Top Developments in COVID-19 Litigation
Jason A. Levine, Gillian H. Clow, and Giles Judd, Alston & Bird LLP
This week’s top COVID-19 litigation developments include: an Ohio court’s decision that a stay-at-home order is not a “quarantine” for travel insurance purposes; a California court’s ruling that Amazon customers must arbitrate price gouging claims against the company; the dismissal of a COVID-19 exposure lawsuit filed by the wife of the defendant’s employee, who allegedly contracted the virus on the job; and a lawsuit against Pennsylvania stemming from a data breach at the Commonwealth’s contact-tracing company.
1. Ohio Court Rules That Government Stay-at-Home Order Is Not a “Quarantine”
Overview: A federal judge in Ohio dismissed a putative class action against Nationwide Mutual Insurance Company, holding that a government-mandated stay-at-home order in response to the COVID-19 pandemic was not a “quarantine” that would trigger coverage under plaintiffs’ travel insurance policy.
Background: On March 8, 2020, Oregon Governor Kate Brown issued an Executive Order that limited social gatherings, recommended social distancing when outside of the home, and cautioned against non-essential travel, to protect residents during the pandemic. Knowing violations of this Order were subject to misdemeanor criminal charges. In response, plaintiffs canceled their planned trip to Mexico and filed a claim under their travel insurance policy with Nationwide. The company denied the claim on the grounds that stay-at-home orders are not covered as quarantines, which would imply an imposed confinement due to exposure to a communicable disease. Plaintiffs filed suit for breach of contract.
Decision: In granting Nationwide’s motion to dismiss, U.S. District Judge Sarah D. Morrison held that “imposed isolation” was a common component of all standard dictionary definitions of the word “quarantine.” The Executive Order in question allowed outside recreational activities with social distancing. Accordingly, the court held that the Executive Order was not an “imposed isolation” or a quarantine under the terms of the policy, even if the particular trip might have violated the Order.
Our Take: This case stands apart from the typical insurance suits filed during the pandemic, where policyholders seek coverage for business interruption. The Ohio court’s ruling indicates that even when a travel insurance policy covers claims arising from “quarantine,” government-mandated stay-at-home orders such as Oregon’s may not trigger coverage.
2. Amazon Customers Required to Arbitrate COVID-19 Price Gouging Claims
Overview: A California federal judge granted Amazon’s motion to compel arbitration of COVID-19-related price gouging claims, finding that consumers consented to Amazon’s arbitration provision when they proceeded with their purchases on Amazon.com after being provided with hyperlinked access to the terms and conditions.
Background: Plaintiffs assert that price increases of as much as 1,800% for face masks and 233% for toilet paper sold on Amazon.com violated California law, which prohibits price increases exceeding 10% during a state or local emergency. Amazon.com sought to compel arbitration, arguing that plaintiffs consented to arbitrate such claims through their consent to Amazon’s terms and conditions posted on the site.
Decision: Although the named plaintiffs in this case created their Amazon user accounts before Amazon added an arbitration provision to its Conditions of Use in 2011, the court found that they still agreed to arbitrate their claims against Amazon. The court held that the Conditions of Use that applied to the challenged purchases were conspicuous at checkout. Directly below the “place your order” button is a notice saying: “By placing your order, you agree to Amazon’s privacy notice and conditions of use.” The hyperlinked Conditions of Use specify that “any dispute” with Amazon “will be resolved by binding arbitration, rather than in court.”
Our Take: This decision is in accord with others holding that the layout of Amazon’s checkout page provides notice to users of the site’s Conditions of Use, but it is unique in extending the arbitration provision to statutory claims of price gouging. We are not aware of any other case addressing this exact issue. It will be interesting to see if plaintiffs appeal the decision.
3. California Court Dismisses Wife’s Exposure Lawsuit Against Husband’s Employer
Overview: A California federal court dismissed an amended complaint brought against Victory Woodworks, Inc. by an employee’s spouse, who claimed that the company was liable for her COVID-19 infection, which she alleged she contracted through contact with her husband who was exposed at work.
Decision: We previously reported that the court dismissed plaintiff’s original complaint, holding that her claims were barred by California’s workers’ compensation laws to the extent her alleged injuries arose from her husband contracting COVID-19 at work. In ruling on the amended complaint, U.S. District Judge Maxine M. Chesney reasserted that holding. The court further noted that dismissal is warranted on the additional ground that “a defendant’s duty to provide a safe workplace to its employees does not extend to nonemployees who . . . contract a viral infection away from those premises.” Accordingly, the judge granted Victory Woodworks’ motion to dismiss with prejudice.
Our Take: This decision is in tension with a recent California state court decision, which held that See’s Candies could not avoid a suit where one of its employees claimed that she infected her late husband and daughter with the virus due to improper safety standards in the workplace. The court there took the position that plaintiff’s remedies were not limited to workers’ compensation, because her injury – as an employee – was “not the injury upon which Plaintiffs sue[d].” The same could be said in Victory Woodworks, where the alleged injury was to the employee’s wife, based on her infection as a non-employee, outside the workplace, albeit through conduct challenged in the workplace. See’s Candies recently filed a petition for writ of mandate in the California Court of Appeal. Given the tension between these decisions, we would expect further percolation of this issue in California courts.
4. Pennsylvania Health Department Faces COVID-19 Privacy Lawsuit
Overview: The Pennsylvania Health Department faces a putative class action filed in federal court in the Middle District of Pennsylvania as a result of a data breach suffered by its contact-tracing contractor, Insight Global Inc.
Allegations: Plaintiffs claim that Insight Global put their protected health information at risk when employees set up Google spreadsheets, databases, and documents containing information for tens of thousands of proposed class members. Documents shared through the collaboration channel allegedly became available through a simple Google search and were not password protected. The data breach purportedly exposed personal health information of proposed class members who had either tested positive for COVID-19 or came in close contact with someone who had. The information included data such as individual names, genders, phone numbers, sexual orientations, gender presentations, family sizes, and health details. Plaintiffs assert causes of action for negligence, negligence per se, and publicity given to private life.
Our Take: With the COVID-19 pandemic came novel uses of technology, including new contact-tracing methods. Human error and lack of oversight can lead to data breaches, or the risk of them, and the risk of such breaches is likely to lead to lawsuits like this one. This case is a cautionary tale for businesses to ensure that personal health information is only shared internally through secure means.