Top 4 Developments in COVID-19 Litigation

March 1, 2021

Jason A. Levine, Gillian H. Clow, and Ryan Martin-Patterson

OVERVIEW

This past week’s top developments in COVID-19 litigation were: a federal court’s invalidation of the CDC’s eviction moratorium; the dismissal of a bias suit against Walmart based on its “exclusive shopping hour” for customers who are especially vulnerable to coronavirus; California’s decision to fine a McDonald’s franchisee for allegedly firing COVID-19 safety whistleblowers; and a novel lawsuit by a doctor claiming that a hospital failed to warn him of potential exposure to COVID-19 while on duty.

1. Federal Court Invalidates CDC Eviction Moratorium

Overview: On February 25, 2021, Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas entered a declaratory judgment that the nationwide eviction moratorium ordered by the U.S. Centers for Disease Control and Prevention (“CDC”) in response to the COVID-19 pandemic is invalid under Article I of the U.S. Constitution.    

Background:  In connection with the CARES Act, the CDC issued an order barring most residential evictions in September 2020.  Although initially intended to expire on December 31, Congress enacted legislation extending it through March 2021.  The order prohibits evictions of tenants for non-payment of rent, except on narrow grounds involving criminal or destructive conduct, to avoid the purported public health impact of evictions during the COVID-19 pandemic.  Importantly, the order does not relieve tenants of their obligation to pay overdue rent, but it deprives landlords of eviction as an enforcement mechanism.  The order does not provide any compensation to landlords for the abridgment of their eviction rights. 

One individual landlord and five property management companies filed suit to challenge the constitutionality of the CDC order, claiming that it exceeds the federal government’s power under Article I.          

Decision: In his decision, Judge Barker acknowledged that eviction moratoriums may be lawful as part of state laws managing eviction procedures generally and under states’ broad “police powers” to promote “the lives, health, morals, comfort and general welfare” of their citizens.  He contrasted such state-level actions to this federal moratorium, which he described as a significant expansion of federal power, stating (slip op. at 2):

The federal government cannot say that it has ever before invoked its power over interstate commerce to impose a residential eviction moratorium. It did not do so during the deadly Spanish Flu pandemic.  Nor did it invoke such a power during the exigencies of the Great Depression. The federal government has not claimed such a power at any point during our Nation’s history until last year.

The court also analyzed Congress’s power under the Commerce Clause to regulate interstate commerce, as well as other constitutional provisions, and concluded that the moratorium exceeds the federal government’s authority.  In large part, this is because Judge Barker determined that the decision to evict a tenant is not an “economic” act within Congress’s power to regulate. 

Notably, the court did not enter an injunction against enforcement of the moratorium, but left open that possibility if the federal government does not abide by the declaratory judgment.  In the meantime, the government has already announced that it will appeal the decision to the U.S. Court of Appeals for the Fifth Circuit.

Our Take: This decision contrasts with those of other courts in Louisiana and Georgia that rejected other constitutional challenges to the CDC moratorium.  One might argue that Judge Barker disregarded several grounds cited in support of the CDC moratorium — for example, that a massive wave of evictions could drive up infections and further destabilize the economy.  Given the conflicting precedents, and the public health circumstances of the COVID-19 pandemic, there appears to be a reasonable likelihood that the decision will be struck down even by the relatively conservative Fifth Circuit.

Further, because Judge Barker did not issue an injunction, and because the declaratory judgment was limited to the plaintiffs, the decision does not extend nationwide.  As the Department of Justice noted in announcing its appeal, “[t]he decision . . . does not extend beyond the particular plaintiffs . . . and it does not prohibit the application of the CDC’s eviction moratorium to other parties.  For other landlords who rent to covered persons, the CDC’s eviction moratorium remains in effect.”  Absent a broad injunction, the decision has very limited effect.

2. Judge Dismisses Bias Suit Over Walmart COVID-19 Shopping Accommodations 

Overview: On February 19, 2021, Judge Amit P. Mehta of the United States District Court for the District of Columbia dismissed a suit against Walmart related to its “exclusive shopping hour” for customers with compromised health during the COVID-19 pandemic. 

Background: Plaintiff, a Maryland resident who has high blood pressure and a rare blood cancer, visited a Walmart in Washington, D.C. during the store’s exclusive shopping hour, when the store was only open to shoppers who were immunocompromised or over 65.  A security guard supposedly prevented plaintiff from entering the store until the exclusive shopping hour had ended, and did not call a manager when asked.  Plaintiff filed suit in federal district court, claiming violations of the Americans with Disabilities Act (“ADA”) and the District of Columbia Human Rights Act (“DCHRA”), as well as negligent retention, training, and supervision.

