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`Case 2:20-cv-10167-SDW-LDW Document 1 Filed 08/07/20 Page 1 of 31 PageID: 1
`
`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY
` CASE NO.:
` Ralph Lauren Corporation,
`
`
`Plaintiff,
` v. Factory Mutual Insurance Company,
`
`
`Defendant.
`COMPLAINT
`
`Plaintiff, Ralph Lauren Corporation (“Ralph Lauren Corp.”), files this Complaint for
`damages and declaratory judgment against Defendant, Factory Mutual Insurance Company
`(“FMIC”), alleging the following: I.
`INTRODUCTION
`This diversity action for breach of contract, declaratory judgment, and violation of
`1.
`the New Jersey Consumer Fraud Act arises from FMIC’s improper investigation and refusal to
`pay Ralph Lauren Corp.’s claim for insurance coverage under an “all risks” insurance policy that
`FMIC sold to Ralph Lauren Corp.
`2.
`Despite agreeing to cover Ralph Lauren Corp. for all risks of physical loss or
`damage to property resulting from any cause not excluded, as well as the resulting time element
`and extra expense losses, FMIC has refused to honor its contractual obligations in the face of a
`claim for which coverage is expressly provided. Instead, FMIC attempts to wrongfully shoehorn
`Ralph Lauren Corp.’s claim into a narrow and limited grant of coverage, while contending –
`without textual support – that all other coverage is excluded. Notwithstanding its conduct, FMIC
`must cover the loss sustained by Ralph Lauren Corp. that FMIC contractually agreed to insure.
`1
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`Case 2:20-cv-10167-SDW-LDW Document 1 Filed 08/07/20 Page 2 of 31 PageID: 2
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`
`PARTIES
`II.
`3.
`Ralph Lauren Corp. is incorporated under the laws of the State of Delaware with
`its principal place of business at 650 Madison Avenue, New York, NY 10022. Ralph Lauren Corp.
`maintains corporate offices responsible for risk management and insurance in New Jersey.
`FMIC is incorporated under the laws of the State of Rhode Island with its principal
`4.
`place of business in Johnston, Rhode Island.
`III.
`JURISDICTION AND VENUE
`5.
`This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332, as the
`parties are completely diverse in citizenship and the amount in controversy exceeds $75,000
`exclusive of interest and costs.
`Venue is proper in this Court pursuant to 28 U.S.C. §1391(b)(2) as a substantial
`6.
`portion of the events or omissions giving rise to Ralph Lauren Corp.’s claim occurred in this
`district, including the negotiation and delivery of the relevant insurance policy, as well as the
`submission of the claim at issue.
`IV.
`FACTUAL BACKGROUND
`7.
`Founded in 1967 by Mr. Ralph Lauren, Ralph Lauren Corp. is a global leader in the
`design, marketing, and distribution of premium lifestyle products, including apparel, footwear,
`accessories, home furnishings, fragrances and hospitality.
`Ralph Lauren Corp.’s premier reputation has been built on over fifty years of
`8.
`outfitting a diverse portion of the market with exceptional products.
`Ralph Lauren Corp. operates over 1,000 stores around the world.1
`9.
`
`1 See http://investor.ralphlauren.com/news-releases/news-release-details/ralph-lauren-reports-
`fourth-quarter-and-full-year-fiscal-2020 (last viewed August 6, 2020).
`2
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`
`Prior to being forced to close due to COVID-19, hundreds of thousands of people
`10.
`visited Ralph Lauren Corp. stores every day.
`11.
`FMIC sold an insurance policy to Ralph Lauren Corp.
`12. While soliciting Ralph Lauren Corp.’s business, FMIC touted its “Market Leading
`Claims Service” as a key reason why Ralph Lauren Corp. should procure coverage from FMIC,
`claiming to “[f]ocus on finding coverage instead of exclusions” and “[f]air and prompt payment
`of losses”. (Proposal dated May 1, 2019, attached as Exhibit B (bolded terms original).)
