Updated on October 11 with comments from Jeffrey Schulman from Paisch LLC, counsel for Metallica.
The California Superior Court has refused to dismiss pandemic-related event cancellation litigation filed by heavy-metal band Metallica despite a virus exclusion within the applicable coverage. The case is Frantic Inc. v. Certain Underwriters at Lloyd's et. al.
The Court held that at this preliminary stage of litigation it could not dismiss a suit filed over a tour that was canceled because a "proximate cause" had not yet been established as to what caused the loss.
In September 2019, Metallica began an eight-show tour. The tour began with two shows in San Francisco, which were to be followed by six shows in South America beginning on April 15, 2020 in Chile. Due to the pandemic shutdown, the South American shows were postponed.
Metallica sued their insurer, Lloyd's underwriters after they refused to cover the postponements. The suit charged breach of contract and tortious breach of the implied covenant of good faith and fair dealing.
Lloyds argued that the pandemic caused the cancellations and therefore the insurer should win because there was a virus exclusion in the applicable policy. Metallica argued that Lloyd's "cannot conclusively say that the Pandemic is the efficient proximate cause of the cancellations because there are other adequately alleged causes that are covered by the Policy."
According to the complaint, "the travel restrictions, the duty to mitigate damages, the need to 'flatten the curve' and stay-at-home orders all caused the Shows' cancellations."
The band argued that COVID-19 and SARS-CoV-2 still exist "but that travel restrictions and restrictions on social gatherings have lifted and eased, suggesting that it was something more than just the virus/disease that caused the cancellations."
In allowing the litigation to proceed, the court noted that the complaint "adequately alleged that the coronavirus disease/virus is not the efficient proximate cause of the Shows' cancellations."
"The Court held that the complaint sufficiently alleged that travel restrictions, the duty to mitigate damages, the need to flatten the curve, and stay-at-home orders may be the efficient proximate cause of Metallica's losses," said lead counsel, Partner Jeffrey L. Schulman with Pasich LLP. "The court also noted our argument that the virus/disease may not be the cause of the loss because it still exists and yet, travel and gathering restrictions have eased and concerts are again being performed. The decision also cited our allegation that the insurers cannot identify the efficient proximate cause of the loss because they conducted no meaningful investigation before denying coverage."
Editor's Note: This is not the first time Metallica has been involved in a lawsuit. The band famously sued Napster for copyright infringement and racketeering in 2000, eventually leading to the dissolution of the company.