On February 11, 2022, the United States District Court for the Eastern District of Virginia granted class certification for a second time to a statewide class of Virginia businesses in a potentially precedent setting COVID-19 insurance recovery class action.  The class includes at least 111 Virginia businesses who submitted insurance claims for pandemic-related losses to their insurer, State Farm—and whose claims State Farm denied under its policy’s virus exclusion.  The court’s ruling comes months after a Fourth Circuit panel reversed the trial court’s ruling and remanded the case, ruling that the trial court improperly granted class certification on its own rather than waiting for a motion for class certification from the plaintiff.

Plaintiff Elegant Massage initially asked the court to certify a statewide class of 19,300 Virginia businesses that had State Farm all-risk insurance policies.  The court denied this request, ruling that the proposed class was overbroad and untenable.  However, certified a more narrowly tailored class of 111 Virginia businesses who made insurance claims to State Farm for pandemic related losses and whose claims the company denied.

Following the Fourth Circuit’s decision that Elegant Massage must first move for class certification, Elegant Massage filed a motion requesting that the court again certify the proposed class of Virginia businesses.  The court granted the motion.

As was true when the court initially granted class certification, this may prove to be an important decision with national implications for insurance companies and insureds.  It may open the door even further for courts to certify class actions for policyholders in similar COVID-19 insurance recovery class actions—especially for businesses in states that imposed strict lockdown measures.  A virus exclusion in an insurance policy may be insufficient for insurers to avoid covering these losses.  With over 100 similar class actions pending across the country, insurers may wish to take notice of this case and prepare a strategy now to argue against the certification of similar class action claims.