Cohen Milstein and co-counsel, Gibbs Law Group, are representing restaurants nationwide in litigation against their insurers for failing to provide business interruption insurance coverage due to government mandated closure of their businesses resulting from the COVID-19 pandemic.

Restaurant owners bought insurance to protect all aspects of their businesses – not just for damage to insured premises and equipment – but also for interruptions in business operations that result in loss of business income, such as the circumstances of the COVID-19 pandemic that led up to the government mandated shut down of restaurants and other business across the nation. Plaintiffs have reportedly done everything right to protect their businesses and the public. Such coverage is important, if not vital, because profit margins in the restaurant industry are slim and, unlike in the insurance industry, reserve funds tend to be low. Hence, business interruptions are a particular concern to the restaurant industry.

Case Background

Governments around the world have enacted stringent counter-measures in order to combat the COVID-19 pandemic, requiring the closure of many businesses and restricting almost all public activities.

Restaurants, in particular, have suffered immediate and precipitous losses. This impact on restaurants will have a devastating impact on the nation’s economy and social life. As of 2016, Americans spend more than half of their food budget eating outside the home. According to The Brookings Institution, food preparation and service is the second most common occupation in the United States; waiting tables is the eighth most common. At the start of 2020, there were more than 12 million Americans working at over 600,000 food service and drinking establishments nationwide. Food & Wine reports that approximately 8 million restaurant workers have been laid-off or furloughed since mid-March. Before the COVID-19 pandemic materialized, the National Restaurant Association predicted 2020 sales would be $899 billion. As of June 15, 2020, the Association’s research shows that restaurants lost $120 billion in sales during the first three months of the COVID-19 pandemic. The outlook is dire for the tens of thousands of restaurants that may never reopen.

This arbitrary and wrongful denial of insurance benefits leaves the restaurant and food services industries financially insecure and threatens the survival of the industry as a whole.

Plaintiffs bring this action seeking declaratory relief and damages.