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Court rules against SXSW in dispute with insurer over COVID cancellation class action

By | Published on Monday 3 October 2022


A US judge last week concluded that the insurers of South By Southwest are not required to cover the costs that the festival incurred when dealing with a class action lawsuit in relation to its COVID-caused cancellation in 2020.

District judge Robert Pitman basically accepted the recommendations that magistrate judge Susan Hightower made earlier this year in relation to the dispute between SXSW and Federal Insurance Co.

The SXSW music conference and showcase festival was one of the first major music events to cancel as the COVID pandemic first started to spike in the US back in 2020. Ticket holders were told that they could defer their tickets to either the 2021, 2022 or 2023 editions of the festival.

However, some ticket holders reckoned that they should have been given the option of a cash refund, and they filed a class action lawsuit accusing the festival of, among other things, breach of contract.

That lawsuit was ultimately settled. But the whole thing prompted a second lawsuit, after Federal declined to cover SXSW’s legal costs in relation to the class action. Because it’s alway fun when lawsuits result in lawsuits.

Federal said that SXSW’s insurance policy had a professional services exclusion and that applied in this case. For its part, SXSW said that the insurer was employing an “overboard interpretation” of that particular exclusion. However, in a ruling in May, Hightower sided with the insurance firm.

It was for then for Pitman to decide whether to take Hightower’s recommendation. SXSW urged him not too, arguing that the magistrate judge – like the insurer – had also interpreted the exclusion clause in the insurance policy too widely. But those latest arguments in the case were not successful.

Pitman’s ruling last week states simply: “On this date, the court adopted US magistrate judge Susan Hightower’s report and recommendation concerning plaintiff SXSW LLC’s motion for partial summary judgment and defendant Federal Insurance Company’s motion for summary judgment”.

That means “the court’s order denied SXSW’s partial motion for summary judgment, and granted Federal’s motion for summary judgment. The court dismissed SXSW’s claims”.