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CNA Underwriters Win Dismissal of Putative Class Actions Seeking COVID-19 Business Interruption Insurance

Paul, Weiss achieved a major victory for commercial insurer CNA Financial Corporation when District Judge Barbara J. Rothstein of the Western District of Washington dismissed with prejudice dozens of consolidated lawsuits seeking business interruption coverage from several insurance underwriters for COVID-19-related losses, including five actions brought against CNA underwriters.

The insureds—small and large businesses in Washington State—had alleged that the insurers’ property damage insurance policies covered revenue lost due to state and local shut-down orders during the pandemic, and sued on behalf of putative statewide and nationwide classes. While hundreds of similar cases seeking COVID-19-related business interruption coverage have been filed in courts across the country, Judge Rothstein’s decision was highly anticipated because of the number of consolidated actions before her.

In addition to moving to dismiss on behalf of the CNA underwriters, Paul, Weiss helped oversee the coordinated motion to dismiss briefing on behalf of the ten insurer group defendants before Judge Rothstein.

In a 75-page opinion, Judge Rothstein concluded that the insurance policies’ business income coverage for “direct physical loss of or damage to” property did not cover losses from COVID-19 and the government shut-down orders. Specifically, Judge Rothstein explained that an “airborne virus that can live only briefly on non-organic surfaces, does not cause damage to those surfaces,” and that “physical loss of” property requires that an “outside peril… cause an inability to interact with the property because of an alteration to its physical status,” not simply an inability to use the property. Judge Rothstein held that coverage was also unavailable under a number of other provisions in the insurance policies.

The Paul, Weiss team that oversaw the motion to dismiss briefing in Washington included litigation partners Chris Boehning and Elizabeth Sacksteder and counsel Hallie Goldblatt.

Paul, Weiss also serves as national coordinating counsel for CNA in its COVID-19 claims response and in over 100 lawsuits across the United States and internationally. Paul, Weiss has secured the dismissal of 27 actions on behalf of CNA thus far.

The Paul, Weiss team advising CNA in these matters includes litigation partners Chris Boehning, Elizabeth Sacksteder and Yahonnes Cleary and counsel Daniel Levi and Hallie Goldblatt. A Paul, Weiss team led by litigation partner Kannon Shanmugam is also overseeing CNA’s appellate response to COVID-19 business interruption lawsuits, including in the 11 appeals already filed in federal and state courts of appeal.

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