The federal district court found that the insurer had a duty to defend the underlying suit based on damages allegedly arising from exposure to COVID-19. McDonald's Corp. v. Austin Mutual Ins. Co., No. 20 C 5057, Order (N.D. Ill. Feb.22, 2021). The decision is here.
McDonalds was sued for pubic nuisance and negligence based on its decision to remain open during the COVID-19 pandemic without enhanced health and safety standards. The underlying plaintiffs sought an injunction requiring McDonalds to: (1) provide employees with adequate protective equipment; (2) preclude the reuse of face masks; (3) supply hand sanitiser; (4) require that customers wear face masks; (5) monitor employee COVID-19 infections; and (6) provide employees with accurate information about COVID-19.
The suit was tendered to Ausin Mutual, but coverage was denied. Austin Mutual contended that the underlying suit did not seek "damages because of bodily injury." McDonalds responded that but for the underlying plaintiffs contracting COVID-19 (a bodily injury) it would not have to expend money as "damages" to comply with the mandatory injunction in the underlying suit. Further, exposure to the virus constituted "bodily injury" and money spent to comply with the mandatory injunction would constitute "damages" "because of" the exposure to the virus.
McDonalds sued. Austin Mutual moved to dismiss. Regarding "damages," the court found that the mandatory injunction sought by the underlying plaintiffs was also a "damage" because it would require McDonalds to expend money to remediate the continuous and ongoing exposure to the virus.
Considering the phrase "because of," the policy did not say "proximately because of," but merely said "because of." So simple "but for" causation was enough. McDonalds had adequately alleged "but for" causation because "but for" the underlying plaintiffs actual contraction of COVID-19, McDonalds would not have to incur "damages" to comply with a mandatory injunction. Therefore, McDonalds met it burden of alleging that it might be on the hook for "damages" "because of" or "but for" the employees contracting COVID-19.
Finally, three employees had suffered "bodily injury" by contracting the virus. Further, if the underlying plaintiffs prevailed, McDonalds would have to spend money to prevent the virus from entering the restaurants, and to eliminate or mitigate its presence in the restaurants. Those strategies would decrease the risk of bodily injury from exposure to the virus and from the possibility of reinfection. Further, Austin Mutual could have explicitly included a virus exclusion had it intended to not provide coverage for "bodily injury" caused by a virus.
Austin Mutual's motion to dismiss was denied.
