The COVID-19 pandemic may seem like a distant memory, but pandemic-related insurance litigation lives on. Last Friday a judge denied the Philadelphia Eagles’ motion for reconsideration in their case against Factory Mutual Insurance.
Sportico detailed the lawsuit in 2022. Like other NFL teams in 2020, the Eagles were forced to close or modify operations on account of the pandemic and government lockdown orders. The Eagles had an insurance policy with Factory Mutual for Lincoln Financial Field, which seats about 67,000 plus features a standing room section. Although the NFL managed to play the 2020 regular season in spite of the pandemic, the Eagles initially played games without fans, then could allow 7,500, only to see fans prohibited again when COVID-19 rates surged in mid-November. The Eagles filed an insurance coverage claim for the pandemic-related financial losses, which Factory Mutual denied. The Eagles, in turn, sued.
As Factory Mutual saw the policy, an eligible loss “must directly result from physical loss or damage.” Although COVID-19 is a disease caused by a virus that can be seen under a microscope, Factory Mutual insisted its presence does not constitute physical loss or damage in a logical sense. The Eagles disagreed, asserting that viral droplets “expelled from infected individuals could have been present in the air” and then landed on and attached to surfaces. Earlier this year, U.S. District Judge Michael Baylson granted Factory Mutual’s motion to dismiss.
The Eagles motioned Baylson to reconsider, but he denied the motion in Friday’s order.
The judge stressed that a “physical alteration” to an insured property is a threshold requirement for the policy to apply. Baylson reasoned the Eagles “have not plausibly pled physical disappearance, physical deterioration, or absence of physical function of the insured properties.” The team has shown it sustained economic loss—revenue from hundreds of thousands of fans who would have attended games and paid for parking, merchandise, concessions etc.—but not in a way that sufficiently connects to insurance coverage. Prohibiting or restricting attendance at games and related government orders “had nothing to do with the physical attributes” of Lincoln Financial Field, the judge wrote in quoting an analogous court ruling.
Baylson also wasn’t persuaded by the Eagles’ argument that its losses were connected to a physical condition at the stadium. The Eagles insisted “the actual or threatened presence of COVID-19 at its stadium nearly eliminated or destroyed the stadium’s core function,” but the judge reasoned that depiction doesn’t establish a connection to the property’s physical attributes.
Baylson highlighted precedent from the U.S. Court of Appeals for the Third Circuit regarding physical loss or damage from COVID-19. In 2023, the court found that “loss of use caused by government edict and untethered to the physical condition of the premises” doesn’t count as a “physical loss or damage to the properties.” Even when a property owner loses the ability to use property for its intended purpose, that doesn’t necessarily render the property “useless or inhabitable,” the Third Circuit stressed.
To that point, Baylson noted that Lincoln Financial Field reopened for the 2020 NFL season with limited attendance. The judge reasoned that development is consistent with the idea that government orders, rather than COVID-19 itself, “were the source seriously affecting the property’s functionality.” Along those lines, while COVID-19 might have been in the air or on surfaces, that didn’t make it so “physically dangerous” to be inside Lincoln Financial Field that the building became useless.
The Eagles can appeal Baylson’s order. The team has enjoyed more success on the field in 2024 than in its litigation against Factory Mutual. The 11-2 Eagles are first place in the NFC East and host the 10-3 Pittsburgh Steelers on Sunday. A full house is expected at Lincoln Financial Field.
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