Decision: Judge Mehta first dismissed plaintiff’s claims that Walmart violated Title III of the ADA.  Title III only offers injunctive relief, and Judge Mehta agreed with Walmart that the plaintiff had not established a likelihood of future injury sufficient to justify an injunction.

Judge Mehta then dismissed plaintiff’s claim that Walmart had violated her rights under the DCHRA.  In Judge Mehta’s view, plaintiff had offered no facts to show that Walmart acted because of her disability, a necessary precondition for any disparate treatment claim.  Plaintiff’s own allegations asserted that the guard either did not believe that she was disabled or mistakenly believed he was to allow only seniors to shop during that time.  Plaintiff’s claim of disparate impact was also dismissed, because Walmart’s policy of allowing seniors and the immunocompromised exclusive access to its stores for an hour was not – and did not purport to be – a facially neutral policy.  Plaintiff also failed to plead facts showing that Walmart’s policy disproportionately harmed customers with “hidden” disabilities.

Finally, the negligent retention, training, and supervision claims were dismissed because plaintiff did not allege any conduct that violated any common-law duties.  The violations of statutory duties that plaintiff attempted to assert could not give rise to a common-law negligent supervision, retention, or training claim, even if they had been adequately pleaded.

Our Take: Although Judge Mehta’s decision was issued in a relatively small case, it is favorable for retailers and other companies that have attempted to accommodate COVID-vulnerable customers during the pandemic.  Companies offering such accommodations should continue to be wary of suits challenging the scope or implementation of such policies.

3. California Fines McDonald’s Franchisee for COVID-Related Firings

Overview: On February 17, 2021, the California Labor Commissioner (the “CLC”) fined a McDonald’s franchisee $125,913 for firing four workers after they reported allegedly unsafe working conditions during the pandemic.

Background and Citations: The four employees worked at a McDonald’s location in Los Angeles.  The workers had told their employer, Cal/OSHA, and the Los Angeles County Health Department about allegedly unsafe working conditions related to exposure to COVID-19.  The employees also allegedly participated in strikes over safety conditions, and were later fired.

CLC’s citations list the franchisee company, its owners, and its Human Resources Officer as jointly and severally liable for the full amount of the fine.  The fine includes $45,193 in lost wages, $720 in interest, and $80,000 in statutory retaliation penalties.  In addition, the franchisee must reinstate the four employees, remove any negative references from their personnel files, and post information about the citations in the restaurant.

Our Take: This blog has previously covered the substantial number of wrongful termination suits alleging that employees were fired after complaining of unsafe working conditions related to the pandemic.  This citation by the CLC represents one of the first concrete actions taken by either a court or regulatory authority in response to such a complaint.  Given the volume of complaints and the magnitude of changes governments have required in physical workspaces in response to the pandemic, we expect this citation will not be the last enforcement action against an employer for wrongful termination associated with COVID-19 working condition complaints.

4. Doctor Sues Hospital for Failing to Timely Inform Him of COVID-19 Exposure

Overview: A new lawsuit filed on February 24, 2021 in Massachusetts by an anesthesiologist alleges that a hospital where he worked and a medical staffing company both failed to timely inform him that he came into contact with another doctor at the hospital who had tested positive for COVID-19.  Because plaintiff did not know he was exposed, he did not quarantine until several weeks later when he learned of the potential exposure, allegedly causing him to lose work assignments and income.   

Background and Allegations:  Plaintiff alleges that he came in contact with a physician who tested positive on August 20, 2020, but did not learn of his potential exposure to COVID-19 until the end of his assignment at the hospital, on September 4, 2020.  Plaintiff claims that the hospital made several attempts to conceal the potential COVID-19 exposure, and that he is entitled to lost wages for the “vast number of clinical assignments on [sic] several hospitals that were scheduled after September 4, 2020.”  Although the Complaint is not clear on this point, it appears that plaintiff contends he could not work those assignments because he quarantined after belatedly learning of his exposure.  He asserts causes of action for breach of contract and violation of public policy, and he seeks $263,000 in lost wages.

Our Take: This novel case will be an important one to monitor. We have seen other lawsuits – not in the healthcare realm – alleging that employers have a duty to inform employees in a timely fashion about potential COVID-19 exposure.  If employers do have a duty to inform, devising appropriate remedies may be thorny.  Moreover, as applied to doctors working in hospitals with COVID-19 patients, any duty to inform may be inextricably bound up with an assumption of professional risk.  In addition, plaintiff’s allegations of intentional concealment may factor into the outcome as well.  A decision in this case could signal the direction that courts across the country will take on these issues.

Jason Levine is a commercial and antitrust litigation partner in the Washington, D.C. office of Alston & Bird LLP.  Gillian Clow and Ryan Martin-Patterson are associates at the firm.