California Judge Reverses Dismissal of Food Manufacturer's COVID Suit

The Court of Appeal of California has reversed the dismissal of a COVID-related lawsuit filed by Amy’s Kitchen (Amy’s) against Fireman’s Fund Insurance Company (Fireman’s). The case is Amy’s Kitchen, Inc. v. Fireman’s Fund Ins. Co., 83 Cal. App. 5th 1062 (Cal. Ct. App. 2022). 

Amy’s, a company that produces organic and vegetarian meals, has facilities across the Pacific Northwest that employ more than 2,500 individuals. At the outset of the COVID-19 pandemic in early 2020, Amy’s made several changes at its facilities in order to continue operations while also adhering to social distancing and similar guidelines to protect employees. Amy’s had purchased a comprehensive property policy from Fireman’s in 2019, which extended the policy to provide coverage for communicable diseases as well as loss avoidance and mitigation. There was no definition for “direct physical loss or damage” anywhere in the policy, only specifications for three distinct categories of costs covered “if incurred as a result of a covered communicable disease event.” The types of costs Amy’s had incurred in mitigating the effects of COVID-19, as described above, were included in those categories. Amy’s filed a claim to recover the money spent to “[m]itigate, contain, remediate, treat, clean, detoxify, disinfect, neutralize, cleanup, remove, dispose of, test for, monitor, and assess the effects [of] the communicable disease.”