COVID-19 Litigation Round Up

July 27, 2020

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

As COVID-19 infection rates in many parts of the country spiked upwards this past week, government and workplace lawsuits continued to occupy center stage.  Many of these suits are now at cross-purposes, such as suits seeking to require or prevent reopenings, or to enforce or impede mask mandates. 

OVERVIEW

Lawsuits against governments over reopening and re-closure plans continue to proliferate.  Beyond the well-publicized suit by Georgia’s governor against Atlanta’s mayor, suits filed this past week challenged: California’s plans to force all schools to start the fall semester remotely; Florida’s plan to reopen schools in the fall; San Francisco’s new Healthy Buildings Ordinance; and restrictions on recreational activities.

Suits continue to be filed against employers, including another action against McDonald’s and a suit against Whole Foods focused on civil rights and First Amendment issues.  Pilgrim’s Pride sought to remove a personal injury suit based on federal question jurisdiction, under the theory that the suit challenges Executive Order No. 13917, which requires meat processing plants to remain open.

Confrontations in retail spaces between customers wearing and not wearing face masks have spilled over into the courts, with lawsuits against Kroger and Lowe’s Home Center challenging their enforcement of mask-wearing rules.  In the suit against Lowe’s, a customer without a mask allegedly spit in the face of the plaintiff, who was calling the store’s attention to his non-compliance.

Rounding out our week, we’ve seen more of the now-standard insurance coverage suits, refund suits, and securities actions, which continue to be filed week after week.  New in those categories is a claim against GEICO alleging that, despite its “GEICO Giveback” policy providing certain premium discounts, the company is not providing discounts or refunds to most of its insureds, resulting in a windfall from the greatly reduced miles its customers are driving.

GOVERNMENT SUITS

Challenges to mask ordinances continue in Pinellas County, Florida, for example, as well as in Atlanta, Georgia, where Governor Brian Kemp is suing Atlanta Mayor Keisha Lance Bottoms over the city’s mask mandate.  Governor Kemp argues Atlanta’s executive orders are inconsistent with and impose more restrictive terms than those imposed by the Governor.

In San Francisco, hotel trade groups have sued the city and county over the newly-enacted Healthy Buildings Ordinance, which was designed to establish cleaning and disease prevention standards in hotels and large office buildings.  Plaintiffs contend certain provisions of the ordinance actually increase the risk of coronavirus exposure to staff and guests.

The question whether and how schools should reopen in the fall continues to prompt new lawsuits.  In California, Governor Newsom and Attorney General Xavier Becerra have been sued in federal court in light of the Governor’s order requiring all California schools to begin remotely in the fall. Plaintiffs allege defendants’ restrictions on in-person schooling deprive plaintiffs’ children – and millions of others across California – of the opportunity for a meaningful education.  Plaintiffs bring claims for violation of the Equal Protection and Due Process clauses, violation of Title VI of the Civil Rights Act of 1964 for alleged disparate impact on racial minorities, and violation of federal disability rights.  Meanwhile, Florida’s largest teachers’ union sued the governor, state education officials, and Miami-Dade County’s mayor to prevent the re-opening of schools in August because they fear it cannot be done safely.

State governments are also facing lawsuits regarding restrictions on recreational activities.  In New York, raceway operators have sued Governor Cuomo seeking to stop New York state from enforcing its ban on gatherings of 10 or more people, so long as the operators abide by social distancing guidelines.  In Ohio, a youth basketball league seeks a declaratory judgment that Ohio Department of Health orders prohibiting basketball leagues during the pandemic are unconstitutional where plaintiffs are willing to follow safety and sanitization protocols.

WORKPLACE

Wrongful termination and wrongful denial of benefits continue to be a hot area of litigation, as in past weeks.

Whole Foods is the target of a new putative class action lawsuit in Massachusetts federal court alleging that, despite professing support for the Black Lives Matter (“BLM”) movement, the supermarket has been violating employees’ civil rights by selectively disciplining employees who wear BLM-branded masks (but not other masks that may contain political messages). The lawsuit’s allegations span numerous stores throughout the country and raise claims under the Civil Rights Act.

