The owner of the North Carolina-based Kannapolis Cannon Ballers, Andy Sandler knows first-hand how financially devastating the coronavirus has been to minor league baseball.
As a former Skadden partner who went on to co-found Buckley Sandler (now Buckley LLP) in 2009 and Mitchell Sandler last year, Sandler also knows how to fight back.
He's teamed up with star insurance litigator Robin Cohen, who heads McKool Smith's insurance recovery practice. On Tuesday, the duo filed suit on behalf of fifteen minor league teams in the U.S. District Court for the Eastern District of Pennsylvania for breach (or anticipatory breach) of contract, demanding that the ball clubs' insurers pay up for business interruption coverage.
Sandler's baseball team is not among the plaintiffs suing Philadelphia Indemnity Insurance Co., Acadia Insurance Co., National Casualty Co., Scottsdale Indemnity Co., and Scottsdale Insurance Co.. "I figured I could be a client or a lawyer, but not both," he said.
The Minor League Baseball case shares many of the same questions—namely, has the virus caused the kind of direct physical loss or damage that's covered by insurance policies?
Sandler and Cohen in their complaint argue that it has.
"Current evidence suggests that SARS-CoV-2 may remain viable for hours to days on surfaces made from a variety of materials," they wrote, noting that it was identified on surfaces of the Diamond Princess cruise ship a full seventeen days after the cabins were vacated.
"[I]t 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," they wrote. "Moreover, the ballparks are incapable of their intended function—serving as a venue for ball games attended by fans."
Their clients are about as sympathetic (and all-American) as they come. Most minor league teams are located in smaller cities and communities across the United States, and are owned by local businesses or families. More than 40 million fans attended games last year.
"The virus attaches to surfaces and makes the facilities uninhabitable. That's sufficient to trigger the policies," Cohen said confidently.
The complaint acknowledges that the policies exclude "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."
But Cohen and Sandler argue that provision is "void, unenforceable, and inapplicable. Nor does any other policy provision exclude the teams' claims for coverage."
"Exclusions are applied very narrowly," said Cohen.
For example, after Hurricane Katrina, some policyholders whose coverage excluded hurricane damages were nonetheless able to collect by blaming the U.S. Army Corps of Engineers for their losses.
In the MiLB suit, the teams invoke multiple grounds for coverage.
For one thing, the operating model for MiLB teams is completely dependent upon receiving players, coaches, and other team personnel directly from the MLB team with which they are affiliated. The MLB has decided that its teams will not meet their contractual obligations to provide players under contract to their affiliated minor league teams.
"It is now clear that MLB teams will not provide players to MiLB teams for the entire 2020 season," Cohen and Sandler wrote. "MLB's denial of players to the MiLB teams is a cause of the teams' business interruptions."
Since one potential cause of loss here is the failure of one party to fulfill contractual obligations and the arguments are not based completely upon the potential presence of direct physical loss or damage, this case might be viewed differently by courts and juries than other cases spurred by the COVID-19 pandemic.