By Isha Marathe

June 16 - (The Insurer) - The U.S. Court of Appeals for the 3rd Circuit has dismissed a consolidated appeal from Ralph Lauren Corporation and luggage makers Tumi and Samsonite against Factory Mutual Insurance Company over losses resulting from the COVID-19 pandemic.

The decision affirms a 2024 New Jersey Supreme Court ruling.

In its initial appeal filed in August 2024, Ralph Lauren said that government-mandated closures during the pandemic caused it to suffer "physical loss or damage", which it claimed was covered by its property insurance policy with FM Global.

Ralph Lauren alone pursued coverage for $700 million in losses.

The appeals court, in turn, said that the plaintiffs “failed to allege any physical loss or damages because the properties were intact, functional and not destroyed in ‘whole or in part’”, according to the decision.

In its appeal, the plaintiffs said the virus sits on the physical surfaces and air of the insured property, amounting to physical alteration or destruction, and that one of FM Global's internal loss codes supports its argument.

However, the 3rd Circuit ruled that New Jersey courts may only look to "extrinsic evidence as an aid to interpretation" when the "terms of the contract are susceptible to at least two alternative interpretations". The terms are unambiguous because they denote that the destruction of property constitutes destruction that "renders it unusual or inhabitable", the ruling said.

Counsel for Factory Mutual Insurance Company did not immediately respond to a request for comment.

Counsel for Ralph Lauren and the consolidated plaintiffs did not immediately respond to a request for comment.