Article Published in Bloomberg Businessweek
Plaintiffs’ lawyer John Houghtaling is leading the charge against insurance companies that say they don’t have to pay up for shutdowns.
John Houghtaling was working in the second-floor den of his mansion near the Garden District in New Orleans when a legal memo arrived in his email inbox. It was mid-March, not long before the pandemic shut down much of the U.S., and cooks in white aprons were downstairs preparing an extravagant dinner: lobster casserole, veal chops, seared foie gras. The celebrity chef Jérôme Bocuse, a close friend, would be attending that evening, along with two dozen other guests.
Seated on a velvet couch beneath an 18th century painting of Louis XV, Houghtaling, a plaintiffs’ lawyer who’s long specialized in suing the insurance industry, scanned the memo on his screen, growing increasingly agitated. The 10-page document, compiled by a law firm that represents major insurance carriers, was circulating among industry insiders who were anticipating that local governments would soon begin shutting down commerce because of the novel coronavirus. The memo outlined a series of arguments the providers planned to make to avoid paying virus-related claims from business-interruption coverage—policies companies purchase to hedge against fires and other catastrophes.
The chefs downstairs might soon lose their livelihoods, Houghtaling realized, and the insurance industry would refuse to help. His next thought was, he admits, a selfish one: “This party is gonna f---ing suck.”
Sure enough, early in the evening, Chef Bocuse got a call: His two restaurants at Walt Disney World were being shut down. When he hung up, however, he was sanguine. “We checked the policy,” he assured Houghtaling. “We’re good.”
Houghtaling was skeptical. “They’re not going to pay,” he said.
“Yeah, yeah,” Bocuse replied. “You always say they’re not gonna pay.”
The next few days passed in a series of frantic phone calls. Other celebrity chefs, including Daniel Boulud, another friend of Houghtaling’s, vowed to examine their policies and discuss the issue with colleagues. On March 16, less than a week after the dinner party, Houghtaling filed a petition in state court in Louisiana on behalf of the New Orleans restaurant Oceana Grill, asking a judge to declare preemptively that its insurance policy would cover damage caused by the virus.
“The word ‘unprecedented’ is probably overused in this, but I don’t think I have another word for it”