COVID-19 Litigation Roundup

November 9, 2020

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

OVERVIEW

New court filings this past week spanned a wide array of industries, with important developments in pending cases for major companies. 

New filings included consumer protection enforcement actions by the states of Texas, California, and Arizona, and a suit by restaurant owners against the state of Illinois over its ban on indoor dining.  The Atlanta Falcons and Crunch Holdings filed business-interruption suits against insurers.  Students filed suit against two colleges for suspending students who violated social distancing rules.  Other new cases include more pandemic-related discrimination suits, a working-condition complaint against a major shipping company, and a class action on behalf of inmates who claim their CARES Act payments were wrongfully withheld.

As for important case developments, a New York court dismissed warehouse workers’ public nuisance suit against Amazon on the grounds that OSHA had primary jurisdiction.  A Texas court denied American Airlines’ motion to dismiss a class action seeking ticket refunds, and plaintiffs in a similar case against United Airlines filed their opposition to the company’s motion to dismiss.  Wells Fargo settled a suit claiming it placed mortgages into forbearance without the holders’ consent.  Further on the jurisdictional front, GEICO removed a consumer protection suit to federal court, and a COVID-19 related wrongful death suit filed by a decedent’s estate was remanded to state court.   

EMPLOYMENT

A federal judge in the Eastern District of New York dismissed a lawsuit against Amazon brought by workers in Amazon’s warehouse on Staten Island.  The court ruled that the workers’ complaint for public nuisance was best decided by OSHA in the first instance, and not by a federal court.  The judge also dismissed the workers’ related claims for payment of wages.

A class action was filed against UPS for unsafe working conditions.  UPS allegedly did not provide basic personal protective equipment or maintain social distancing between workers.

CONSUMER PROTECTION AND PRICE-GOUGING

The state of Texas sued a retailer for deceptive trade practices, alleging that it marked up the prices of N95 masks by almost 1000%, sold N95 masks produced by 3M when they were not authorized to do so by 3M, and falsely advertised that N95 masks provide 100% protection from COVID-19.  Similarly, the state of Arizona sued CleanAir EXP, alleging it engaged in deceptive conduct by wrongfully advertising that its air purification system would eliminate the threat of COVID-19 infections. 

In California, Alameda and Contra Costa counties sued Safeway, alleging it price-gouged hand sanitizer during the pandemic.  The parties, however, quickly reached a settlement that included civil penalties and assurances that prices will comply with California law going forward.

Finally, we previously reported on a putative class action filed against auto insurer GEICO Casualty Company by its insureds, which alleged that the company was receiving an “unfair windfall” due to reduced driving times and fewer accidents during the pandemic, and that the 15% credit offered to insureds in its “GEICO Giveback” program was insufficient to offset excessive premiums.  GEICO removed the case to federal court this week, and noted its intent to file a motion to dismiss in the near future.

REFUND

In Texas, a federal judge allowed a proposed class of passengers to proceed with their claims against American Airlines for its purported failure to provide refunds for flights canceled during the pandemic.  The judge’s order granted American Airlines’ motion to compel arbitration with respect to passengers who received their tickets through online travel services, because those agreements contained enforceable arbitration provisions.  But the airline’s motion to dismiss was otherwise denied.

Meanwhile, passengers of United Airlines filed an opposition to the company’s motion to dismiss their proposed class action suit in Illinois federal court.  The passengers allege that, despite United Airlines’ claim that flights canceled during the pandemic were due to an unforeseen “force majeure event,” the company based its decision solely on economic factors and, therefore, breached its contract with them by not providing full refunds.

MORTGAGE FORBEARANCE

In last week’s Roundup, we reported that Wells Fargo was seeking to dismiss a putative class action brought by mortgage holders who claim that the bank placed their mortgages into forbearance without their consent.  This week, the parties agreed that the bank will no longer impose a “COVID-19 pandemic-related forbearance” on any mortgage holder unless that customer has requested the forbearance.

INSURANCE

New cases alleging failure to pay benefits under insurance policies for losses from COVID-19  have been filed, including complaints by Crunch Holdings LLC alleging COVID-19 health department orders have forced them to close their gym facilities across the United States, Canada, and in Costa Rica. The Atlanta Falcons have also sued for business interruption losses due to COVID-19.

GOVERNMENT

In Illinois, a group of restaurants sued the Governor, alleging that his multiple declarations of emergency banning indoor dining due to the pandemic were unlawful.

SECURITIES DISCLOSURE

A putative class of investors in Norwegian Cruise Lines responded to the company’s motion to dismiss their suit for purported violations of the Securities Exchange Act.  They claim that the company “engaged in a deceptive sales campaign designed to induce customers to continue booking, and stop cancelling, cruises” despite COVID-19.  Plaintiffs further allege that the cruise line had a duty to disclose pandemic-related threats to investors.

CARES ACT AND PPP

An inmate in the U.S. Virgin Islands filed a proposed class action complaint against the Governor of the Virgin Islands for refusing to issue Economic Impact Payments under the CARES Act solely based on claimants’ status as incarcerated persons.  The complaint asserts that even though the CARES Act did not prevent payments to incarcerated persons, the IRS directed state correction departments to intercept payments to prisoners weeks after the CARES Act was passed.  This suit complements litigation pending in the Northern District of California regarding other inmates who are U.S. citizens and legal permanent residents.

A technology company in Texas sued its accounting service for failing to file the company’s tax returns for multiple fiscal years, resulting in the company not being eligible for thousands of dollars in federal Paycheck Protection Program forgivable loans.   

PPE FRAUD

A Pennsylvania medical group sued a holding company for failing to fulfill orders of medical personal protective equipment and refusing to return deposits made for the purchase of that equipment.

DISCRIMINATION

A man in Texas sued Choice Hotels for disability discrimination, alleging that the defendants refused to continue allowing him to rent based on his positive COVID-19 test.  The plaintiff asks the court to enjoin the hotel chain from removing him from his room. 

Another customer sued a grocery store over its mask policy.  The complaint alleges that Sprouts Farmers Market stores are violating the Americans with Disabilities Act by enforcing a mask policy that contains no exceptions for customers who have medical reasons to not wear masks, such as difficulty breathing.

COLLEGES/UNIVERSITIES

College students in New York have sued Rensselaer Polytechnic Institute and College of Mount Saint Vincent for their actions in suspending students for allegedly violating the schools’ COVID-19 social distancing policies. 

NEGLIGENCE/FAILURE TO PROTECT

A Florida federal court remanded a lawsuit filed by the estate of a man who died from COVID-19, holding that the plaintiff’s complaint alleged only state claims and that the Public Readiness and Emergency Preparedness (PREP) Act did not make the claims removable due to alleged acts and omissions “hav[ing] nothing to do with the administration of a qualified pandemic or epidemic product, drug, biological product, or device for which the PREP Act provides immunity.”

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.