`13.
`On information and belief, FMIC represents that it evaluates all claims in good
`faith, in a manner consistent with the plain language of the policy and pursuant to the applicable
`law governing the interpretation of the relevant policy.
`14.
`The policy has an effective term of May 1, 2019 through May 1, 2020. (Policy No.
`1051410, at RLCPolicy_0008, attached as Exhibit A (the “Policy”).)
`15.
`FMIC also issued a policy to Ralph Lauren Corp. for the term May 1, 2020 through
`May 1, 2021, which is substantively similar in all material respects relating to coverage to the
`Policy. 16.
`The Policy covers Ralph Lauren Corp.’s property against “ALL RISKS OF
`PHYSICAL LOSS OR DAMAGE, except as … excluded ….” (Exhibit A, at RLCPolicy_0008.)
`17.
`The Policy also affords coverage to Ralph Lauren Corp. for Time Element loss
`“directly resulting from physical loss or damage of the type insured ….” (Exhibit A, at
`RLCPolicy_0046.)
`18.
`The Policy provides up to $700 million in coverage per occurrence. (Exhibit A, at
`RLCPolicy_0011.)
`3
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`
`FMIC agreed to cover Ralph Lauren Corp.’s risk of loss, in consideration of a
`19.
`substantial premium that was paid by Ralph Lauren Corp. (Exhibit A, at RLCPolicy_0008.)
`A.
`COVID-19 Is a Deadly Communicable Disease
`20.
`COVID-19 is a deadly communicable disease that, as of August 6, 2020, has
`already infected over 4.8 million people in the United States and caused more than 157,000 deaths.2
`21.
`The Centers for Disease Control and Prevention (“CDC”) estimates that infection
`rates for COVID-19 are likely at least ten times higher than reported.3
`22.
`There is still no effective vaccine for COVID-19.
`23.
`The World Health Organization (“WHO”) has declared the COVID-19 outbreak a
`pandemic and President Trump has declared a nationwide emergency due to the public health
`emergency caused by the COVID-19 outbreak in the United States.
`A pandemic, by definition, is an “an epidemic occurring worldwide ….”4
`24.
`25.
`The incubation period for COVID-19—the time between exposure (becoming
`infected) and symptom onset—can be up to 14 days.5
`26.
`During this period (also known as the “pre-symptomatic” period), infected persons
`can be contagious and disease transmission can occur before the infected person shows any
`symptoms or has any reason to believe they are infected.6
`
`2 See https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html (last viewed
`August 6, 2020).
`3 See https://www.nbcnews.com/health/health-news/cdc-says-covid-19-cases-u-s-may-be-10-
`n1232134 (last viewed August 6, 2020).
`4 See https://www.who.int/bulletin/volumes/89/7/11-
`088815/en/#:~:text=A%20pandemic%20is%20defined%20as,are%20not%20considered%20pandemics.
`5 See https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200402-sitrep-
`73-covid-19.pdf?sfvrsn=5ae25bc7_2 (last viewed August 6, 2020).
`6 See https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200402-sitrep-
`73-covid-19.pdf?sfvrsn=5ae25bc7_2 (“In a small number of case reports and studies, pre-symptomatic
`transmission has been documented through contact tracing efforts and enhanced investigation of clusters
`of confirmed cases. This is supported by data suggesting that some people can test positive for COVID-19
`4
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`Not only is COVID-19 spread by human-to-human transfer, but the WHO has
`27.
`confirmed that COVID-19 can exist on contaminated objects or surfaces.7
`28.
`According to a study documented in The New England Journal of Medicine,
`COVID-19 was detectable in aerosols for up to three hours, up to four hours on copper, up to 24
`hours on cardboard, and up to three days on plastic and stainless steel.8
`29.
`Ralph Lauren Corp. uses all of these materials at its stores and in its ordinary course
`of business.
`30.
