Graphic of red baseball helmet, glove, ball, bat, medical face mask, and hand sanitizer sitting on field in empty stadium

Numerous Minor League Baseball teams have filed suit against their insurance companies, claiming they were unlawfully denied coverage for their businesses due to COVID-19.

The minor league teams, including the Chattanooga Lookouts, Columbia Fireflies and others, say their insurance companies should pay them for losses because their baseball seasons were cut short during the spread of the pandemic.

The defendant insurance companies are: Philadelphia Indemnity Insurance Co.; Acadia Insurance Co.; National Casualty Co.; Scottsdale Indemnity Co.; and Scottsdale Insurance Co.

The baseball teams claim there are several causes of the cessation of Minor League Baseball in 2020. Those causes include the continuing concerns for the safety and health of the players, employees, fans related to COVID-19; action and inaction by federal and state governments in response to controlling the spread of the virus; and the decision by Major League Baseball that the teams would not be meeting their contractual obligations to provide players under contract to their affiliated minor league teams.

The plaintiffs go on to say that prudent minor league team owners purchased business interruption insurance from the defendant insurers and paid significant premiums to protect themselves from business interruption, which included the cancellation of games. 

These “all-risk” policies cover MiLB teams for business interruption in circumstances in which there has been direct physical loss or damage including to the teams’ ballparks caused by COVID-19, the governmental response to it or the teams’ inability to obtain players from the major league affiliates.

Baseball“It is statistically certain that the virus is present at the Teams’ ballparks and nearby properties or that the threat of the virus’s presence at the ballparks is imminent,” the baseball teams state in recent legal news.

“The ballparks are incapable of their intended function—serving as a venue for ball games attended by fans.”

According to legal news reported by ESPN, the minor league teams do not employ or manage the baseball players who draw fans to the park.

The plaintiffs explain that Major League Baseball teams supply the players to each Minor League Baseball team through player development contracts.

The Minor League Baseball teams claim the major league baseball clubs have not met their obligation to supply players to their teams. They say it is now clear that these players will not be supplied for the entire 2020 season.

“Because of this business model, which requires variable revenue tied to game attendance but significant fixed operating expenses, and the fact that most MiLB team owners are small business owners or family businesses rooted in the community in which they own a team, the teams have little prospect for economic survival if the operation of their businesses is interrupted for any significant period of time within a season,” the plaintiffs contend.

“Indeed, several MLB teams have announced significant reductions in the number of players under contract, thereby rendering it infeasible for them to provide players in a manner consistent with their contractual agreements,” the plaintiffs go on to say.

Due to COVID-19, the plaintiffs say, they have been deprived of their primary source of revenue, which is fans coming to the ballpark and paying for game tickets, merchandise, food and beverage and partaking in other amenities.

That said, the clubs claim they still have fixed costs of operating a baseball stadium, like fixed lease payments and payroll for permanent employees needed to operate the team over an annual business cycle.

The Minor League Baseball class action lawsuit claims the policies purport to exclude from coverage “loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.”

However, that does not preclude the teams’ claim for coverage because it is void, unenforceable and inapplicable, the teams argue.

The Minor League Baseball teams state they have all made claims with their respective insurers and the defendants have all denied, or will deny, the teams’ claims for coverage on the grounds that their losses do not result from physical loss or damage to property and that they are barred by the exclusion.

The minor league class action lawsuit argues that, under the terms of the policies, the defendants must pay up to the policy’s limits of insurance for any loss covered under the policies, subject only to sublimits, time limits or deductibles for specific coverages.

“As a direct and proximate result of the respective Defendants’ breaches of contract, the Breach Plaintiffs have suffered and will continue to suffer damages in an amount to be determined at trial, plus consequential damages, attorneys’ fees, and pre- and post-judgment interest to the extent permitted by law,” the plaintiffs claim.

Were you planning on attending baseball games this summer? Leave a message in the comments section below.

The plaintiffs are represented by Robin Cohen, John Briody and Patrick Pijls of McKool Smith PC, and Andrew L. Sandler, Stephen M. LeBlanc and Rebecca Guiterman of Mitchell Sandler LLC.

The Minor League Baseball Insurance Lawsuit is Chattanooga Professional Baseball LLC, et al. v. Philadelphia Indemnity Insurance Co., et al., Case No. 2:20-cv-03032, in the U.S. District Court for the Eastern District of Pennsylvania.

Do YOU have a legal claim? Fill out the form on this page now for a free, immediate, and confidential case evaluation. The attorneys who work with Top Class Actions will contact you if you qualify to let you know if an individual Coronavirus business interruption lawsuit or class action lawsuit is best for you. [In general, business interruption lawsuits are filed individually by each plaintiff and are not class actions.] Hurry — statutes of limitations may apply.

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