Poultry processor Pilgrim’s Pride Corp. raised a novel legal argument in defending a personal injury suit.  The family of a Pilgrim’s Pride employee sued the company after the employee allegedly contracted COVID-19 at a Texas processing plant and subsequently passed away. In seeking to remove the matter to federal court, Pilgrim’s Pride invoked federal question jurisdiction because the case implicates President Trump’s Executive Order No. 13917, which requires meat processing plants to remain open during the pandemic.

A repeat target of COVID-19 related litigation, McDonald’s is the subject of a charge filed with the National Labor Relations Board. In the charge, a union asserts that the company violated the National Labor Relations Act when it allegedly fired an employee for organizing strikes to address safety concerns at the restaurant where she worked.  

The Wage and Hour Division of the Department of Labor issued updated guidance regarding how employers must handle the pandemic, stressing that employees who take COVID-related time off cannot be treated differently. Some of the issues addressed by the updated guidance include:

  • Policies that can require employees who may have been exposed to COVID-19 to remain at home;
  • When a remote employee must be paid under the Fair Labor Standards Act;
  • How to factor in eligible time off under the Family and Medical Leave Act; and
  • How to bring employees back from furlough.

FAILURE TO PROTECT

This week brings suits by customers against retailers for allegedly failing to protect customer health.  In a suit against Lowe’s Home Center, a customer claims that Lowe’s engaged in fraud and created a public nuisance when it allegedly allowed an unmasked customer to spit in the plaintiff’s face four times in rapid succession, and took no action against the spitting customer, in contravention of its public pledge to protect its customers’ health.

Similarly, Kroger is facing claims that it did not protect customers from COVID-19 by allowing unmasked shoppers onsite. The complaint states that the defendant store failed to comply with the law by not mandating masks within the stores.

In another negligence class action, residents of the Holyoke Soldiers’ Home brought a § 1983 suit against the Home for allegedly being denied proper care during the COVID-19 pandemic.  According to the complaint, the Home was “indifferent” to the pandemic and made questionable decisions that endangered the residents, such as combining two dementia units into a single space after the virus broke out, which allegedly resulted in 76 deaths and 84 sick residents.

SECURITIES

Carnival Cruise continues to be hit with litigation related to COVID-19.  This time, plaintiffs claim Carnival made false representations about the safety precautions it was establishing on its ships in order to protect a steady level of revenue.  The complaint alleges that Carnival failed to institute proper measures to protect its passengers and crew, and that when that failure was disclosed, Carnival’s share price fell from $15.90 to $13.93 and has not yet recovered.

CONSUMER PROTECTION

A new putative class action was filed against GEICO alleging that the company is unfairly profiting from the pandemic. GEICO insureds allege the insurance company is scoring a windfall because insureds are spending less time on the road during the pandemic and thus having fewer accidents. Though the company began a “GEICO Giveback” program, the program only applies to new and renewal policies and provides a 15% discount, which plaintiffs allege is insufficient to offset the allegedly excess premiums.

CARES ACT/PPP

There were fewer lawsuits this week by loan processing agents claiming they were not paid agent fees in connection with processing PPP loan applications, but this will likely continue to be a consistent area of litigation, especially if another round of PPP loans is funded. 

BREACH OF CONTRACT

PPE and COVID-19 related products continue to be a focus of contract disputes. Plaintiff LHP Pharma alleges that defendant supplier Ark Medical Solutions was involved in a practice of orchestrating “ghost shipments” of PPE where the defendants purchased PPE at lower prices from manufacturers under the guise that the PPE products were to be exported overseas.

More celebrities are now joining the COVID-19 related litigation fray. The Virgin Mobile-sponsored festival, Virgin Fest Los Angeles, was scheduled to make its debut in June 2020 but was canceled once large gatherings were prohibited due to the pandemic.  While most artist agencies returned deposits for the performances, talent agency William Morris Endeavor, along with musicians Lizzo, Kali Uchis, and Ellie Goulding, did not. Virgin Mobile filed suit claiming that the COVID-19 pandemic constituted a force majeure event that entitles them to full refunds.

INSURANCE

Insurance coverage suits for business interruption claims continue to be filed, including one brought by the Houston Rockets, the first business interruption lawsuit brought by an NBA team.

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.  Gillian Clow, Debolina Das, and Kaelyne Wietelman are litigation associates at the firm.