`Individuals also can become infected with COVID-19 through indirect contact with
`surfaces or objects used by an infected person, whether they were symptomatic or not.9
`31.
`COVID-19 also can spread through airborne transmission.10
`32.
`The CDC published a study in July that concluded “droplet transmission was
`prompted by air-conditioned ventilation” that caused an outbreak among people who dined in the
`same air-conditioned restaurant.11
`
`from 1-3 days before they develop symptoms. Thus, it is possible that people infected with COVID-19
`could transmit the virus before significant symptoms develop.”) (last viewed August 6, 2020).
`7 See https://www.who.int/news-room/commentaries/detail/modes-of-transmission-of-virus-
`causing-covid-19-implications-for-ipc-precaution-recommendations (“[T]ransmission of the COVID-19
`virus can occur by direct contact with infected people and indirect contact with surfaces in the immediate
`environment or with objects used on the infected person”) (last viewed August 6, 2020).
`8 See https://www.nih.gov/news-events/news-releases/new-coronavirus-stable-hours-surfaces
`(last viewed August 4, 2020); see also https://www.who.int/news-room/commentaries/detail/modes-of-
`transmission-of-virus-causing-covid-19-implications-for-ipc-precaution-recommendations (last viewed
`August 6, 2020).
`9 Id.
`10 See https://academic.oup.com/cid/article-pdf/doi/10.1093/cid/ciaa939/33478095/ciaa939.pdf
`(last viewed July 14, 2020); https://academic.oup.com/cid/article-
`pdf/doi/10.1093/cid/ciaa939/33478095/ciaa939.pdf (last viewed August 6, 2020).
`11 See https://wwwnc.cdc.gov/eid/article/26/7/20-0764_article (last viewed August 6, 2020).
`5
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`
`Civil Authority Orders Because of COVID-19 and Related Physical Loss or
`B.
`Damage to Property
`On March 16, 2020, and directly because of COVID-19, the CDC and the national
`33.
`Coronavirus Task Force, civil authorities regulating the effect of infectious disease, issued public
`guidance titled “30 Days to Slow the Spread” of COVID-19. The guidance called for extreme
`social distancing measures, such as working from home, avoiding gatherings of more than ten
`people, and avoiding discretionary travel, such as shopping at retail stores.
`34.
`Also directly because of COVID-19 and to protect property from further loss or
`damage, state and local governments imposed directives requiring residents to shelter in place or
`remain in their homes unless performing “essential” activities (“Stay at Home Orders”).
`35. More recently, some medical researchers have advised that HEPA and other
`specialized air filtration systems can be used to remediate the presence of COVID-19.12
`36.
`Because COVID-19 physically affects the property on which it is present and can
`be transferred to individuals that come into contact with the surface of such property, thereby
`infecting that individual, the Stay at Home Orders were issued directly because of damage to
`property to minimize the spread of COVID-19 by reducing the likelihood of an individual’s
`exposure to that property.
`37.
`Likewise, as evidenced by the recent advice that HEPA and other specialized air
`filtration systems can be utilized to remedy the presence of COVID-19, physical alteration of
`property may be necessary to render it safe from COVID-19 and return the property to a useable
`state.13
`
`12 See https://www.theatlantic.com/health/archive/2020/07/why-arent-we-talking-more-about-
`airborne-transmission/614737/ (last viewed August 6, 2020).
`13 Id.
`6
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`The Stay at Home Orders typically require businesses deemed “non-essential” to
`38.
`be closed and in-person work is forbidden. For example, on March 16, 2020, New York City
`Mayor Bill De Blasio issued Executive Order No. 100, which was intended to minimize the spread
`of COVID-19, emphasizing that COVID-19 “physically is causing property loss and damage.”
`(N.Y.C. Exec. Order No. 100, attached as Exhibit C.)
`39.
