McDonald's reaches settlement with insurer

Fast food giant sued its insurer over class action litigation costs

McDonald's reaches settlement with insurer

Insurance News

By Lyle Adriano

McDonald’s Corporation and two of its franchisees in Chicago have reached a tentative settlement with their insurer, over a complaint made by the fast food giant that said its insurer refused to cover for litigation costs after the Golden Arches was sued by workers.

In a joint filing in Chicago federal court, McDonald’s, the franchisees, and Austin Mutual Insurance Company indicated that they have reached a settlement in principle. Reuters reported that the terms of the settlement were not disclosed.

It all began after five McDonald’s workers in Chicago filed a class action lawsuit against the restaurant chain in 2020, accusing McDonald’s of failing to follow government safety guidance on COVID-19. In their complaint, the workers alleged that the fast food company failed to provide hand sanitizer, gloves, and masks, and that the chain did not notify staff whenever an employee got infected.

McDonald’s and its franchisees later sued Austin Mutual also in 2020, claiming that the insurer was required to cover the costs of defending against the proposed class action. At the time of the 2020 lawsuit, McDonald’s claimed that it had incurred some $1.6 million in legal costs related to the worker class action.

But Austin Mutual maintained that the insurance policies did not apply to the worker safety case, since the workers had not alleged that they were injured.

Last year, US District Judge Charles Kocoras in Chicago dismissed Austin Mutual’s motion to dismiss the lawsuit, ruling that contracting the COVID-19 virus was "an indisputable bodily injury."

Also last year, the worker plaintiffs in the original lawsuit agreed to the dismissal of the case after McDonald’s – which denied wrongdoing – implemented various worker safety policies.


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