COVID-19 Litigation Roundup

November 2, 2020

Jason A. Levine, Peter E. Masaitis, Gillian H. Clow, Ryan Martin-Patterson, Giles Judd,  and J. Stephen Tagert, Alson & Bird LLP

OVERVIEW

This week marks a milestone for us: our 30th weekly COVID-19 Litigation Roundup.  This past week saw new COVID-19 related lawsuits in many of the categories we’ve covered in the past, plus new legal theories and important developments in pending cases.

Grocery shopping was the focus of two legal developments this week.  A grocery company sued a Teamsters Union local for allegedly instituting a “sickout” that took advantage of the company’s relaxation of its attendance policy.  And a Pennsylvania federal court denied a customer’s motion for a preliminary injunction in a lawsuit challenging Giant Eagle’s mask mandate.    

In terms of other important developments, Ticketmaster reached an agreement with the Arizona Attorney General to resolve complaints involving refunds for events cancelled due to the pandemic.  Applied BioSciences also settled claims filed by the SEC over public statements that the company was shifting focus from “cannabinoid-based” products to pandemic-related ones.  A California court refused to permit an Instacart courier to institute a class action over the company’s supposed failure to provide PPE.  And a bank moved to dismiss a complaint asserting that it placed mortgages into forebearance without the mortgagees’ consent.

Otherwise, a new breach of contract case was filed against Microsoft and individuals filed new suits in several states challenging various pandemic-related restrictions.  OSHA also fined several more meatpacking plants, more employers were sued over workplace protection and wrongful exposure to COVID-19, a movie-theater chain sought to void a large lease agreement, and another company faces claims of misusing Paycheck Protection Program funds.  These perennial kinds of cases show no sign of abating.        

BREACH OF CONTRACT

Microsoft Corporation faces suit in New Jersey for purported breach of contract arising from its decision in June of 2020 to close its brick-and-mortar retail locations due to the pandemic.  Plaintiff Bitro Group, Inc., asserts that it is owed approximately $950,000 for custom lighting it engineered and produced for several of these Microsoft retail stores.

OK Grocery Company, a division of Giant Eagle, Inc., has filed suit in Pennsylvania federal court against Teamsters Local Union No. 636 for purported breach of the parties’ collective bargaining agreement.  According to the company, union members are attempting “to create a slowdown and/or sickout” in violation of the CBA, by urging employees to call in and to be “excessively absent” from work.  The complaint alleges that the union is taking advantage of the company’s temporary suspension of discipline under its attendance policy, which was instituted in order to support employees affected by the pandemic.

A group of Harvard University students have opposed the University’s attempt to dismiss their proposed class action for breach of contract, conversion, and unjust enrichment.  The students stress that they are not, as the University claims, questioning the quality of education offered at Harvard, but instead are alleging that Harvard breached its promise to offer in-person and on-campus education due to the outbreak of COVID-19.

SECURITIES DISCLOSURE

The SEC and Applied BioSciences Corp. have reached an agreement in principle to settle their dispute over purported violations of the Securities Exchange Act.  The complaint alleged that the company sought “to exploit the COVID-19 pandemic for profit,” by announcing in a series of purportedly misleading statements that it was shifting its focus “from cannabinoid-based products to pandemic-related products.”  According to the judge’s order, the action may be reopened within 60 days if the parties fail to finalize the agreement.

REFUND

Ticketmaster reached an agreement with the Arizona Attorney General’s Office to refund over $71 million to consumers who purchased tickets to events that were canceled due to the COVID-19 pandemic.  The agreement follows a complaint filed last week by the Arizona Attorney General, which alleged that Ticketmaster had violated the Arizona Consumer Fraud Act for its purported failure to issue refunds.

WORKPLACE

The Occupational Safety and Health Administration (“OSHA”) announced more than $300,000 in new fines last week for COVID-related workplace safety violations, bringing the total to over $1.6 million.  Included in the new batch of fines were meatpacking plants run by JBS Group and Conagra Brands Inc.

GOVERNMENT

Complaints were filed this week in Colorado, Michigan, and Florida alleging that public health orders, including those requiring face masks, violate plaintiffs’ civil rights.  New cases were also filed regarding school re-openings.

In California, Los Angeles County has sued a Santa Clarita event space for alleged violations of its COVID-19 orders.  Defendants have been hosting large events, including weddings, on their property during the pandemic, and without the required permits or fire-suppression equipment.

MORTGAGE FOREBEARANCE

Wells Fargo seeks to dismiss a putative class action that we previously covered, brought by and on behalf of mortgage holders who claim that the bank placed their mortgages into forbearance without their consent, in an attempt to provide economic relief under the CARES Act during the global pandemic.  Plaintiffs allege that this imposed forbearance damaged their credit scores and prohibited them from taking advantage of low interest rates by refinancing.  The complaint alleges several causes of action, including violations of RESPA, RICO, common law fraud, and state debt collection laws, all of which Wells Fargo opposes in its motion.

ENFORCEABILITY OF LEASES

Regal Cinemas, Inc., seeks a declaratory judgment from an Oregon state judge that it is not in default of its lease with landlord BV CenterCal, LLC, and that it is entitled to approximately $43,000 for all rent paid after March 23, 2020, when it was forced to close its theater in accordance with the Governor’s closure orders.  Regal asserts that, under the terms of the lease agreement, restrictive government regulations constitute an “unavoidable delay” which excuses performance.

FAILURE TO PROTECT EMPLOYEES

A California state court held that an Instacart courier in a proposed class action must individually arbitrate his claims related to Instacart’s alleged failure to provide PPE or hand sanitizer due to his signing of an independent contractor agreement that contained an arbitration clause. 

The estate of a deceased former train conductor for New York City Transit Corporation sued the railway operator, alleging he contracted his eventually fatal case of COVID while performing his duties as a conductor.

CARES ACT/PPP

A part owner of North Wind Forest Consultants, LLC, a forestry consultant firm, sued North Wind and the other owners, alleging that the other owners used PPP loans to pay for personal healthcare insurance when the company had left some employees’ wages unpaid.

DISCRIMINATION

A Pennsylvania grocery store customer lost his attempt to force Giant Eagle to let customers to shop without wearing masks.  In denying the customer’s motion for a preliminary injunction, a federal district court held that the plaintiff failed to show that his anxiety disorder prevented him from wearing a face shield rather than a mask, as permitted under Pennsylvania law, and that the record lacked evidence of a medical opinion that the plaintiff’s disorder prevented him from wearing a mask.  The court also questioned whether plaintiff was actually disabled, given his social media posts where he indicated that his health did not prevent him from wearing masks, but that it was his right to refuse to wear one.  This proves the new adage for the social media age, that we must watch what we post.

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, Giles Judd, Ryan Martin-Patterson, and J. Stephen Tagert are litigation associates at the firm.