumer Liaison
Comm. (Aug. 14, 2020), https://tinyurl.com/b7xvqdfp.
4
3
UP amicus briefs. See, e.g., Humana Inc. v. Forsyth,
525 U.S. 299, 314 (1999); Julian v. Hartford
Underwriters Ins. Co., 110 P.3d 903, 911 (Cal. 2005).
III.
United Policyholders’ role as amicus here.
UP seeks to fulfill the classic role of an amicus,
supplementing the efforts of the parties and their
counsel and drawing the Court’s attention to points
that are core to UP’s mission. That is an appropriate
role for UP, as an amicus often can “focus the court’s
attention on the broad implications of various possible
rulings.” R.L. Stern et al., Supreme Court Practice
570-71 (6th ed. 1986) (quoting B.J. Ennis, Effective
Amicus Briefs, 33 Cath. U. L. Rev. 603, 608 (1984)).
UP does that here.
This amicus brief is intended to provide an added
dimension to issues presented by the petition and to
enhance the Court’s understanding of these issues
and how they impact policyholders.
INTRODUCTION
In the case below, Mama Jo’s, Inc. (“Mama Jo’s”)
sought to prove that construction dust and debris
from road construction adjacent to Mama Jo’s
restaurant caused, over a two-year period, “direct
physical loss of or damage” to property under the allrisk policy sold by Sparta Insurance Co. App.3a. The
parties stipulated that construction dust and debris
migrated onto Mama Jo’s premises. Pet. at 3. The
issue below was whether the dust and debris, which
evidence showed contained Portland cement and
other materials that inundated the property
(App.39a), caused “direct physical loss of or damage
to” covered property sufficient to trigger insurance
coverage. Mama Jo’s claimed essentially two forms of
4
loss or damage: (1) loss of or damage to the inside and
outside of its open-air restaurant from two years of
pervasive construction dust and debris, requiring not
only heavy physical remediation but also repainting
of damaged walls and of the parking-lot area; and (2)
loss of or damage to mechanical and audio systems
and the lighting in the outdoors portion of the
restaurant. App.4a-6a; Pet. 3-4.
The district court dismissed the case at summary
judgment, and the Eleventh Circuit affirmed. With
only a superficial reference to Florida state law and
with no express attempt to predict how Florida courts
would rule on the question, the Eleventh Circuit held
that Mama Jo’s had not proved it suffered a “direct
physical loss of or damage to property” sufficient to
trigger coverage. It reached this conclusion because
the Sixth Circuit, in an unpublished decision that was
never cited by a Florida state court and that
interpreted different policy language, had predicted
that Michigan law would find no coverage for
voluntary cleaning and moving costs where a tenant
suffered no “direct physical loss or damage” to its
property from mold, none of its property was actually
damaged or lost, and the building was still
inhabitable. App.21a. The Eleventh Circuit also
upheld summary judgment finding no coverage for
costs to repair or replace mechanical and audio
systems and lighting—based on lack of admissible
expert evidence. App.19a. Even though there was no
dispute that dust and debris from the roadway
construction had blanketed the restaurant, and even
though all of Mama Jo’s experts were qualified, the
Eleventh Circuit held their opinions inadmissible
because the experts had not categorically excluded
5
other sources of dust and had not conducted vigorous
scientific testing.
Mama Jo’s petitioned for a writ of certiorari.
Because the Eleventh Circuit’s errors are affecting
coverage cases nationwide, leading district courts to
short-circuit their duty to ascertain and apply state
insurance-coverage law and leading those courts to
usurp the role of the trier of fact by making factual
determinations at the Rule 12(b)(6) motion to dismiss
stage, amicus files this brief in support of Mama Jo’s.
SUMMARY OF ARGUMENT
The issues that Mama Jo’s raises in its petition
present federal questions of national importance. The
Eleventh Circuit below failed to adhere to two
fundamental precepts of federal jurisprudence: the
requirement that federal courts sitting in diversity
apply the substantive law of the forum state and the
right of civil litigants to a trial.
In its first error—the Erie error5—the Eleventh
Circuit failed to make any genuine attempt to apply
Florida policy-interpretation law and to predict how
Florida courts would decide the coverage question. It
ignored pertinent authority from Florida state courts
and instead relied on federal authority and out-ofstate cases.
In its second error—the Daubert error6—the
Eleventh Circuit imposed the novel and erroneous
requirements that causation experts categorically
exclude all alternative causes and that they conduct
5
Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).
6
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993).