`On March 19, 2020, the City of Los Angeles issued a “Safer at Home” order,
`detailing how COVID-19 “can spread easily from person to person and it is physically causing
`property loss or damage due to its tendency to attach to surfaces for prolonged periods of time.”
`(Los Angeles Safer at Home Order, attached as Exhibit D.)
`40.
` On March 21, 2020, New Jersey Governor Phil Murphy issued Executive Order
`No. 107, mandating that New Jersey residents remain at their place of residence unless engaged in
`essential activities, cancelling gatherings of individuals, and closing brick-and-mortar premises of
`all non-essential retail businesses. (N.J. Exec. Order 107, attached as Exhibit E.)
`41.
`Positivity rates measure the number of positive tests from the total number of tests
`administered and are used for determining whether a particular area is prepared to reopen.14
`42.
`The WHO recommends that a particular area reach a 5% positivity rate or lower
`before reopening.15
`43.
`On March 28, 2020, the positivity rate for New York City was 71.2%, meaning that
`for every 1,000 people tested, 712 people tested positive.16
`44.
`As of July 31, 2020, the positivity rate in seven states and Puerto Rico was above
`15%, which is more than three times higher than the recommended 5% rate.17
`
`14 See https://coronavirus.jhu.edu/testing/testing-positivity (last viewed August 6, 2020).
`15 See https://coronavirus.jhu.edu/testing/testing-positivity (last viewed August 6, 2020).
`16 See https://www1.nyc.gov/site/doh/covid/covid-19-data.page (last viewed August 6, 2020).
`17 See https://coronavirus.jhu.edu/testing/testing-positivity (last viewed August 6, 2020).
`7
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`Some Stay at Home Orders remain in effect and have caused the suspension of both
`45.
`non-essential and essential businesses.
`46.
`Despite reopening and loosening of restrictions under the Stay at Home Orders,
`many non-essential businesses have not returned operations to pre-loss levels.
`47.
`In some jurisdictions, new orders restricting or closing businesses have been issued
`as a direct result of a new presence of COVID-19, which has required some reopened stores to
`close again.18
`48.
`As a non-essential business with operations in locations under Stay at Home Orders,
`Ralph Lauren Corp. has been required to comply with applicable orders.
`49.
`Stay at Home Orders required complete closure of Ralph Lauren Corp. locations
`around the United States. Many of these locations have reopened, but are subject to government
`orders limiting operational capacity.
`50.
`Similar government orders in other countries have required Ralph Lauren Corp.
`locations around the world to close.
`51.
`COVID-19 and Stay at Home Orders have directly impacted Ralph Lauren Corp.’s
`operations and Ralph Lauren Corp.’s gross earnings and gross profit. COVID-19 and Stay at
`Home Orders have also directly caused Ralph Lauren Corp. to incur extra costs to temporarily
`continue as nearly normal as practicable the conduct of its business.
`52.
`The restrictions and limitations on Ralph Lauren Corp.’s operations has caused
`substantial damage.
`
`18 See https://www.forbes.com/sites/bradjaphe/2020/07/13/california-is-closing-all-bars-and-
`indoor-restaurants-again-due-to-coronavirus-surge/#267428ba1517 (last viewed August 6, 2020);
`https://fortune.com/2020/06/27/texas-florida-close-bars-coronavirus/ (last viewed August 6, 2020).
`8
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`Despite efforts to prioritize online sales in the midst of store closures due to
`53.
`COVID-19, Ralph Lauren Corp.’s revenues dropped 66% for the first quarter as compared to the
`year before.19
`54.
`In North America alone, brick-and-mortar store sales fell 77% while wholesale
`sales plummeted 93% from the previous year.20
`55.
`Ralph Lauren Corp. has suffered direct physical loss and/or damage to its property
`due to COVID-19 and the Stay at Home Orders.
`56.
`Likewise, COVID-19 has caused direct physical loss and/or damage to property
`that Ralph Lauren Corp. does not own, occupy, lease, rent, or have insured under the Policy.
