COVID-19 Litigation Round Up
Jason A. Levine, Peter E. Masaitis, Alex Akerman, Gillian H. Clow, Debolina Das, and Kaelyne Wietelman, Alston & Bird LLP
Many of last week’s interesting COVID-19 related lawsuits involved the government. While litigation continued over state stay-at-home orders, Harvard and MIT challenged a new federal policy that would force foreign students on visas to return home if their classes are entirely online. In the meantime, some landlords and tenants took a break from suing each other by suing city governments, arguing the cities are required to either ban or permit evictions for unpaid rent.
This past week featured important securities litigation. One new suit alleged a company committed securities fraud by failing to disclose that its response to COVID-19 was inadequate. The Commodities Futures Trading Commission brought its first enforcement action related to the pandemic, targeting a trader who allegedly bragged that the pandemic bolstered his trading profits.
Intellectual property litigation continues to play an important role. Microsoft used trademark law to target an alleged pandemic-related phishing scheme. Meanwhile, a company that had retooled to help with COVID-19 testing invoked trade secret rights to protect its investment.
All the while, filings continued in employment, insurance, refund, and other types of now-familiar pandemic-related cases.
Microsoft filed a suit against a group of unidentified hackers who allegedly conducted a series of phishing email scams using Microsoft’s network. According to the complaint, the hackers targeted individuals who were looking for economic relief during the COVID-19 pandemic.
In Washington federal court, a USDA-licensed veterinary diagnostics company filed suit against its former employees. In response to the pandemic, plaintiff retrofitted its manufacturing line to create specimen vials for use in COVID-19 testing for humans. Plaintiff alleges that, while still working for plaintiff, defendants created a competing company and misappropriated trade secrets in order to manufacture specimen vials for COVID-19 testing.
Like clockwork, new suits seeking refunds for monies paid for services made impossible or impractical by COVID-19 continued to be filed this past week. As with previous weeks, universities, vacation rentals, resorts, hotels, study abroad programs and event venues continue to be targeted.
This past week brought more challenges to “stay-at-home” orders from Arizona gyms, and yet another challenge in Florida to a mandatory mask ordinance. Most notably, as potential new lockdowns loom, plaintiffs are beginning to file lawsuits related to the process under which a state may issue shutdown orders. For example, in North Carolina, the Lt. Governor seeks an order prohibiting the Governor from enforcing COVID-19 shutdown orders until the provisions of those orders have been approved by the Council of State.
Litigation related to rent abatement is also flourishing. Tenants in Philadelphia seek to force the City to preclude landlords from evicting tenants who are unable to pay rent during the pandemic, and to allow tenants to pay back rent without interest. In turn, Cincinnati landlords have filed suit against the state of Kentucky seeking just the opposite – an order prohibiting Kentucky from enforcing executive orders suspending evictions for non-payment of rent during the ongoing pandemic.
The Trump administration recently announced a policy that would require foreign students on F-1 visas to return home if their classes are entirely online. One day after Harvard and MIT filed suit to challenge the policy, the district court announced that it would resolve the issue by July 15. The court acknowledged that this would be a tough timeline for the U.S. Attorney, but noted that the time pressure was created by the government’s action. We will provide updates as this quick-moving matter develops, as well as report on related suits. The University of California has announced it plans to file a similar suit.
Employers across all industries continue to fight suits alleging wrongful termination and wrongful denial of benefits.
Nursing homes continue to be the center of attention for suits alleging wrongful death and elder abuse in connection with the pandemic.
As in prior weeks, loan processing agents have continued pursuing claims against financial institutions for failure to pay agent fees in connection with processing PPP loan applications.
Shareholders continue to file derivative lawsuits against companies for exposing themselves to litigation and stock depreciation by allegedly making false statements about their products, particularly COVID-19 related products.
Also this week, a shareholder brought a stock-drop suit against a company that allegedly made misleading statements about its COVID-19 response. Plaintiff claims that the company, a private prison operator, failed to disclose that its COVID-19 response procedures were inadequate. Plaintiff alleges that when an article was published exposing the facilities’ poor conditions, the company’s stock fell 7.8%.
Lastly, the U.S. Commodity Futures Trading Commission (CFTC) has filed its first enforcement action over conduct related to the COVID-19 crisis. In Texas federal court, the CFTC filed a complaint alleging that the defendant used social media to market himself as a successful foreign exchange trader whose trading profits have been bolstered by the pandemic. The complaint alleges that defendant continued to solicit clients after receiving a cease-and-desist letter from the Texas State Securities Board.