6
strict scientific testing. This new standard usurps the
role of the trier of fact.
Federal courts nationwide are making these same
errors in cases seeking coverage for losses arising
from the COVID-19 pandemic. These courts are
making critical coverage decisions—in the context of
motions to dismiss—without making serious efforts to
determine and apply the coverage law of their forum
states and predict how those states’ courts would
decide the issue. Instead, despite sometimes
acknowledging their duty to apply state law, these
federal courts are nevertheless determining coverage
by following federal courts in other jurisdictions that
have made the same Erie error. This amounts to the
development of a federal general common law of
insurance coverage, a result outlawed since 1938
when Erie overruled Swift v. Tyson, 41 U.S. 1 (1842).
Federal courts are also usurping the role of the fact
finder
and
inappropriately
making
factual
determinations on motions to dismiss. Instead of
applying the Twombly-Iqbal plausibility standard,7
federal courts are routinely disregarding factual
allegations that COVID-19 causes direct physical loss
of and/or damage to the insureds’ property. By
making factual determinations different from the
allegations in a complaint, these courts are
commandeering the jury’s role.
The Eleventh Circuit’s decision is perpetuating and
deepening these errors. Its decision has led many
federal courts to neglect Erie on an issue that is
preeminently one of state law and regulation, and
Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atl. Corp. v.
Twombly, 550 U.S. 544 (2007).
7
7
also to bypass their fundamental duty to leave factual
questions to the trier of fact. The result is certain to
be hundreds of thousands of additional smallbusiness failures, loss of jobs, and pain for families
across the country.
ARGUMENT
I.
This case raises issues of national importance
for coverage of COVID-19 claims.
Policyholders nationwide, often small businesses,
are being devastated by the COVID-19 pandemic.
They are turning to their insurance policies, which
contain boilerplate language the insurance industry
drafted that is the same as or similar to the language
at issue here. The construction of this language
therefore raises questions of national importance.
Small businesses provide 60.6 million jobs in the
United States—more than 47% of United States
employees.8 But the average small business has less
than one month’s cash on hand at any one time.9 They
have been disproportionately hurt by the pandemic.
Millions of these small businesses are among those
who purchased insurance to protect against this type
of catastrophe. Many, if not most, of these policies are
“all risks” policies, which cover all risks except those
specifically excluded. J.M. Draper, 30 A.L.R.5th 170
(originally published in 1995). Coverage varies and
depends on the precise policy language, but a frequent
2020 Small Business Profile,
Administration
Office
of
https://tinyurl.com/13r7sqbs.
8
U.S. Small
Advocacy
Business
(2020),
A. Bartik et al., How Are Small Businesses Adjusting to
COVID-19? Early Evidence from a Survey (Harvard Law Sch.
9
Working Paper Summary, 2020), https://tinyurl.com/5cc5mkly.
8
component of the coverage trigger is that there be
“direct physical loss of or damage to Covered
Property.” See, e.g., Blue Springs Dental Care, LLC v.
Owners Ins. Co., No. 20-CV-00383-SRB, 2020 WL
5637963, at *1 (W.D. Mo. Sept. 21, 2020). This is the
same language that determines coverage in this case.
II.
State law requires detailed evaluation of policy
language in the context of the entire policy and
the factual details of the claim, but insurers
have issued blind and blanket denials of
coverage.
Whether an insurance policy covers a claim
depends on (1) the policy language, (2) governing state
law, and (3) the facts of the claim. However, since the
beginning of the pandemic, insurers have issued
blanket denials of coverage without regard for policy
language and often without factual investigation.
A.
The phrase “direct physical loss of or
damage to” supports coverage of COVID19 claims.
Before this pandemic, courts across the country
construed the phrase “direct physical loss of or
damage to” (and its permutations) to encompass more
than structural injury to property and to include loss
of use of covered property.10 Much like the causative
10 Mama Jo’s notes a “circuit split” concerning how broadly to
construe “physical loss and damage.” Pet. at 10-19. In fact, the
Third Circuit should be listed in the “favor policyholders”
category. See Port Auth. of N.Y. & N.J. v. Affiliated FM Ins. Co.,
311 F.3d 226, 236 (3d Cir. 2002) (presence of asbestos fibers
rendered structure useless or uninhabitable and was “physical
loss or damage”).
9
agents in those cases, such as smoke from wildfires,11
carbon
monoxide,12
ammonia
vapors,13
methamphetamine vapors,14 bacteria,15 mold,16
asbestos,17 and others,18 COVID-19 is an agent that
causes damage and loss of use of property. Indeed,
Oregon Shakespeare Festival Ass’n v. Great Am. Ins. Co., No.
