Chicago restaurants score small victory in legal battle over pandemic business interruption insurance claims


The Chicago-area restaurants that sued last year after his insurance company denied pandemic-related payments this week after months of frustration. A federal judge on Tuesday denied a motion to dismiss lawsuits filed against Society Insurance, a Madison, Wis.-based niche company. Plaintiffs include well-known entities such as Lettuce Entertain You Enterprises, Billy Goat Tavern, Purple Pig and Big Onion Tavern Group.

Last year, as governments began ordering restaurants to close to prevent the spread of COVID-19, lawyers began flooding the courts with lawsuits against companies like Society Insurance, alleging that those companies refused wrongly payments. Business interruption policies are designed to cover entities if they are unable to operate due to conditions such as fire or natural disaster.

But when it comes to a public health crisis, definitions are blurry. Society Insurance and other companies argued the business interruption policies that many restaurants have focused on property damage. These policies would not cover losses associated with a pandemic.

The restaurants and their attorneys initially began filing suits in March, including a case filed on behalf of six Chicago-area restaurant groups. As the pandemic dragged on and financial losses increased due to the drastic reduction in indoor dining, more lawyers began communicating with each other about their clients’ issues. In October, a federal judge decided to consolidate the claims into one lawsuit. The city’s largest catering company, Lettuce Entertain You, joined as a plaintiff, along with smaller venues such as the owners of the Whistler, the trendy cocktail bar in Logan Square.

Getting the different restaurants and lawyers to coordinate with each other can be considered a success. This type of organization is something that many of those who challenged Governor JB Pritzker’s orders to shut down the Home Service have failed to do. Lawyers for the disgruntled restaurants have mounted various legal arguments against these orders only to see the courts rule against their customers. This, in turn, created legal precedents that made later legal challenges more difficult.

Society Insurance told the Grandstand that he is disappointed but that he “will vigorously defend his interests”. Crain’s points out that Society Insurance isn’t exactly a juggernaut – the company is relatively small by industry standards and might not have the resources to pay out millions of dollars in premiums to plaintiffs.

Some viewed the lawsuits as a losing bet, saying restaurants would face an uphill battle trying to recover payments from insurance companies. the from the grandstand the reports point to this, citing research from the University of Pennsylvania that shows judges across the country typically dismiss more than 80% of similar cases.

Several restaurateurs who spoke to the Grandstand are excited about the news. Nearly a year after the first lawsuit was filed, there is a good chance that the restorers’ arguments will be heard in court.

  • Chicago restaurants score early victory in court in bid for COVID claims [Crain’s]
  • What Billy Goat, Purple Pig and Other Local Restaurants Want From Federal Court [Crain’s]
  • Chicago businesses can sue to seek COVID-19 payments from Society Insurance, judge rules [Tribune]
  • Fox Fire restaurant’s appeal decision is now a legal precedent [Capital Fax]

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