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Chicago Restaurants Earn Small Win in Legal Battle for Pandemic Business Interruption Insurance Claims

A federal judge rejected the insure’s motion to dismiss the lawsuit filed by restaurant groups Lettuce Entertain You, Big Onion Group, and more

Billy Goat Tavern
Billy Goat Tavern is one of several well-known plaintiffs.
Marc Much/Eater Chicago

Chicago-area restaurants which filed lawsuits last year after its insurance company denied pandemic-related payouts this week after months of frustration. A federal judge on Tuesday rejected a motion to dismiss legal proceedings filed against Society Insurance, a niche firm based out of Madison, Wisconsin. Plaintiffs include well-known entities like Lettuce Entertain You Enterprises, Billy Goat Tavern, Purple Pig, and Big Onion Tavern Group.

Last year, as governments began ordering restaurants to close their doors to avoid the spread of COVID-19, attorneys began flooding courts with lawsuits against companies like Society Insurance, alleging these firms wrongfully denied payouts. Business interruption policies are designed to cover entities if they are unable to operate due to conditions such as a fire or natural disaster.

But when it comes to a public health crisis, the definitions are murky. Society Insurance and other companies have argued the business interruption policies that many restaurants have centered on property damage. Those policies wouldn’t extend to cover losses associated with a pandemic.

Restaurants and their attorneys initially began raising claims in March, including a case filed on behalf of six Chicago-area restaurant groups. As the pandemic dragged on, and the financial losses mounted due to drastically reduced indoor dining, more attorneys began communicating with each other about their clients’ problems. In October, a federal judge decided to consolidate the claims into a single lawsuit. The city’s largest restaurant company, Lettuce Entertain You, joined as a plaintiff, along with smaller venues such as the owners of the Whistler, the trendy cocktail bar in Logan Square.

Getting the various restaurants and attorneys to coordinate can be viewed as a success. That type of organization is something that many who challenged Gov. J.B. Pritzker’s orders to close indoor service have failed to do. Lawyers for disgruntled restaurants mounted varied legal arguments against those orders only to see courts rule against their clients. That, in turn, created legal precedents that have made subsequent court challenges tougher.

Society Insurance tells the Tribune that it is disappointed but will “vigorously defend its interests.” Crain’s points out that Society Insurance isn’t exactly a juggernaut — the company is relatively small by industry standards and might not have the resources to pay millions of dollars in premiums to plaintiffs.

Some considered these lawsuits a losing gambit, saying restaurants would face an uphill battle trying to recover payouts from insurance companies. The Tribune’s reporting underscores this, citing research from the University of Pennsylvania that shows that judges across the country typically dismiss more than 80 percent of similar cases.

Several restaurant owners who spoke to the Tribune are enthused by the news. After nearly one year since filing the first lawsuit, the odds are good that restaurant owners’ arguments will be heard in court.

  • Chicago restaurants win early court victory in bid for COVID claims [Crain’s]
  • What Billy Goat, Purple Pig and other local eateries want from a federal court [Crain’s]
  • Chicago businesses can proceed with lawsuits seeking COVID-19 payouts from Society Insurance, judge rules [Tribune]
  • Fox Fire restaurant appellate decision is now legal precedent [Capital Fax]

Billy Goat Tavern

1535 West Madison Street, , IL 60607 (312) 733-9132 Visit Website

The Whistler

2421 North Milwaukee Avenue, , IL 60647 (773) 227-3530 Visit Website

Lettuce Entertain You

5419 N Sheridan Rd, Chicago, IL 60640

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