1:15-CV-01932-CL, 2016 WL 3267247, at *9 (D. Or. June 7,
2016).
11
Matzner v. Seaco Ins. Co., No. CIV. A. 96-0498-B, 1998 WL
566658 (Mass. Super. Aug. 12, 1998).
12
Gregory Packaging, Inc. v. Travelers Prop. Cas. Co. of Am., No.
2:12-CV-04418 WHW, 2014 WL 6675934 (D.N.J. Nov. 25, 2014).
13
Farmers Ins. Co. of Oregon v. Trutanich, 858 P.2d 1332, 1336
(Or. App. 1993); Largent v. State Farm Fire & Cas. Co., 842 P.2d
445 (Or. App. 1992).
14
15
Motorists Mut. Ins. Co. v. Hardinger, 131 F. App’x 823 (3d Cir.
2005).
Sullivan v. Standard Fire Ins. Co., 956 A.2d 643 (Del. 2008)
(unpublished); Columbiaknit, Inc. v. Affiliated FM Ins. Co., No.
CIV. 98-434-HU, 1999 WL 619100 (D. Or. Aug. 4, 1999).
16
17
Sentinel Mgmt. Co. v. N.H. Ins. Co., 563 N.W.2d 296, 300
(Minn. Ct. App. 1997).
Motorists Mut. Ins. Co. v. Hardinger, 131 F. App’x 823, 824-26
(3d Cir. 2005) (e. coli); Metro. Lloyds Ins. Co. of Texas v.
Werkstell, No. 416CV00280ALMCAN, 2017 WL 2901700, at *9
(E.D. Tex. May 16, 2017) (“unbearable chemical odor”); Widder
v. Louisiana Citizens Prop. Ins. Corp., 82 So. 3d 294, 296 (La.
App. 2011) (lead-paint dust); Essex Ins. Co. v. BloomSouth
Flooring Corp., 562 F.3d 399 (1st Cir. 2009) (unpleasant odor);
Hampton Foods, Inc. v. Aetna Cas. & Sur. Co., 787 F.2d 349, 352
(8th Cir. 1986) (risk of collapse); TRAVCO Ins. Co. v. Ward, 715
F. Supp. 2d 699 (E.D. Va. 2010), aff’d, 504 F. App’x 251 (4th Cir.
2013) (drywall offgassing); W. Fire Ins. Co. v. First Presbyterian
Church, 437 P.2d 52 (Colo. 1968) (gasoline fumes); Murray v.
State Farm Fire & Cas. Co., 203 W. Va. 477 (1998) (risk of
rockslide).
18
10
hundreds of thousands of businesses have been
deprived of the use of their properties because of
COVID-19.
However, the virus also causes direct physical loss
of and damage to property in other, invisible ways.
Many of the governmental orders to control the
pandemic expressly recognize this fact.19 The virus
spreads not just by human-to-human contact, but
through objects, surfaces, and aerosols, and the virus
remains infectious for days on surfaces.20 The virus
See, e.g., New York City Emergency Executive Order No. 100
(Mar. 16, 2020) (“the virus physically is causing property loss
and damage”), https://tinyurl.com/1gjtvuxj; Public Order Under
City of Los Angeles Emergency Authority, “SAFER AT HOME”
(Revised Apr. 10, 2020) (COVID-19 “physically caus[es] property
loss or damage due to its tendency to attach to surfaces for
prolonged periods of time”), https://tinyurl.com/yf828hq3;
Broward County, Florida Administrator’s Emergency Order 2003, “Directing Shelter-in-Place: Safer at Home Policy” (Mar. 26,
2020) (“this Emergency Order is necessary because … the virus
is physically causing property damage due to its proclivity to
attach to surfaces for prolonged periods of time”),
https://tinyurl.com/3yubyevj; see also City of Miami Beach
Declaration of a State of Emergency, Extended Through 11:59
P.M.
on
February
17,
2021
(Feb.
10,
2021),
https://tinyurl.com/fmac6j69;
Orange
County,
Florida
Emergency Executive Order No. 2020-04 Regarding COVID-19
(Mar. 24, 2020), https://tinyurl.com/f1ltyzi3; West Virginia
Executive
Order
No.
9-20
(Mar.
23,
2020),
https://www.wvlegislature.gov/legisdocs/misc/Exec-Order-9-2020200323.pdf; New Hampshire Emergency Order # 17 Pursuant
to
Executive
Order
2020-04
(Mar.
