The combined effects of the coronavirus and government-imposed shutdowns have cost the US economy an enormous amount of money—perhaps trillions of dollars—and we still aren’t out of the woods yet. But a year into the virus, there still isn’t a clear answer to a very basic question: who is going to pay for all of this? While the government has provided some aid to business owners, numerous businesses around the country have still suffered due to forced closures as well as the effect of people voluntarily remaining at home. In an effort to stay afloat, many business owners have turned to making claims with their insurance companies for the damages they have suffered over the past year.
Major League Baseball’s December suit illustrates one example of what lawsuits against insurance companies might look like. While it may raise eyebrows to compare the struggles of the MLB to the struggles of a small shop-owner, entities large and small have been affected by the virus in similar ways, though not on a similar scale. This blog post will examine a lawsuit filed by the MLB and its associated baseball clubs, in an attempt to shed some light on one issue that other businesses might face in making insurance claims.
The stakes of the litigation are high. If the MLB’s claims against its insurers are successful, the door would potentially be opened for the entire entertainment industry to make claims on losses. The industry was obliterated by Covid-19, and losses could cost insurers billions of dollars—if they have to pay out. Insurers may successfully argue that the types of economic damages caused by Covid-19 were not of the type that the insurance policies were intended to cover. If insurers in the future significantly raise policy costs because of payouts caused by the pandemic, it could make insurance more difficult to obtain or more costly for businesses needing it.
Let’s play ball
Insurance policies like the one that the MLB had in place prior to the coronavirus pandemic typically cover physical damage, and it is not clear that the damage caused by the coronavirus falls into that category. The MLB has claimed that the presence of the virus itself is physical, noting that “The presence of the coronavirus and Covid-19, including but not limited to coronavirus droplets or nuclei on solid surfaces and in the air at insured property, has caused and will continue to cause direct physical damage to physical property and ambient air at the premises.” This would be a new spin on what counts as physical damage. It’s true that the coronavirus has affected the environment, but unlike more traditional damages caused by storms or fires, the virus has left no lasting, visible impact on the objects that it touches.
Does the coronavirus cause “physical damage”?
The success or failure of these lawsuits could theoretically turn on whether or not the damage caused by the coronavirus is physical, so it’s worth examining this claim in more detail. The suit cites the presence of the coronavirus on both physical surfaces and in the air as the source of damage, but as we’ve learned more about the coronavirus, it’s become clear that the virus is primarily spread through the air and has a very limited ability to be spread via surfaces. Even if every seat in every stadium in the MLB had been touched by someone with coronavirus, the viral presence on the seat would be unlikely to infect others. While the claim that physical surfaces are damaged by the presence of the coronavirus has some innate appeal, judges might struggle to find any damage to physical surfaces.
What happens when the air itself is damaged?
More interesting is the claim that the air itself has been damaged due to the presence of the coronavirus. It’s true that the coronavirus is spread via large and small droplets which travel through the air, but the CDC has indicated that it is probably not airborne in the way that infectious disease experts define the term. It’s spread via close contact with someone else who has the virus; that is to say, a baseball fan might well catch the coronavirus at a ballpark, if they come in close contact with someone who is spreading the disease, but it might be more difficult to say that they caught it from the air at the ballpark itself.
Ballparks might offer, in response, that it is not necessary for the entirety of their airspace to be unbreathable for the park to be unusable. Even if it were the case that only one fan in a stadium were infected with Covid-19, thus rendering three or four seats in the fan’s immediate area dangerous to sit in, that might be enough to shut down the park. Perhaps one cubic yard of air might be “damaged” at any given time—but we might as well say that the majority of the Titanic was not physically damaged by the iceberg. That’s true…but not particularly important.
There is precedent for damage to the air itself as a legally recognized cause of action. It might be helpful to look at tort claims for offensive odors. Although odors might cause no physically visible harm, they can, if strong enough, render a facility useless for its intended purpose. Perhaps judges sympathetic to the harms caused by Covid-19 might consider holding that coronavirus has had a similarly deleterious effect on businesses.
Does it matter if the physical damage was theoretical?
A potential difficulty with the claim of physical damage caused by the coronavirus to the air is that it appears that the damage to the air is more or less theoretical. The MLB did not allow fans to attend regular season games during the 2020 season, a choice that stood in contrast to other professional sports leagues in the United States and around the world. Because of this, as far as we know, the virus likely wasn’t physically present in the stands. It wasn’t on the seats, it wasn’t in the air: no one was there at all. This raises the issue of whether the MLB can claim to have been physically harmed by a situation which was preempted by the MLB’s own actions.
It would seem to be against public policy to say that the MLB, which took responsible steps to prevent the coronavirus, was not physically harmed by the coronavirus, while other leagues, which continued to allow fans into the stadium, were harmed. Could the NFL, which allowed fans into stadiums to watch live games in a limited capacity, have suffered more physical damage to its facilities than the MLB, which did not? A literalist reading of the word “physical” would suggest that this is the case. However, a ruling to this end might suggest to businesses that next time there is a public health crisis which requires some voluntary social distancing, they should not take the most restrictive route towards securing public health.
Economic damage or physical damage
Regardless of whether baseball stadiums were physically harmed by the coronavirus, they were most definitely economically harmed. And while baseball club owners might not be quite as sympathetic as small business owners, they do provide a service that is beloved by many in America and around the globe. Regardless of how their case fares on the particular point of physical damage, they ought to be made whole to the extent necessary that Americans can enjoy our national pastime for many years to come.