Legal Roundup: COVID Business Interruption Settlements, Amazon’s D.C. Price Fixing Suit and More

The latest court filings and cases that will have an impact on the risk management and insurance industry.
By: | June 7, 2021

UK Brewer Reaches Settlement for COVID Business Interruption 

The Case: Camerons Brewery, a UK chain, sued insurer Royal & Sun Alliance (RSA) to recover an estimated £1.7 million ($2.4 million) in losses suffered during COVID-19 lockdowns.

The total sum is based on claims of £100,000 per premises.

RSA rejected the claim, saying it would cap the indemnity at £100,000 in total, rather than add up individual claims on dozens of pubs. Law360 reports that the brewery and pub chain argued that the policy it took out in 2019 “included an extension that granted cover if its pubs and bars were forced to be shut by the government as a result of infectious disease.”

Scorecard: Camerons and RSA just announced that they’ve reached an undisclosed settlement.

Takeaway: Victories are rare for policyholders suing insurers over COVID business interruption, so a settlement in this case is important to note.

The Camerons case comes on the heels of two other actions that have had varying degrees of success. In the U.S., a Missouri federal judge allowed a group of hair salons to sue its insurance carrier for business interruption losses, and in France, insurer AXA lost its case and was ordered to pay a restaurateur for two months of revenue losses.

Something’s Rotten in South Carolina

The Case: A foul stench from a Charlotte factory is the subject of a new lawsuit.

A class of homeowners in the area have sued New-Indy Containerboard alleging “noxious and harmful hydrogen sulfide emissions,” according to the Charlotte Observer. Neighbors even complain of headaches and sore throats.

The federal lawsuit seeks at least $5 million in compensation for “rotten egg” emissions that occurred after New-Indy ceased use of pollution control devices. The plaintiff adds that several government agencies, including the Environmental Protection Agency, have found New-Indy responsible for the emissions that spread across both North and South Carolina.

As the case goes to trial, the EPA has just issued an emergency order to compel New-Indy to lower hydrogen sulfide emissions and start monitoring the air in residential areas near the plant.

Scorecard: The case has recently been filed and has not reached a resolution.

Takeaway: This case is one of many cases in which residents have complained about a stench rising from a manufacturing plant.

In Iowa, a $45 million class-action settlement was reached in a case between a grain-processing company and local residents who claimed the factory’s emissions contributed to health problems.

Earlier this year, Jacksonville residents filed suit against International Flavors & Fragrances for noxious odors but the company filed a motion to dismiss the case citing tests saying the company is not responsible for the odor.

Amazon Accused of Price Fixing by D.C. Attorney General

The Case: Amazon is accused of wielding excess power in the marketplace in an antitrust suit brought by Washington D.C. Attorney General Karl A. Racine. The complaint alleges that Amazon’s monopoly power has resulted in higher prices for consumers.

Amazon has allegedly tilted the playing field in its favor illegally by fixing prices through contract provisions with third-party sellers, according to the Washington Post: “The attorney general said that Amazon prevents sellers from offering their products at lower prices or on better terms on any other online platforms, including their own websites.”

Consumer advocates have spent years pushing for federal antitrust charges against the company, calling on the Biden Administration to take action. Racine, however, said there was no coordination at the federal level or with any other state attorneys general.

Scorecard: The case has recently been filed and has not reached a resolution.

Takeaway: The Amazon case reflects a larger effort to reign in big tech.

Google and Facebook have been under fire on a federal level, with cases brought by the Justice Department and the Federal Trade Commission.

The limited scope of the recent Amazon lawsuit does not address the many complaints against Amazon’s anti-competitive practices. In order to affect real change, Stacy Mitchell, co-director of the Institute for Local Self-Reliance, says federal legislation is needed to address all the ways Amazon thwarts competition.

She told the Washington Post: “To have a truly competitive e-commerce market, you have to break up Amazon. There’s a fundamental conflict of interest when you own the infrastructure and you also compete on that infrastructure.”

Investor Sues Brooks Brothers Over Bankruptcy

The Case: The owners of Brooks Brothers have been sued by Hong Kong clothing maker TAL Apparel in the U.S. District Court for the Southern District of New York. TAL accused the retailer of shirking financial responsibility by declaring bankruptcy and allegedly avoiding making good on a $100 million investment TAL made in Brooks Brothers.

Reuters reports: “Tal Apparel said Claudio Del Vecchio and his son Matteo pressured it to invest $100 million in Brooks Brothers in 2016, and promised it would be ‘made whole’ if they later sold the retailer for less than $652 million. The complaint said the Del Vecchios lined up ‘several’ bids for Brooks Brothers in 2019, before the COVID-19 pandemic, but did not pursue them because they would owe Tal money, and even asked if Tal would take a ‘haircut’ on any payment.”

Instead, Brooks Brothers declared bankruptcy, rendering the TAL contribution nearly worthless. Licensing company Authentic Brands Group, along with mall owner Simon Property Group acquired the bankrupt Brooks Brothers for $325 million.

Scorecard: The case was recently filed and has not come to resolution.

Takeaway: Both Brooks Brothers and TAL took a hit during pandemic shutdowns. Attorneys representing the Del Vecchio family consider the lawsuit’s allegations false, and expect the court to dismiss the case; however, others watching the action expect a settlement between the two super wealthy families. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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