For the second time in less than six weeks, the Ninth Circuit is asking the Supreme Court to answer a question of state law regarding insurance coverage for a business’s losses due to the COVID-19 pandemic.
Today’s federal appellate panel order, in French Laundry Partners, LLP v. Hartford Fire Insurance Co., comes in an appeal from a district court dismissal of a lawsuit brought by a company that had its insurance claim for economic loss denied after its two Napa County restaurants were closed by government pandemic-related health orders.
The specific question the Ninth Circuit asks is: “Is the virus exclusion in French Laundry’s insurance policy unenforceable because enforcing it would render illusory a limited virus coverage provision allowing for the possibility of coverage for business losses and extra expenses allegedly caused by the presence and impacts of COVID-19 at an insured’s properties, including the loss of business due to a civil authority closure order?”
The federal appellate court notes that, “[i]n California, and indeed nationwide, a multitude of COVID-19-related insurance cases are moving through the judicial process” and states, “While both state and federal courts have published opinions providing some guidance, there remains much uncertainty as to how California law applies in many scenarios.”
On December 28, another Ninth Circuit panel referred a different COVID-19 insurance coverage question to the Supreme Court in Another Planet Entertainment, LLC v. Vigilant Insurance Company. (See here.) Although the Supreme Court has not yet agreed to answer the Another Planet question, the French Laundry panel today says the Supreme Court “may gain some efficiencies through concurrent consideration” of the two cases.
After one in a string of Supreme Court refusals to take up COVID insurance issues in state court litigation, we said, “It looks like the only way the court will address the issue is if the Ninth Circuit asks it to,” and we mentioned the French Laundry case as a potential source of a request.
The Supreme Court should let the Ninth Circuit know — give or take — by the end of this month whether it will accept the Another Planet case and by the beginning of April whether it will add French Laundry to its docket. Considering who’s asking, it’s likely the court will take both cases — it has granted 18 of the last 19 Ninth Circuit requests for help in resolving questions of California law, dating back to July 2018. The lone denial during that time was in October 2019.