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MiLB teams file suit against insurers to cover 2020 losses

Minor League Baseball logoFifteen Minor League Baseball teams across the country have filed suit against their insurers, seeking to recover the financial losses resulting from the COVID-19 global pandemic.

In a lawsuit filed by the insurance coverage team at McKool Smith and the litigation team at Mitchell Sandler (Andy Sandler, the owner of the Kannapolis Cannon Ballers, is the named partner), the teams argue that insurers have denied business interruption insurance coverage, worsening the financial losses team owners and the local communities have already faced from the pandemic. In addition, MiLB team owners paid business interruption insurance policies year-after-year in order to remain protected from economic distress due to unforeseeable circumstances, such as the COVID-19 pandemic.

According to the lawsuit, unlike its major league counterpart, the MiLB business model is entirely dependent on receiving players, coaches and other team personnel from the MLB team, as well as federal, state and local governments to allow the admission of thousands of fans who attend games, purchase concessions and merchandise sold at the ballpark. Minor-league teams are also responsible for a fixed lease payment of as much as $1 million or more in order to operate in the ballpark. The economic implications from an inactive season is the business interruption minor league teams sought to cover: teams are on the hook for $2 million in losses that are being denied by insurers. The reasons for denial, according to the lawsuit: there is no physical damage to ballparks and policies exclude coverage for losses caused by viruses

The case is Chattanooga Professional Baseball, LLC, et al. v. Philadelphia Indemnity Insurance Co., et al. and the case number is 2:20-cv-03032 in the United States District Court Eastern District of Pennsylvania.

The 15 MiLB teams: the Chattanooga Lookouts, Amarillo Sod Poodles, Augusta GreenJackets, Binghamton Rumble Ponies, Boise Hawks, Columbia Fireflies, Delmarva Shorebirds, Eugene Emeralds, Fort Wayne TinCaps, Frederick Keys, Greenville Drive, Idaho Falls Chukars, Inland Empire 66ers, San Antonio Missions and Stockton Ports.