`C.
`Ralph Lauren Corp.’s “All Risk” Policy
`57.
` The Policy covers property at or within 1,000 feet of Ralph Lauren Corp.’s
`locations “against ALL RISKS OF PHYSICAL LOSS OR DAMAGE, except as hereinafter
`excluded ….” (Exhibit A, at RLCPolicy_0008, RLCPolicy_0018.)
`58.
`Ralph Lauren Corp.’s covered locations include the stores listed in an appendix to
`the Policy. These locations are referred to herein as “Ralph Lauren Corp. Locations.” (Exhibit A,
`at RLCPolicy_0085-106.)
`59.
`FMIC drafted the Policy.
`60.
`In addition to affording coverage for “ALL RISKS OF PHYSICAL LOSS OR
`DAMAGE,” the Policy contains certain “ADDITIONAL COVERAGES.” Specifically, the
`Property Damage sections of the Policy provide that it “includes the following Additional
`Coverages for insured physical loss or damage.” (Exhibit A, at RLCPOLICY_0025.)
`
`19 See https://footwearnews.com/2020/business/earnings/ralph-lauren-q1-2021-earnings-sales-
`declines-1203036030/ (last viewed August 6, 2020).
`20 See https://footwearnews.com/2020/business/earnings/ralph-lauren-q1-2021-earnings-sales-
`declines-1203036030/ (last viewed August 6, 2020).
`9
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`
`One of the “Additional Coverages for insured physical loss or damage” is titled
`61.
`“COMMUNICABLE DISEASE RESPONSE.” (Exhibit A, at RLCPOLICY_0031.)
`62.
`Pursuant to the “COMMUNICABLE DISEASE RESPONSE” coverage, the Policy
`expressly covers, among other things, “the reasonable and necessary costs incurred … for the: 1)
`cleanup, removal and disposal of … communicable diseases from insured property.”21 (Exhibit
`A, at RLCPolicy_0031.)
`63.
`“Communicable disease” is a cause of loss covered under the Policy.
`64.
`By including COMMUNICABLE DISEASE RESPONSE coverage as one of the
`“Additional Coverages for insured physical loss or damage,” the Policy expressly acknowledges
`that communicable disease causes “insured physical loss or damage.”
`65.
`Similarly, by providing for
`the “cleanup, removal and disposal of …
`communicable disease,” the Policy explicitly recognize that communicable disease causes a
`physical, tangible alteration to the integrity of the property.
`66.
`Because the Policy specifically covers remediation of the damage caused by
`communicable disease, the physical damage to property caused by communicable disease is
`“physical damage of the type insured” under the Policy.
`1.
`COVID-19 Triggered Coverage Under the “All Risks” Policy
`67.
`The actual presence of COVID-19 at Ralph Lauren Corp. Locations has triggered
`coverage under the Policy.
`68.
`In addition, the presence of COVID-19 at or on property away from Ralph Lauren
`Corp. Locations has triggered coverage under the Policy.
`
`21 Terms defined in the Policy are signified by the use of bold typeface. Unless otherwise stated,
`the use of bold typeface signifies the use of same in the Policy.
`10
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`
`COVID-19 has caused and continues to cause physical loss and physical damage
`69.
`to property, including Ralph Lauren Corp.’s property.
`70.
`Indeed, COVID-19 has caused and continues to cause a physical, tangible alteration
`to the integrity of the property at and away from Ralph Lauren Corp. Locations and, therefore, has
`caused physical damage to such property.
`71.
`As well, COVID-19 has caused and continues to cause a physical loss to property
`at and away from Ralph Lauren Corp. Locations because it has eliminated the use and function of
`such property.
`72.
`COVID-19 also has caused and continues to cause Ralph Lauren Corp. to
`experience covered Time Element loss.
`2.
`Multiple Coverages Are Triggered Under the “All Risks”
`Policy
`73.
