COVID-19 Litigation Roundup

November 23, 2020

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

OVERVIEW

This past week brought more rulings of interest in pending COVID-19 cases.  While last week’s Roundup described the dismissal of claims brought by plaintiff restaurant owners against their insurers, a court in North Carolina held the opposite this past week, finding that restaurant owners were entitled to summary judgment on claims that their forced closure constituted a direct physical loss under their insurance policies.

You may have heard about important litigation in Pennsylvania last week.  Beyond the obvious election litigation, we saw important covid-related litigation there as well, with multiple suits filed against retail giants alleging that Pennsylvania law prohibits the collection of sales tax on face masks because they are “medical supplies.”  Another Pennsylvania plaintiff attempted to use a class certification ruling in a Texas court involving American Airlines as a precedent for opposing Southwest Airlines’ motion to dismiss refund claims.

Several large banks won dismissal of claims alleging they failed to pay agent fees under the Paycheck Protection Program, and multiple other banks filed motions seeking the same relief.  And in a new twist on insurance coverage cases, a travel insurer sought dismissal of claims against it on the grounds that the plaintiff’s travel was booked after the pandemic was well under way, such that the risk of cancellation was a known and foreseeable risk outside of the policy’s coverage.

INSURANCE

While last week we mentioned that courts had dismissed claims brought by plaintiff restaurant owners, this week a North Carolina state court reached the opposite conclusion, granting summary judgment to a group of restaurant plaintiffs on the issue of whether the forced closures of their businesses amounted to a direct physical loss under the policies. New cases also continue to be filed for wrongful denial of business interruption claims, including cases filed this week by major league baseball teams and United Talent Agency.

In the travel insurance sphere, an insurer filed a motion to dismiss  on the grounds that although the insurer failed to cover a trip plaintiff was forced to cancel due to COVID-19, by the time she purchased the policy in May 2020, the pandemic was already a known and foreseeable risk, and thus outside the bounds of the policy.

EMPLOYMENT

A former warehouse worker brought a putative class action against Amazon in federal court alleging that Amazon’s policies during the pandemic intentionally and disproportionally affected African American and Hispanic workers, while protecting their white managers.  The complaint alleges that Amazon’s General Counsel sent a memorandum disparaging the named plaintiff in the suit.

A Pizza Hut franchise was sued for negligence in Florida state court.  The suit alleges that Pizza Hut failed to ensure its employees were wearing enough personal protective equipment, endangering employees and customers alike.

CARES ACT AND PAYCHECK PROTECTION PROGRAM

A California district court granted several big banks’ motions to dismiss a proposed class action filed by lenders seeking agent fees under the Paycheck Protection Program.  The court said the complaint’s statements were too conclusory to establish standing and failed to identify specific loan applications for which a bank failed to pay agent fees.  The court allowed the lenders to amend their complaint, but expressed doubt that the case could ultimately succeed because “the CARES Act does not provide a private cause of action to recover agent fees absent an agreement between agent and lender.”  JP Morgan and First Republic Bank asked a different California district judge to dismiss a similar proposed class action for similar reasons.

UNFAIR BUSINESS PRACTICES/TAXATION

Three proposed class action suits, all filed in Pennsylvania state court by the same counsel, target retail giants Amazon, Zazzle, Etsy, Marshall’s, Forever 21, Sally Beauty, ALDI, Dollar General, and eBay for alleged unfair business practices in connection with the sale of protective face masks.  All three Complaints allege that, under Pennsylvania law, retailers are prohibited from collecting sales tax on items deemed to be medical supplies.

GOVERNMENT

Cases continue this week against government officials in California, with restaurants  and gyms alleging that COVID-19 lockdown orders are overly broad, and that their distinctions between “essential” and “non-essential” businesses are arbitrary.  In Louisiana, an apartment association sued the director of the CDC and the Department of Health and Human Services, alleging that the President’s “Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners” forces landlords to take on a disproportionate share of the costs of the pandemic.

REFUND / BREACH OF CONTRACT

We previously reported that a Texas federal judge allowed a proposed class to proceed against American Airlines for its purported failure to provide refunds for flights which were canceled due to the pandemic.  In a Pennsylvania federal court, plaintiffs suing Southwest Airlines argued that the Texas ruling supports their opposition to Southwest Airlines’ motion to dismiss similar claims.  Southwest responded that that the Texas decision “has no bearing on the contractual provisions applicable” to the case pending against it in Pennsylvania.

Another student filed another proposed class action against the University of San Diego for refusing to refund tuition for the Spring 2020 semester when all classes were moved online.   And, billionaire real estate developer Ben Ashkenazy sued the Gindi family, which founded Century 21, for purportedly using the Covid-19 pandemic as an excuse to divert money from his businesses and for defaming Ashkenazy by claiming that he stole money from Gindi-owned entities.

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.