26,
2020),
https://tinyurl.com/p0goh1oe; Harris County Order of County
Judge Lina Hidalgo, “Stay Home, Work Safe” (Mar. 24, 2020),
https://tinyurl.com/5cawm2rd.
19
See G. Kampf et al., Persistence of Coronaviruses on
Inanimate Surfaces and Their Inactivation with Biocidal Agents,
20
J. Hosp. Infection (Jan. 31, 2020), https://tinyurl.com/3kztdcmn;
11
thereby physically transforms property (indoor air
and surfaces) from a safe condition to a dangerous and
potentially
deadly
condition.
Cleaning
and
disinfecting are beside the point; the ubiquity of the
virus means it is constantly re-introduced.
In 2006, the insurance industry policy-drafting
arm created a virus-specific exclusion in the
recognition that, without it, virus-caused loss or
damage would be covered. Notably, many insurers
elected not to use this exclusion in their policies, the
result being that coverage for virus-associated loss or
damage remained intact.
Importantly, there are permutations in policy
language, some policies including the term
“accidental” and some omitting “physical damage” or
“loss of,” among the differences. This underscores the
importance of close analysis of policy language in light
of the terms of the policy as a whole, state law, and
M. Jayaweera et al., Transmission of COVID-19 Virus by
Droplets and Aerosols: A Critical Review on the Unresolved
Dichotomy,
Environ.
Res.
(June
13,
2020),
https://tinyurl.com/nsk2qog2; Jianyun Lu et al., COVID-19
Outbreak Associated with Air Conditioning in Restaurant,
Guangzhou, China, 2020, 26 Emerging Infectious Diseases 7
(July 2020), https://tinyurl.com/o4v2unp9; M. Marques et al.,
Contamination of Inert Surfaces by SARS-CoV-2: Persistence,
Stability and Infectivity. A Review, Environ. Research Vo. 193,
110559 (Feb. 2021), https://tinyurl.com/49q2czo5; S.L. Miller et
al., Transmission of SARS-CoV-2 by Inhalation of Respiratory
Aerosol in the Skagit Valley Chorale Superspreading Event,
Indoor Air (Sept. 26, 2020), https://doi.org/10.1111/ina.12751;
CDC, “How COVID-19 Spreads” (updated Oct. 28, 2020),
https://tinyurl.com/5xods9ye (recognizing COVID-19 spreads
through respiratory droplets and airborne transmission); WHO,
“Transmission of SARS-CoV-2: Implications for Infection
Prevention
and
Precautions”
(July
9,
2020),
https://tinyurl.com/1utzo2xa (same).
12
the facts of the claim. Numerous courts have done so,
correctly holding that COVID-19 is capable of
triggering coverage by causing direct physical loss of
or damage to relevant property. See, e.g., Elegant
Massage, LLC v. State Farm Mut. Auto. Ins. Co., No.
2:20-CV-265, 2020 WL 7249624 (E.D. Va. Dec. 9,
2020); Studio 417, Inc. v. Cincinnati Ins. Co., 478 F.
Supp. 3d 794 (W.D. Mo. 2020); JGB Vegas Retail
Lessee, LLC v. Starr Surplus Lines Ins. Co., No. A-20816628-B, slip op. at 4 (Nev. Dist. Ct. Dec. 1, 2020);
Dino Palmieri Salons, Inc. v. State Auto. Mut. Ins.
Co., No. CV-20-932117, slip op. at 9 (Ohio Ct. Co. Pl.
Nov. 17, 2020); Blue Springs Dental Care, 2020 WL
5637963 at *4; Perry St. Brewing Co. v. Mut. of
Enumclaw Ins. Co., No. 20-2-02212-32 (Wash. Super.
Ct. Nov. 23, 2020).
At the very least, these decisions, by respected
judges across the country, show that the language is
subject to more than one reasonable interpretation.
As a result, it is ambiguous and coverage cannot be
determined at the Rule 12(b)(6) stage; a factual record
is needed.
B.
Insurers have deployed an industry-wide
strategy to deny coverage regardless of
policy language, state law, or facts.
Insurers nationwide have issued blanket denials of
coverage, regardless of policy language; state law; and
the facts of specific claims, which they often refuse to
investigate. These insurers invariably take the
position that “direct physical loss of or damage to”
property requires tangible, structural alteration of
property in order to trigger coverage. See, e.g., Studio
417, 478 F. Supp. 3d at 801; Promotional Headwear
Int’l v. Cincinnati Ins. Co., No. 20-CV-2211-JAR13
GEB, 2020 WL 7078735, at *4 (D. Kan. Dec. 3, 2020);
Elegant Massage, 2020 WL 7249624, at *7.