`In addition to triggering the Policy’s “all risks” coverage, Ralph Lauren Corp.’s
`claim also triggers multiple “Other Additional Coverages,” “Time Element Coverages,” and “Time
`Element Coverage Extensions” provided under the Policy including but not limited to the
`following.
`i.
`COVID-19 Triggered the Policy’s Communicable Disease
`Response Coverage
`
`74.
`The actual presence of COVID-19 at Ralph Lauren Corp. Locations has caused
`physical damage to property at such Ralph Lauren Corp. Locations resulting in limited, restricted,
`and/or prohibited access due to the issuance of orders by an authorized governmental agencies
`regulating communicable disease, thereby triggering coverage under the Policy’s Communicable
`Disease Response coverage for the resulting loss.
`The actual presence of COVID-19 at Ralph Lauren Corp. Locations has caused
`75.
`physical damage to property at these locations resulting in decisions by Ralph Lauren Corp. to
`11
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`limit, restrict, and/or prohibit access thereto, thereby triggering coverage under the Policy’s
`Communicable Disease Response coverage for the resulting loss.
`76.
`Upon information and belief the actual presence of COVID-19 continues to exist at
`Ralph Lauren Corp. Locations.
`ii.
`COVID-19 Triggered the Policy’s Protection and Preservation of
`Property Coverage
`
`77.
`COVID-19 has threatened and continues to threaten to cause physical loss and
`damage to insured property.
`The actual and threatened physical loss or damage to insured property has caused
`78.
`Ralph Lauren Corp. to take action to temporarily protect or preserve its property, thereby triggering
`the Policy’s Protection and Preservation of Property coverage.
`iii.
`COVID-19 Triggered the Policy’s Time Element Coverage
`
`79.
` The Policy affords coverage for Ralph Lauren Corp.’s Time Element loss, subject
`to the Policy’s terms and conditions.
`80.
`COVID-19 has caused Ralph Lauren Corp. to suffer Time Element loss as a direct
`result of physical loss and damage of the type insured under the Policy.
`81.
`This loss triggers coverage under the Policy’s Time Element provisions including,
`without limitation, coverage for Gross Earnings loss, Gross Profits loss, and Rental Income loss
`up to the Policy’s applicable limits and sublimits.
`iv.
`COVID-19 Triggered the Policy’s Extra Expense Coverage
`
`82.
`COVID-19 has caused Ralph Lauren Corp. to incur reasonable and necessary extra
`expenses to temporarily continue as nearly normal as practicable the conduct of Ralph Lauren
`Corp.’s business. Such expenses are beyond those that would have normally been incurred in
`conducting the business absent the presence of COVID-19.
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`
`The expenses incurred by Ralph Lauren Corp. beyond those necessary in the normal
`83.
`operation of its business solely as a result of the physical loss and damage caused by COVID-19
`trigger coverage under the Policy’s Extra Expense coverage.
`v.
`COVID-19 Triggered the Policy’s Civil Authority Coverage
`
`84.
`The physical damage caused by the presence of COVID-19 at property located at
`or within five (5) statute miles of Ralph Lauren Corp. Locations has directly resulted in the
`issuance of orders from civil authorities restricting and/or prohibiting access to Ralph Lauren Corp.
`Locations. 85.
`Ralph Lauren Corp. has sustained and will continue to sustain Time Element loss
`because orders from civil authorities issued as a direct result of physical damage of the type insured
`at a Ralph Lauren Corp. Location or within five (5) statute miles of a Ralph Lauren Corp. Location,
`have prohibited or restricted access to Ralph Lauren Corp. Locations. This Time Element loss
`triggers coverage under the Policy’s Civil or Military Authority coverage, subject to the Policy’s
`applicable limits.
`vi.
`COVID-19 Triggered the Policy’s Contingent Time Element
`Extended Coverage
`
`86.
`The presence of COVID-19 at the locations of Ralph Lauren Corp.’s direct and
`indirect customers, suppliers, contract manufacturers, or contract service providers has caused
`physical loss or damage to property at such locations.
