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Judge declines to dismiss McDonald’s COVID-19 suit against insurer

Posted On: Feb. 23, 2021 1:26 PM CST


A federal district court Monday refused to dismiss a lawsuit filed by McDonald’s Corp. and two of its franchisees over its insurer’s refusal to defend them in COVID-19 litigation filed by the fast-food chain’s employees, three of whom have had symptoms of the virus.

Five workers at four McDonald’s restaurants and their family members and cohabitants had filed the suit against McDonald’s and the franchisees in October, charging public nuisance and negligence because of the fast-food operators’ decision to remain open during the pandemic, while “failing to comply with minimum basic health and safety standards at its restaurants,” according to the litigation in McDonald’s Corp. et al. v. Austin Mutual Insurance Co., which was filed in U.S. District Court in Chicago.

The employees’ suit seeks a mandatory injunction requiring McDonald’s and the franchisees to, among other things, provide their employees with adequate personal protective equipment; preclude the reuse of face masks; supply sanitizer; require that customers wear face masks; monitor employee COVID-19 infections; and provide workers with accurate information about the virus.

Three of the plaintiffs in the case have either contracted the virus or fallen ill and experienced symptoms consistent with it, according to Monday’s ruling.

The policy issued by Austin Mutual, a unit of Madison, Wisconsin-based American Family Mutual Insurance Co., provides coverage for “damages because of ‘bodily injury,’” the ruling said. It does not have a virus exclusion.

“Putting it all together,” if the employees prevail and win entry of the injunction, it will be because of their contraction of the virus, “an indisputable bodily injury,” the ruling said.

“Alternatively, another potential avenue for coverage is that exposure to the Virus is itself a ‘bodily injury’ that (McDonald’s and its franchisees) would be forced to expend ‘damages’ to remedy,” the ruling said.

“Either argument may not wow everyone with its brilliance, and Austin Mutual might even have the better interpretation. But this is not a dispute about the better interpretation: It is a dispute about a potential and legally defensible interpretation,” the ruling said.

No one “can credibly dispute that plaintiffs’ complaint raises a potential argument for coverage” the ruling said in denying Austin Mutual’s motion to dismiss the case.

An insurer attorney had no comment, while plaintiff attorneys did not respond to a request for comment.

Last week, a Los Angeles McDonald’s franchisee was fined more than $125,000 after being accused of retaliating against employees who reported COVID-19 workplace safety violations.