Minor League Baseball Teams Sue Insurers for Virus Damages

An empty Parkview Field minor league baseball stadium is seen in downtown Fort Wayne, Ind., on April 8, 2020. (Mike Moore/The Journal-Gazette via AP, File)

PHILADELPHIA (CN) — Fifteen minor league baseball teams filed a federal lawsuit Tuesday against insurance companies they say won’t pay for coronavirus-related business interruption claims.

“Our clients pay their premium every year to protect them against business interruption like they have confronted this year and the reason for the lawsuit is to require the insurance companies, who gladly accept the premiums every year, to meet their obligation to pay for the losses,” the teams’ attorney Andrew Sandler, of Mitchell Sandler in Washington, said in a phone call Tuesday.

The complaint filed in Philadelphia argues that going to minor league baseball games has been a low-cost American family tradition for more than 100 years. 

“This is the first year in that entire period of time — through prior pandemics, two world wars, and many other global and national crises — that those magic words, ‘Play Ball,’ will not be heard in any of the ballparks around the country in which minor league baseball is played,” the lawsuit states.

Pointing fingers, the teams say there are several parties at fault for this: the federal government, which they say failed to recognize the severity of Covid-19 and did not take adequate steps to protect the country, and the Major League Baseball Association, which recently announced that its teams will not provide or pay minor league players in 2020.

“The operating model for MiLB teams is entirely dependent on receiving players, coaches, and other team personnel from the MLB team with which they have an affiliation agreement,” the complaint states. “It is also dependent on being permitted by federal, state, and local governments to allow the admission of the thousands of fans who flock to every minor league game to enjoy a ball game, partake in the entertainment and food and beverage amenities associated with the minor league baseball experience, and purchase baseball caps and other merchandise sold in the ballpark.”

The 34-page suit says that regardless of whether stadiums open, most teams are on the hook for more than $2 million in annual operating expenses that cover stadium rental payments, permanent employees’ salaries, and marketing and advertising costs. This will be tough for the teams to cover, they say, without key revenue generators like ticket, parking and concession and merchandise sales.

“Given the business model for MiLB,” the complaint continues, “prudent owners of MiLB teams, including the plaintiff teams, purchased business interruption insurance from the defendant insurers and paid significant premiums to protect themselves from business interruption, including the cancellation of games.”

The teams plan to pursue this line of argument despite clauses in the business interruption policy excluding losses resulting from any virus and the government’s failure to act.

“We do not think that they properly apply, and we look forward to the opportunity to persuade the insurers themselves or if necessary the court, if that is the case,” their attorney, Sandler, said of the exclusions.

The five insurance companies named as defendants are the Philadelphia Indemnity Insurance Company, Acadia Insurance Company, National Casualty Company, Scottsdale Indemnity Company and Scottsdale Insurance Company.

Several of the teams’ insurance claims have been denied by their respective insurers, while others have joined the suit in anticipation of their own claim denials.

The insurance companies did not immediately respond to requests for comment Tuesday on the breach of contract claims.

In addition to Sandler, who owns a team in North Carolina that isn’t a party to the lawsuit, two attorneys from his firm — Stephen LeBlanc and Rebecca Guiterman — are listed as counsel. Attorneys with the firm McKool Smith, two in New York and one in Dallas, are also representing the teams.

The teams named as plaintiffs are the Chattanooga Lookouts, Boise Hawks, Columbia Fireflies, Eugene Emeralds, Binghamton Rumble Ponies, Fort Wayne TinCaps, Fredericksburg Nationals, Augusta Greenjackets, Greenville Drive, Idaho Falls Chukars, Inland Empire 66ers, Amarillo Sod Poodles, San Antonio Missions, Stockton Ports and Delmarva Shorebirds.

The MLB pegged three of those teams — the Binghamton Rumble Ponies, Chattanooga Lookouts and Idaho Falls Chukars — for elimination in a proposal last year, along with 39 others.

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