COVID-19 Litigation Round-Up

July 8, 2020

Jason A. Levine, Peter E. Masaitis, Alex Akerman, Gillian H. Clow, Debolina Das, and Kaelyne Wietelman, Alston & Bird LLP

This past week saw noticeably fewer new COVID-19-related lawsuits, but we expect this is attributable to the long Independence Day weekend. And the week did bring with it several noteworthy developments.

What do the New York court system and Las Vegas casinos have in common? They were sued by labor unions claiming they failed to protect their employees from the coronavirus.

As the pandemic continues, landlord-tenant litigation has now reached a new stage – bankruptcy court – with a tenant successfully invoking the Bankruptcy Act as a basis for deferring about $65 million in rent.

More businesses challenged “stay-at-home” orders, and one company sued to block a Seattle ordinance from requiring it to provide hazard pay to gig food delivery workers. The proliferation of now commonplace commercial litigation also continued, with suits seeking refunds for cancellations, payments from business-interruption insurance coverage, and releases from financial obligations due to the pandemic.

REFUND/CANCELLATION

The holiday week brought more than a dozen new suits seeking refunds for monies paid for services made impossible or impractical by COVID-19. These suits will likely continue to mount as many states are either tightening restrictions or slowing the pace of reopening in response to COVID-19 surges. Airlines, universities, ticket-brokers, resorts, summer camps, theme parks and event venues continue to be targeted.

GOVERNMENT

This week brought more challenges to “stay-at-home” orders from businesses ranging from gyms to bars across many states including Massachusetts and Arizona, as well as another challenge in Florida to a mandatory mask ordinance. 

Most notable are developments related to COVID-19 business regulations. Instacart has sued to block a Seattle ordinance requiring that it pay coronavirus hazard pay to gig food delivery workers. Instacart argues that the law, the first of its kind in the country, violates the state’s Keep Groceries Affordable Act of 2018, as well as the U.S. Constitution and the Washington State Constitution.

In other news, a federal judge denied an attempt by landlords to quash New York’s limits on evictions during the COVID-19 crisis. The state won summary judgment as the court found that the restrictions do not violate landlords’ rights under the Takings or Contract clauses of the U.S. Constitution, and that the court has no jurisdiction over state-law challenges.

INSURANCE

We continue to see cases filed across numerous industries (including restaurants, salons, and educational centers) for business interruption as a result of the COVID-19 pandemic.

WORKPLACE

Claims against employers for allegedly failing to provide proper benefits or wrongfully terminating employees continued this week as well.

In the District Court of Nevada, the joint bargaining agency of the Culinary Workers Union and the Bartenders Union filed suit against the MGM Resorts, Harrah’s, and Bellagio casinos for not protecting their employees from COVID-19.  The complaint alleges the casinos failed to adopt reasonable rules and procedures to address the spread of the virus. Plaintiff seeks injunctive relief under the Labor Management Relations Act.

Across the country in the Southern District of New York, a union representing approximately 1,500 Court Officers filed a putative class action against the Chief Judge of the New York state court system alleging that the courts failed to provide suitable PPE to union members and failed to properly sterilize work areas within the court, such that officers have been, and continue to be, exposed to COVID-19. The Union President alleges that upon bringing these practices to light, he was threatened with disciplinary action. The union is seeking at least $2 million in damages.

Also in the Southern District of New York, the Professional Staff Congress at the City University of New York (CUNY) alleged that, despite being awarded $251 million in CARES Act money, CUNY began laying off thousands of employees in violation of that Act. The layoffs, mostly of adjunct faculty and staff, totaled 2,800 by July 1, 2020, or roughly 20% of CUNY’s adjunct workforce. The suit seeks injunctive relief barring CUNY from further layoffs of adjunct employees and requiring reinstatement of those already laid off, along with back-pay and benefits.

CARES ACT/PPP

Lenders’ alleged failure to pay agent fees continues to be a hot-button issue that is likely to persist, especially if a new round of PPP loans are funded in coming weeks. As previously reported, the Judicial Panel on Multidistrict Litigation is considering whether to consolidate these cases into a single MDL.

LEASES/RENTS

Renters continue to file cases alleging that the pandemic released them from rent or lease obligations. Last week, a Delaware bankruptcy judge granted rent deferral of 60 days for the gym chain 24 Hour Fitness Worldwide Inc., for roughly $65 million in rent payments. The judge acknowledged that 24 Hour Fitness was moving to restructure its $1.4 billion in debt and sympathized that the corporation needs as much liquidity as possible since there is uncertainty about the reopening of some of its locations.

Jason Levine is a commercial and antitrust litigation partner in the Washington, D.C. office of Alston & Bird LLP. Peter Masaitis is a product liability and toxic tort litigation partner in the firm’s Los Angeles office.  Alex Akerman,  Gillian Clow, Debolina Das, and Kaelyne Wietelman are litigation associates at the firm.