The Eleventh Circuit’s decision below is front and
center in the insurance industry’s strategy, with
courts across the country citing it in order to avoid
analysis of the precise policy language and state law
at issue, and to render factual determinations that
are inappropriate on a motion to dismiss. See infra at
19.
III.
The Eleventh Circuit erred in its application of
Erie and Daubert.
The Eleventh Circuit misapplied Erie and Daubert.
A.
The Eleventh Circuit failed to apply state
law.
The Eleventh Circuit failed to apply Erie, thereby
ignoring important rules of construction that Florida
courts must apply and ignoring pertinent Florida
precedent.
Erie is premised on the notion that a federal court
sitting in diversity should reach the same result as
would the forum state’s courts. Guar. Tr. Co. of N.Y.
v. York, 326 U.S. 99, 111 (1945); Erie R. Co. v.
Tompkins, 304 U.S. 64 (1938). Erie requires federal
courts to look to a final decision of a state’s highest
court and, if none, then to predict how the state high
court would decide the issue. However, an Erie
prediction is not a shot in the dark. A “state is not
without law save as its highest court has declared
it”—“[t]here are many rules of decision commonly
accepted and acted upon by the bar and inferior courts
which are nevertheless laws of the state although the
highest court of the state has never passed upon
14
them.” West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237
(1940). The Erie analysis therefore requires
examination of high court and intermediate appellate
court decisions, among other forum-state sources. Id.;
see Gooding v. Wilson, 405 U.S. 518, 525 n.3 (1972);
Comm’r v. Bosch’s Estate, 387 U.S. 456, 465 (1967).
Federal courts are bound to consider the numerous
sources of state law thoroughly before turning for
inspiration to decisions of other federal courts: they
must do not what they think best but what the state
supreme court would deem best. See West, 311 U.S.
at 237. This methodology—scouring state sources for
state high court intent—preserves Erie’s underlying
objective that federal courts sitting in diversity
operate as neutral forums that follow their forum
states’ laws.
This is not what happened here. The Eleventh
Circuit did not engage in any serious Erie analysis
when it concluded that an “item or structure that
merely needs to be cleaned” does not give rise to direct
physical loss to property. It cited two Florida cases,
from which it drew conclusions about what key policy
terms, including “loss,” “direct” and “physical” mean.
App.20a. This analysis was deficient for three main
reasons.
First, the Eleventh Circuit erroneously equated
“loss” with “damage.” To be sure, the court did cite two
Florida cases, but each addresses policy language,
and facts, not at issue here. The policy language at
issue in both cases specifically required “physical
loss,” with the insurer agreeing to pay for “direct loss
to property … only if that loss is a physical loss.” The
first rejected coverage under that language and the
facts at issue. Vazquez v. Citizens Prop. Ins. Corp.,
15
304 So. 3d 1280, 1284 (Fla. Dist. Ct. App. 2020)
(rejecting coverage to replace non-damaged cabinets
to match replacements for damaged cabinets). The
other upheld coverage. Homeowners Choice Prop. &
Cas. v. Maspons, 211 So. 3d 1067, 1069 (Fla. Dist. Ct.
App. 2017) (upholding coverage for failure of drain
pipe to perform its function). Mama Jo’s policy is
materially broader, covering “loss of” property, not
just “loss,” and also “damage to” property—critically
different language. Florida law requires that “loss of”
in these policies mean something different from
“damage.” Foremost Ins. Co. v. Medders, 399 So. 2d
128, 130 (Fla. Dist. Ct. App. 1981). By equating “loss
of” with “damage,” the Eleventh Circuit violated the
Florida legal principles that policy terms not be
rendered superfluous and that words in a policy be
construed in context, not in isolation. Auto-Owners
Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000).
Second, even if “direct physical loss of or damage
to” required that the loss of or damage to property be
“actual” (as the Eleventh Circuit stated despite the
policy not so requiring), a significant mental leap is
needed to conclude that coverage does not apply to
items that “merely need[ ] to be cleaned.” The court
filled this gap not with Florida law and the policy
analysis that Florida law requires, but with federal
precedent and decisions from other states. App.21a.
