On April 27, 2020, Cohen Milstein and Gibbs Law Group filed a class action in the United States District Court for the District of Columbia against The Hartford Financial Services Group, Inc. (The Hartford) on behalf of GCDC Grilled Cheese Bar and other Washington, D.C.-based restaurants and small businesses insured through The Hartford for its failure to cover their business interruption losses due to the COVID-19 pandemic.

Case Background

As a result of the COVID-19 pandemic, businesses throughout the nation and District of Columbia have had to close.  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.

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. The latest estimates suggest the industry will face $240 billion in losses by the end of the year. Those losses include an estimated $30-plus billion in lost revenue in March and a projected $50-plus billion in lost revenue in April alone.

The restaurant industry is vital to the local economy of Washington, D.C. In 2018, the District’s 2,457 restaurants and bars generated $4 billion in sales. In 2019, about 8 percent of all employment in the District — 65,200 jobs — was in the restaurant and food service industry. According to the Washington City Paper, small, independent restaurants make up 96 percent of the District’s dining scene. Government-mandated business restrictions are taking a devastating economic toll on these small businesses.

Plaintiff GCDG Grilled Cheese Bar (“GCDC”), a popular, well-reviewed eatery in a prime Pennsylvania Avenue location, is one such restaurant affected. Since early March 2020, GCDC has been complying with orders issued by the District of Columbia that have brought its business to a complete halt. GCDC filed a claim with its business insurance carrier, the Defendants, and was denied coverage on the basis of indecipherable exclusions and endorsements added unilaterally to its policy.

GCDC and other restaurants similarly situated bought full-spectrum, comprehensive insurance for their businesses – not just for damage to their physical premises and equipment. These restaurants believed that they had comprehensive coverage that would apply to business interruptions under circumstances like these, where they have 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 reserve funds tend to be low. Hence, business interruptions are a particular concern of this industry.

Plaintiffs claim that had Defendants wanted to exclude the risks of a pandemic – and the necessary public health counter-measures that would mandate business closures and population-wide social distancing – they should have done so plainly, as they did with numerous other risks. But they did not.

GCDC brings this action, on behalf of itself and other District of Columbia restaurants similarly situated, seeking declaratory relief, insurance coverage owed under Defendant’s policies, and damages.

The case name is: GCDC Grilled Cheese Bar, et al. v. The Hartford Financial Services Group, Inc., et al., Case No. 1:20-cv-01094, United States District Court for the District of Columbia