Fast food king McDonald’s has filed suit against one of its insurers, asserting the insurer has wrongly refused to cover the fast mounting legal fees the burger purveyor has incurred, as it defends itself against a legal action brought by restaurant workers who claim McDonald’s didn’t do enough to keep them safe from COVID-19.
On Aug. 27, Chicago-based McDonald’s Corp. and two of its franchisees filed suit in Chicago federal court against Austin Mutual Insurance Company, a subsidiary of American Family Mutual Insurance Company.
The claim centers on Austin Mutual’s alleged refusal to fund the defense of McDonald’s and the two franchisees, identified as DAK4 LLC and Lexi Management LLC, against the mass action brought by its workers.
The franchisees own McDonald’s restaurant at 2438 W. Cermak Road and 10320 S. Kedzie Ave., both in Chicago.
In that lawsuit, filed in May and still pending in Cook County Circuit Court, the workers asserted McDonald’s and the franchisees improperly trained workers on social distancing and mask-wearing, as required by the Centers for Disease Control and state public health rules. They asserted the restaurant owners did not enforce those policies within the restaurants.
At the end of June, Cook County Judge Pam Reilly granted an order against the franchisees forcing them to institute and implement better distancing and mask-wearing policies. The order did not apply to McDonald’s Corp., however, as the judge noted McDonald’s had already taken a number of actions to protect its workers and continued to evolve its plans, policies and workplace infrastructure to adapt to new public health guidance and worker safety deficiencies.
Further, the judge noted the franchisees owned the restaurants at the heart of the lawsuit, not the corporate parent.
The order did not award any funds to the any of the plaintiffs or their attorneys, as Judge Reilly said “the harm of being infected with COVID-19 is not something that a monetary award will remedy.”
However, as the litigation has continued, McDonald’s said it has amassed legal bills of more than $1.5 million defending against the lawsuit. The franchisees have, together, been charged legal fees of more than $116,000.
McDonald’s said those costs should be borne by Austin Mutual under the terms of its policy, which calls on the insurer to fund legal defense costs related to a “bodily injury” claim.
McDonald’s said this lawsuit counts as such a claim, and alleged Austin Mutual has violated its contract
McDonald’s is represented in the action against Austin Mutual and in the workers’ lawsuit by attorneys Paul Walker-Bright and Angela R. Elbert, of the firm of Neal Gerber & Eisenberg LLP, of Chicago.
The franchisees are represented by attorneys Steven L. Baerson, of Williams & Baerson LLC, of Chicago, and Sande S. Shamash and Anthony J. Madonia, of Anthony J. Madonia & Associates Ltd., of Des Plaines.
The workers are being represented by attorneys with the firm of James & Hoffman PC, of Washington, D.C.