Third, the Eleventh Circuit ignored pertinent
Florida precedent requiring that the phrase “direct
physical loss of or damage to” be given a broad
construction. Azalea, Ltd. v. Am. States Ins. Co., 656
So. 2d 600, 602 (Fla. Dist. Ct. App. 1995). In Azalea,
a policy covered “direct physical loss of or damage to”
certain property—the same policy language issued to
Mama Jo’s. The question was whether the policy
16
covered loss of or damage to the facility resulting
when a chemical killed the bacterial colony in a
sewage-treatment plant. The appellate court reversed
the trial court, holding that, by adhering to the
interior of the facility and destroying the bacterial
colony that was an integral part of the facility, the
chemical caused direct damage to the plant. Id.
Structural damage was not required. It was “common
sense” that the policy not be construed to deny
coverage for a structure “rendered completely
useless.” Id. This was so even though all that was
necessary was that the plant be cleaned so it could be
reseeded. Id.; see Three Palms Pointe, Inc. v. State
Farm Fire & Cas. Co., 250 F. Supp. 2d 1357, 1364
(M.D. Fla. 2003) (Azalea shows that, “under Florida
law ‘direct physical loss’ includes more than losses
that harm the structure of the covered property”).21
In this way, the Eleventh Circuit’s result was
driven not by Florida law but by federal precedent, in
contravention of Erie.
B.
The Eleventh Circuit
application of Daubert.
erred
in
its
Daubert assigned the federal courts a gatekeeper
role regarding expert evidence. The Eleventh Circuit
has made it a usurping role. In two ways, the
Eleventh Circuit overextended Daubert. First, the
Eleventh Circuit required Mama Jo’s to exclude every
21 This construction is supported by Florida policy-interpretation
principles that the Eleventh Circuit ignored or failed to apply.
Policies are construed liberally in favor of the insured; every
provision should be given meaning; and where language is
susceptible of more than one reasonable interpretation, it is
construed in favor of coverage. Washington Nat’l Ins. Corp. v.
Ruderman, 117 So. 3d 943, 948, 950 (Fla. 2013).
17
possible cause of the loss of or damage to property
aside from the road construction. Second, the court
required vigorous laboratory testing that was
incongruous with the scope of the experts’ opinions.
1. The Eleventh Circuit faulted Mama Jo’s for
failing to exclude every other possible cause of
damage apart from the road construction. App.15a18a. Nothing in Daubert requires an expert to
categorically exclude all other possible causes, nor do
other circuits impose such an onerous requirement.
E.g., Johnson v. Mead Johnson & Co., 754 F.3d 557,
563 (8th Cir. 2014) (“[W]e have consistently ruled that
experts are not required to rule out all possible causes
when performing the differential etiology analysis.”);
Ellis v. Gallatin Steel Co., 390 F.3d 461, 470 (6th Cir.
2004) (same); Ambrosini v. Labarraque, 101 F.3d 129,
140 (D.C. Cir. 1996) (same). If the Eleventh Circuit’s
standard were to stand, there would be no need for a
Daubert gatekeeper because the gate would be firmly
locked. There does not appear to be any indication of
any other source of the severe dust accumulation
Mama Jo’s experienced. And if there were, Daubert
itself presents the solution: “[v]igorous crossexamination, presentation of contrary evidence, and
careful instruction on the burden of proof are the
traditional and appropriate means of attacking shaky
but admissible evidence.” Daubert, 509 U.S. at 596.
By affirming the categorical exclusion of the evidence,
the Eleventh Circuit usurped this role, assigned to the
fact finder.
2. The Eleventh Circuit insisted on vigorous
laboratory testing and faulted Mama Jo’s experts for
performing only visual and tactile inspections.
App.15a-18a. These were matters for the fact finder,
not the gatekeeper. This Court has never required
18
strict “scientific foundations” for expert testimony,
permitting that evidence to be based on personal
knowledge and experience as long as it assists the
trier of fact. Kumho Tire Co. v. Carmichael, 526 U.S.
137, 150 (1999). The district court deemed each expert
qualified to offer his opinion. Each expert used his
knowledge, gained from substantial experience in his
field, to formulate his opinion. Daubert required no
more. See Correa v. Cruisers, a Div. of KCS Int’l, Inc.,
298 F.3d 13, 26 (1st Cir. 2002) (approving visual
inspection as appropriate for mechanic to diagnose
engine problem).
The persuasiveness of the experts’ opinions was for
the fact finder. The Eleventh Circuit erred by
arrogating this role to itself.
IV.
The Eleventh Circuit’s errors are being applied
nationwide.
