Shelley Lindgren is co-owner and wine director of A16 restaurants in San Francisco. Alexandra Foote is an attorney representing small businesses, mostly restaurants, in litigation versus insurance companies denying business interruption claims related to the pandemic.

ALEXANDRA FOOTE: I came to this issue because I’m married to Daniel Patterson, who’s a chef and restaurateur at Alta Restaurant Group. When we had to shut down the restaurant, I said to him, “We should definitely tender these claims, because we have insurance.” We got an immediate rejection, and I looked at the rejection letter and realized there was something horribly wrong with the reasoning and the instantaneousness of the response because I have a background in insurance coverage law. I immediately went back to my old firm—Lieff, Cabraser, Heimann, and Bernstein, which is a plaintiff’s-side litigation firm—and said, “Hey, guys, take a look at this.” In the meantime, throughout our restaurant community I was hearing that this was happening to a lot of other people. Very quickly they got on board and realized that this is probably the largest litigation of the last quarter century. This will be significant.

Then I called everyone I know in our restaurant community and let them know that this was happening, that they should be tendering to their insurance carriers, and by the way, we were forming a lawsuit, and were they interested? I called Shelley, and it was very easy for her to understand exactly what she needed to do. She had been very meticulous in her tenders and her paperwork, so the process moved smoothly for her.

We’re working on these lawsuits every day, and we’re filing across the country. The business interruption coverage cases we’re litigating are taken on contingency, which means we advance all costs and fees. We’ll only be paid if there is a settlement or recovery, so there is no upfront cost to the business to participate in the litigation against their insurer.

Some are individual suits, and some are class actions. A class action procedure has distinct advantages in some ways. We’re thinking carefully about where to use that tool, and where not to. We have a collection of individual claims in state court, individual claims in federal court, and class action claims in both. We’re teeing this up because this is the beginning. We’re steering the ship in the direction that we think will maximize our chances of success for everyone.

What’s important for people to understand is just because one business filed a class action against their insurer, it does not protect another individual business with their own particular claim against their insurer. Everyone has the obligation and the ability to get a competent lawyer to help them address their business affairs in this context. If you sit back and don’t do anything knowing that there are other lawsuits out there, you might forfeit your rights. When and if we are successful—and I hope we are, and I’m confident in these suits—that victory might not affect you if you didn’t do anything. That’s a very important message that we’re trying to get people to understand, that you have your own claim. Every business has its claim, and it must be shepherded through the court process.

Insurance companies would like to be able to exclude claims about what’s happening right now. They have come out saying they will fight these cases to the bitter end, and that there’s no way they’re going to participate in and support our society and our country as we try to overcome this terrible situation. They definitely have the resources to make a big difference. I hear numbers anywhere from $2 trillion and up that they’re sitting on. When you have business interruption insurance and you tender your claim, the coverage kicks in from day one and covers your rent, your payroll, your accounts payable, and your taxes. It’s a smooth process for however long you have that coverage in your policy. So if everyone had been able to tap into that, whatever the government decided to add to that would give us all the more tools for success as businesses to weather the storm.

A fundamental principle of insurance law is that if something is not specifically excluded, it’s included. When most small businesses sign up for insurance, they get what they get. You say I need this much coverage under my lease, and I need business interruption coverage. They go to their broker, and they don’t have a suite of policies to choose from, typically, They get one that is what it is. It’s expensive. They buy that insurance and they think, “OK, I took care of that. My business is sound.” It is not a small expense.

SHELLEY LINDGREN: And that payment hasn’t gone away during this time. You have to have insurance, because you’re liable for people from that minute that they are on the clock until they get home. We don’t have one insurance, we have multiple insurances. The list is long. For sixteen and a half years, we’ve never missed an insurance payment.

I didn’t get a denial letter right away. I had someone call who basically could have been a robocall. Here we were devastated, we were dark in our restaurants, and someone is randomly calling you from an 800 number to tell you, “Nope, you’re denied.” It was like autopilot, just reading from a card or something. I hung up and started crying. I rarely cry, but I was just so emotional. Because I know what we pay in insurance.

To have them say there was this small clause about a virus or a bacteria, that was just an excuse. No decency was brought to the table, nor did the government get involved. We still pay this amount of money per month because we have to protect all our people. It’s a lot of jobs lost right now. We put all of the employees first.

Like Alexandra was saying, it could have been a lot different for restaurants. The government should get involved because they mandated the closure. It wasn’t because we had the plague with a flag in front of the restaurant. And the way they handled it was extremely disheartening.

ALEXANDRA: The insurance industry as a whole across the board has taken the position that they will not be paying these claims, regardless of policy language. We have clients with many policies that do not have a virus exclusion, and those claims are being denied as well. In the denials, we’re seeing the exact same language over and over again. I did get one recently that really excited me because it was so blatant—they had forgotten to take out the word “template” at the top. I flagged that one, because it showed me that what we’re hearing about a coordinated, absolute nonpayment of all claims is in fact the case. It doesn’t matter what your policy says.

We’ve all been asked to sacrifice our businesses on the altar of public good, to reach deep into savings if we’re lucky enough to have them, to keep our businesses going and to keep our families fed while the situation is going on. And the government is going deep into the government coffers to find money to try and find a way to stitch this back together on all levels.

So we’re all suffering—except for the insurance companies. They’re fine. But in the United States, we’re not a country that has a safety net. Open a business, take care of your own, follow the law, do what business owners should do. And one of those main things you’re supposed to do is purchase insurance. We did everything that’s asked of us, but what we paid for isn’t there to help us now that we need it.

What I tell myself at night when I allow myself to grieve over what’s happening is that the people who had what it took to open restaurants in the first place—those people have grit and vision. It’s not easy to be a small business owner and to make something from nothing. The people who did that will eventually get something out of this if we’re successful. I believe those people will be able to rise from the ashes, and these claims will give them the tools. Some will be able to hang on until then, and some may not. But it’s coming. And for whatever the future looks like, this money is going to matter.

But if you don’t get involved now, you will get nothing. Right now you have nothing, and you will have nothing. If you get involved, you have a chance at something. The more people that we have joining the fight, the stronger it becomes. Each business is another piece in this huge mosaic of the policies, and our knowledge of the policies, and their differences and similarities. We grow stronger with each one. And that matters.

SHELLEY: I love that Alexandra is including everyone who has insurance in this business, because I think there are a lot of voices from the restaurant industry that aren’t being heard. For us, everything we’ve been allowed to do, we’ve done. We’ve built parklets in our parking spaces, and more that we probably couldn’t have ever gotten a permit to do in normal circumstances. The community need right now is really high. There’s a lot of uncertainty in the future, and we’re doing everything we can. It looks easier than it is because we’re in the hospitality industry. We want people to have a great time, but it’s a lot of work to make that happen, and it takes a lot of people.

ALEXANDRA: All the other businesses that exist in our cities and towns—we’re bringing claims on their behalf as well. Restaurants are a big part of it—for me, especially, because those are people I know. That’s my community. But it’s much larger than just restaurants. The entire fabric of who we are as a nation is being torn apart because the insurance that we counted on is not there.