`In addition, the presence of COVID-19 at the locations of companies under a
`87.
`royalty, licensing fee and/or commission agreement with Ralph Lauren Corp. has caused physical
`loss and/or damage to property at such locations.
`13
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`Ralph Lauren Corp. has sustained and will continue to sustain Time Element loss
`88.
`as a result of the damage to property at the locations described in the previous two paragraphs,
`triggering coverage under the Policy’s Contingent Time Element Extended coverage.
`vii.
`COVID-19 Triggered the Policy’s Ingress/Egress Coverage
`
`89.
`COVID-19 and the physical loss and damage it has caused has resulted in the
`necessary interruption of Ralph Lauren Corp.’s business by totally or partially preventing ingress
`to or egress from Ralph Lauren Corp. Locations as a direct result of physical loss and damage of
`the type insured to property of the type insured.
`90.
`The Time Element loss sustained by Ralph Lauren Corp. due to the necessary
`suspension of Ralph Lauren Corp.’s business as a result of the total or partial denial of access to
`Ralph Lauren Corp. Locations triggers coverage under the Policy’s Ingress/Egress coverage.
`viii.
`COVID-19 Triggered the Policy’s Attraction Property Coverage
`
`91.
`COVID-19 also has caused and is continuing to cause physical loss and damage to
`property away from Ralph Lauren Corp. Locations, including property located within one (1)
`statute mile of Ralph Lauren Corp. Locations that attracts business to Ralph Lauren Corp.
`Locations. 92.
`Ralph Lauren Corp. has sustained and will continue to sustain loss and extra
`expenses directly resulting from physical loss and damage of the type insured to property of the
`type insured that attracts business to Ralph Lauren Corp. Locations. These losses and extra
`expenses trigger coverage under the Policy’s Attraction Property Coverage, subject to the Policy’s
`applicable limits.
`
`
`14
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`
`COVID-19 Triggered the Policy’s Interruption by Communicable
`ix.
`Disease Coverage
`93.
`The actual presence of COVID-19 at Ralph Lauren Corp. Locations has resulted in
`the issuance of orders by authorized governmental agencies regulating communicable disease that
`limited, restricted, and/or prohibited access to such locations.
`The actual presence of COVID-19 at Ralph Lauren Corp. Locations has resulted in
`94.
`decisions by Ralph Lauren Corp. that limited, restricted, and/or prohibited access to such locations.
`95.
`The Time Element loss sustained by Ralph Lauren Corp. resulting from the civil
`authority orders and decisions by Ralph Lauren Corp. that limited, restricted, and/or prohibited
`access to Ralph Lauren Corp. Locations that were issued and/or made due to the actual presence
`of COVID-19 at Ralph Lauren Corp. Locations triggers coverage under the Policy’s Interruption
`by Communicable Disease coverage.
`3.
`No Exclusion Impacts Coverage
`96.
`No exclusions in the Policy apply to preclude or limit coverage for Ralph Lauren
`Corp.’s claimed loss. To the extent FMIC contends that any exclusion applies, such exclusion is
`unenforceable. 4.
`The Policy’s Contamination Exclusion Does Not Apply
`97.
`The Policy’s “Communicable Disease Response” coverage expressly covers,
`among other things, “the reasonable and necessary costs incurred … for the: 1) cleanup, removal
`and disposal of … communicable diseases from
`insured property.” (Exhibit A, at
`RLCPolicy_0031.)
`98.
`FMIC has acknowledged in response to Ralph Lauren Corp.’s claim that COVID-
`19 is a communicable disease as that term is defined in the Policy. (April 27, 2020 Letter from
`FMIC, attached as Exhibit F.)
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`The Policy also contains an exclusion that purports to preclude coverage for
`99.
`“contamination.” (Exhibit A, at RLCPolicy_0079.)