The Eleventh Circuit’s erroneous decision has
exacerbated errors in COVID-19 coverage cases
nationwide.
A.
Federal courts are backsliding into a
federal general common law of insurance
coverage.
Federal courts faced with COVID-19 coverage
claims are making the same Erie error as the
Eleventh Circuit. In decision after decision, federal
courts are making no real effort to apply the state
standards on policy interpretation or to predict how
the state high court, applying such standards, would
interpret the relevant policy language. Instead,
finding no binding authority by the states’ highest
courts on the precise question, they immediately have
turned to federal decisions from other jurisdictions,
19
many of which have made the same error. The result
is a self-perpetuating series of cases that deny
coverage for COVID-19 claims based on federal
courts’ preferences. This is no different from the
regime of Swift v. Tyson, 41 U.S. 1 (1842), into which
federal courts are backsliding. They are creating a
federal general common law of insurance coverage,
specifically business-income coverage, exactly what
Erie forbids.
The errors are manifest. Where Erie sought to
ensure that no party would obtain an advantage in
substantive law in a federal court sitting in diversity,
being in federal court has inured to the distinct
benefit of one party in many cases: the insurance
company. The trends have seen insurers fare better in
federal courts and worse in state courts.22 The reason
Compare causes favoring policyholders, e.g., McKinley Dev.
Leasing Co. v. Westfield Ins. Co., No. 2020CV00815, 2021 WL
506266, at *2 (Ohio Com. Pl. Feb. 9, 2021); P.F. Chang’s China
Bistro, Inc. v. Certain Underwriters at Lloyd’s, London, No.
20STCV17169, (Cal. Super. Ct. Feb. 4, 2021); Goodwill Indus. of
Orange Cnty. v. Philadelphia Indem. Ins. Co. , No. 30-202022
01169032-CU-IC-CXC, 2021 WL 476268 (Cal. Super. Ct. Jan. 28,
2021); Cherokee Nation v. Lexington Ins. Co., No. CV-2020-150,
2021 WL 506271 (Okla. Dist. Ct. Jan. 14, 2021); JGB, No. A-20816628-B; Perry St., No. 20-2-02212-32; with causes favoring
insurance companies, e.g., Roy H. Johnson, DDS v. Hartford Fire
Ins. Co., No. 1:20-cv-02000, 2020 WL 2392784 (N.D. Ga. May 8,
2020); Drama Camp Prods., Inc. v. Mt. Hawley Ins. Co., No. 1:20CV-266-JB-MU, 2020 WL 8018579 (S.D. Ala. Dec. 30, 2020);
Karen Trinh, DDS, Inc. v. State Farm Gen. Ins. Co., No. 5:20CV-04265-BLF, 2020 WL 7696080 (N.D. Cal. Dec. 28, 2020);
Santo’s Italian Cafe LLC v. Acuity Ins. Co., No. 1:20-CV-01192,
2020 WL 7490095 (N.D. Ohio Dec. 21, 2020); 10012 Holdings,
Inc. v. Sentinel Ins. Co., No. 20 CIV. 4471 (LGS), 2020 WL
7360252 (S.D.N.Y. Dec. 15, 2020); Terry Black’s Barbecue, LLC
v. State Auto. Mut. Ins. Co., No. 1:20-CV-665-RP, 2020 WL
20
for this, amicus believes, is exactly that these federal
courts are disregarding Erie’s instruction to apply the
law of the forum state and predict, through all
available sources, how that forum state would resolve
the issue. They are simply citing themselves.
Erie,
together with the federalism and
jurisprudential wisdom it embodies, requires federal
courts to engage in the effort of applying forum-state
law and predicting how the forum state would resolve
the coverage issue. That is not occurring across the
country in many federal courts.
B.
The Eleventh Circuit’s decision is
deepening this dangerous trend, which is
amplified by the Daubert error.
Federal courts across the country are relying on the
decision below, with its Erie and Daubert errors, to
deflect analysis of state law, factual allegations, and
policy language. By citing to the decision below, these
courts skirt over analysis of state law, offering little
but the most languid nod to governing substantive
law and the policy analysis it requires.23 The Eleventh
Circuit’s faulty Daubert analysis only reinforces these
7351246 (W.D. Tex. Dec. 14, 2020); T&E Chicago LLC v.
Cincinnati Ins. Co., No. 20 C 4001, 2020 WL 6801845 (N.D. Ill.
Nov. 19, 2020); Graspa Consulting, Inc. v. United Nat’l Ins. Co.,
No. 1:20-cv-23245, 2020 WL 7062449 (S.D. Fla. Nov. 17, 2020).
