632 Metacom v. Certain Underwriters at Lloyd's

Background

632 Metacom, Inc., doing business as Hometown Tavern, brought a proposed class action against Certain Underwriters at Lloyd's, London Subscribing to Policy No. XSZ146282. It alleged breach of contract and sought a declaration that its commercial property insurance policy covered business losses related to the COVID-19 pandemic. The policy covered the plaintiff’s restaurant in Warren, Rhode Island, and included coverage for certain business-income losses caused by direct physical loss or damage or by orders from a civil authority.

The plaintiff notified the defendants in March 2020 of property loss and business interruption that it attributed to the pandemic. It filed the action in the Southern District of New York and proposed a nationwide class and a Rhode Island subclass. The defendants moved under 28 U.S.C. § 1404(a), a federal law allowing a court to transfer a case for the convenience of the parties and witnesses and in the interest of justice.

Transfer Standard

The court first considered whether the action could have been brought in the District of Rhode Island. It found that it could have been filed there because the plaintiff was a Rhode Island business seeking coverage for losses occurring there and connected to Rhode Island stay-at-home orders. The court then balanced factors concerning convenience and fairness.

Court’s Analysis

The court gave little to no weight to the plaintiff’s choice of New York because the operative facts had little material connection to that district. The court rejected the plaintiff’s reliance on the presence of Lloyd’s of London’s office in New York, explaining that Lloyd’s is an insurance marketplace and is not a defendant or a party to the policy.

The court found that the location of the operative facts favored Rhode Island. The policy was issued to the plaintiff at a Rhode Island address, the claimed losses occurred there, and the relevant state orders were issued there. Nothing in the record showed that relevant policy events occurred in New York.

The convenience of witnesses also favored transfer, although not strongly. Potential witnesses included employees of the Rhode Island restaurant and the plaintiff’s Massachusetts-based insurance broker, while none of the identified potential witnesses were in New York. The convenience of the parties was neutral. The court also found that familiarity with governing law slightly favored Rhode Island because Rhode Island law would govern interpretation of the plaintiff’s policy at this stage.

Trial efficiency and the interests of justice favored transfer because the Southern District of New York had no tangible connection to the dispute, the case was still at an early stage, discovery had not begun, and the relevant witnesses and documents were largely in or around Rhode Island or outside the United States. The remaining factors—compelling unwilling witnesses, document location, and the parties’ relative means—did not strongly favor either district.

Disposition

The court granted the motion to transfer the action to the United States District Court for the District of Rhode Island. The opinion’s conclusion calls it “Plaintiff’s motion to transfer,” but the motion described and analyzed throughout the opinion was the defendants’ motion. The court did not decide the merits of the insurance-coverage claims.