`100. The Policy defines “contamination” as, among other things, a “virus.” (Exhibit A,
`at RLCPolicy_0079.)
`101. The Policy’s “contamination” exclusion does not exclude coverage for loss caused
`by “communicable disease.”
`102. The Policy’s “contamination” exclusion does not exclude coverage for Ralph
`Lauren Corp.’s claim, which is based on the direct physical loss or damage caused by COVID-19
`and the resulting Stay at Home Orders.
`103. To the extent FMIC contends that the Policy’s “contamination” exclusion bars
`coverage for loss caused by “communicable disease” or some other aspect of Ralph Lauren
`Corp.’s claim, the Policy is ambiguous because it is susceptible to more than one reasonable
`interpretation and, therefore, must be construed in favor of coverage. Royal Ins. Co. of Am. V.
`KSI Trading Corp., 563 F.3d 68, 74 (3d Cir. 2009) (Under New Jersey law, “[w]here genuine
`ambiguity exists, such that the controlling language will support two meanings, one favorable to
`the insurer, and the other favorable to the insured, the interpretation sustaining coverage must be
`applied.”).
`5.
`The Policy’s Communicable Disease Sublimits Do Not Cap Ralph
`Lauren Corp.’s Recovery
`104. The Policy affords coverage to Ralph Lauren Corp. for the actual presence of
`communicable disease at a Ralph Lauren Corp. Location. This coverage is found under two
`sections of the Policy titled “Communicable Disease Response” and “Interruption by
`Communicable Disease” (together, the “On-Site Sublimited Communicable Disease Coverages”).
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`105. The On-Site Sublimited Communicable Disease Coverages, including any
`sublimits, do not apply to limit any other coverage under the Policy, including physical damage
`resulting from or caused by communicable disease away from Ralph Lauren Corp. Locations.
`106. Rather, coverage for physical loss and damage and/or resulting Time Element loss,
`from or caused by communicable disease away from Ralph Lauren Corp. Locations, is subject to
`the policy limits associated with the coverage or coverages implicated.
`D.
`FMIC’s Fraudulent Conduct
`1.
`FMIC Fraudulently Conducted a Directed Investigation of
`Ralph Lauren Corp.’s Claim
`107. Aware that the Policy and others like it afford coverage for COVID-19 losses
`beyond the On-Site Sublimited Communicable Disease Coverages, FMIC devised a plan designed
`to steer its policyholders, including Ralph Lauren Corp., into at most, the On-Site Sublimited
`Communicable Disease Coverages for their COVID-19 loss.
`108. FMIC executed that plan in response to Ralph Lauren Corp.’s claim, consistently
`mischaracterizing the nature and scope of the claim despite repeated efforts from Ralph Lauren
`Corp. to correct FMIC’s inaccurate statements.
`109. Ralph Lauren Corp. submitted its initial claim for coverage under the Policy on
`March 30, 2020, through its insurance broker, Willis Towers Watson (“WTW”). (March 30, 2020
`e-mail containing claim, attached as Exhibit G.)
`110. The notice of claim specified that the “Type of Loss” was “Physical Damage &
`Time Element.” It further indicated that it was based on “Physical damage and time element losses
`due to Covid-19 impact on physical assets ….” (Exhibit G.)
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`111. Following the submission of the claim, Ralph Lauren Corp.’s Senior Director of
`Risk Management, Jason Fenkel, on one occasion, and Michael Kennedy of WTW, on several
`occasions, spoke to Bill Reed, FMIC’s Claims Manager, and colleagues.
`112. During these separate calls, Mr. Fenkel and Mr. Kennedy advised Mr. Reed that
`Ralph Lauren Corp.’s claim was based on the presence of COVID-19 on property, including at
`Ralph Lauren Corp. Locations, and the resulting Time Element loss.
`113. Over three weeks later, on April 22, 2020, FMIC sent a letter to Ralph Lauren Corp.
`acknowle