See, e.g., KD Unlimited Inc. v. Owners Ins. Co., No. 1:20-CV2163-TWT, 2021 WL 81660 (N.D. Ga. Jan. 5, 2021); Atma
Beauty, Inc. v. HDI Glob. Specialty SE, No. 1:20-CV-21745, 2020
WL 7770398 (S.D. Fla. Dec. 30, 2020); Sun Cuisine, LLC v.
Certain Underwriters at Lloyd’s, London, No. 1:20-CV-21827,
2020 WL 7699672 (S.D. Fla. Dec. 28, 2020); Infinity Exhibits,
Inc. v. Certain Underwriters at Lloyd’s, London, No. 8:20-CV1605-T-30AEP, 2020 WL 5791583 (M.D. Fla. Sept. 28, 2020).
23
21
courts’ errors in finding facts at the motion to dismiss
stage in plain contravention of the plausibility
standard of Iqbal, 556 U.S. at 678.24
This is not right. Policyholders deserve to have
their claims assayed under the respective state’s law,
not some self-propagating federal general common
law disembodied from state doctrine. Federal courts
must respect—and apply—the proper standard, as
Erie directs. A motion to dismiss is not the stage to
make factual determinations. Policyholders deserve
the opportunity to present evidence to support their
factual allegations, not have those allegations
brushed aside by a court’s inappropriate factual
findings.
CONCLUSION
The
Eleventh
Circuit’s
decision
reflects
fundamental errors, first in its failure to make a
genuine attempt to predict state law and second in its
See, e.g., Rococo Steak, LLC v. Aspen Specialty Ins. Co., No.
8:20-CV-2481-VMC-SPF, 2021 WL 268478 (M.D. Fla. Jan. 27,
2021) (dismissing notwithstanding allegations that virus caused
damage by physically altering property and impairing
functionality of property); Karmel Davis & Assocs. v. Hartford
Fin’l Svcs. Grp., Inc., No. 1:20-CV-02181-WMR, 2021 WL 420372
(N.D. Ga. Jan. 26, 2021) (dismissing on grounds that ability to
clean virus means no physical change to property); Unmasked
Mgmt., Inc. v. Century-Nat’l Ins. Co., No. 3:20-CV-01129-HMDD, 2021 WL 242979 (S.D. Cal. Jan. 22, 2021) (dismissing
because ability to clean means no direct physical loss or
damage); Mena Catering, Inc. v. Scottsdale Ins. Co., No. 1:20CV-23661, 2021 WL 86777 (S.D. Fla. Jan. 11, 2021) (dismissing
despite allegation that virus caused distinct alteration of
property that could not be corrected by disinfection); Tappo of
Buffalo, LLC v. Erie Ins. Co., No. 20-CV-754V(SR), 2020 WL
7867553 (W.D.N.Y. Dec. 29, 2020) (dismissing on grounds that
ability to clean surfaces means no direct physical loss).
24
22
overreach under Daubert. This Court can correct
these errors by granting the petition for certiorari,
summarily reversing the decision below, and
remanding for further proceedings.
Respectfully submitted.
Lorelie S. Masters
Counsel of Record
HUNTON ANDREWS KURTH LLP
2200 Pennsylvania Avenue, NW
Washington, DC 20037
(202) 955-1851
lmasters@huntonAK.com
Walter J. Andrews
Andrea DeField
HUNTON ANDREWS KURTH LLP
333 SE 2nd Avenue, Suite 2400
Miami, FL 33131
(305) 810-2500
wandrews@huntonAK.com
adefield@huntonAK.com
Michael S. Levine
HUNTON ANDREWS KURTH LLP
2200 Pennsylvania Avenue, NW
Washington, DC 20037
(202) 955-1857
mlevine@huntonAK.com
Nicholas D. Stellakis
Shauna R. Twohig
HUNTON ANDREWS KURTH LLP
60 State Street, Suite 2400
Boston, MA 02109
(617) 648-2800
nstellakis@huntonAK.com
23
stwohig@huntonAK.com
Cameron L. Davis
HUNTON ANDREWS KURTH LLP
500 West 5th Street, Suite 1530
Austin, TX 78701
(214) 979-2905
cdavis@huntonAK.com
Amy Bach
UNITED POLICYHOLDERS
917 Irving Street, Suite 4
San Franciso, CA 94122
(415) 393-9990
Dated: February 25, 2021
24
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.