U.S. District Chief Judge Mark Hornak of the Western District of Pennsylvania followed that interpretation in granting defendant Erie Insurance Exchange's motion to dismiss four of the nine counts in the plaintiffs' consolidated amended complaint.

Plaintiffs attorney Adam Moskowitz of The Moskowitz Law Firm in South Florida declined to comment on the case, as did Alston & Bird's Adam Kaiser, who represents Erie.

Hornak noted in his opinion that state and federal courts had already provided abundant guidance in "thousands" of decisions on pandemic era business interruption insurance.

However, the federal judge ruled that "almost none have been decided by the highest courts of the jurisdictions whose law applies to the MDL actions, leaving some uncertainty as to how those courts would decide the issues of state common law under the law of those jurisdictions."

The nine jurisdictions in which plaintiffs are based include Washington, D.C.; Tennessee; and Pennsylvania, where Hornak said the relevant high courts, appellate courts and federal appeals courts had yet to weigh in on the issue.

Without COVID-specific guidance from the state's appellate courts and the U.S. Court of Appeals for the Third Circuit, Hornak turned to precedent from asbestos-related insurance litigation to interpret Pennsylvania law.

A pair of COVID business interruption disputes (also against Erie) are set to make their way before the Pennsylvania Supreme Court, but the question the justices agreed to consider on appeal pertains to the way the litigation was consolidated, rather than the interpretation of "direct physical loss" that is central to similar cases.

Hornak ultimately determined in his 67-page opinion that case law across the nine jurisdictions relevant to the MDL supports the conclusion the "direct physical loss of or damage to" covered by the plaintiffs' policies does not refer to the harm businesses suffered as a result of the pandemic.

"As devastating as COVID-19 has been from a health and safety standpoint, property has not been lost or damaged by the presence of the virus, in the sense that people cannot access, use, or inhabit it due to its impaired physical condition, because the COVID-19 virus altered the property itself," Hornak wrote.

Hornak's decision dismissed with prejudice the plaintiffs' first four claims, leaving only counts related to state-specific laws remaining. In the dismissed claims, the plaintiff sought relief for breach of contract as well as declaratory judgment that their losses were covered by their respective Erie policies.

Hornak's order accompanying the opinion directed the parties' counsel to file a joint status report proposing how future proceedings should be conducted in the litigation.