Top Developments in COVID-19 Litigation
Jason A. Levine, Ryan Martin-Patterson, and Stephen Tagert
This week’s top COVID-19 litigation developments include: the Supreme Court’s refusal to halt enforcement of the CDC’s residential eviction moratorium; a New Jersey court’s rejection of business interruption insurance claims by the parent company of Versace; and a challenge to the constitutionality of a Nevada law that prevents certain efforts to collect medical debts incurred during the pandemic.
1. Supreme Court Denies Request to Halt CDC Eviction Moratorium
Overview: On June 24, the CDC extended its residential eviction moratorium to July 31, after it was previously slated to expire on June 30. Meanwhile, on June 29, the Supreme Court denied a request to effectively block enforcement of the moratorium.
Underlying Litigation: We previously wrote about the decision by the U.S. District Court for the District of Columbia that vacated the eviction moratorium, but then stayed enforcement of the vacatur pending appeal – thus leaving the moratorium in effect. The D.C. Circuit upheld the stay. Plaintiff, the Alabama Association of Realtors, then sought emergency relief from the Supreme Court.
CDC Extension: In the midst of the pending litigation, the CDC extended the moratorium from June 30 to July 31, because it predicted that there would be a massive surge of evictions if the moratorium were to conclude on June 30 as the nation is going through vaccination efforts. The CDC stated that “[a]lthough this [extension] Order is subject to revision based on the changing public health landscape, absent an unexpected change in the trajectory of the pandemic, CDC does not plan to extend the Order further.”
Supreme Court Order: The Supreme Court denied the motion to vacate the stay in a 5-4 decision. Justice Kavanaugh, joining the majority, wrote a short concurrence saying that he agreed with the district court that the CDC had exceeded its existing statutory authority, but that he was voting to deny the application to vacate the stay because only a few weeks remained until the CDC planned to end the moratorium anyway. Justice Kavanaugh said, however, that to extend the moratorium past July 31, Congress would need to pass new legislation.
Our Take: If the CDC does not extend the moratorium yet again, the moratorium will expire on July 31. If the CDC does extend the moratorium, the Supreme Court’s decision essentially invites further litigation to halt its enforcement. And although the federal government’s appeal remains pending before the D.C. Circuit, the Supreme Court’s order will cast a long shadow over the D.C. Circuit proceedings.
2. New Jersey Court Dismisses Versace Owner’s COVID-19 Coverage Suit
Overview: A New Jersey state court has dismissed claims filed by Capri Holdings Limited, the parent company of the Versace brand, which alleged that insurance companies were required to cover losses suffered by its physical stores during the pandemic.
The Orders: The Superior Court of the State of New Jersey, County of Bergen, granted six motions to dismiss filed by insurance companies against claims brought by Capri. Capri had argued that the damage to the property was due to the physical surfaces and surrounding air becoming contaminated with COVID-19. The defendants responded that air is not property insured by the policy. The court did not provide a written opinion, but it held on the record that Capri was not totally cut off from entering the property, and thus that there was no damage to the property insured by the contract.
Our Take: This case fits a trend we have seen in COVID-19-related insurance litigation, where courts have been hesitant to extend coverage to losses caused by the pandemic absent a specific clause that refers to a pandemic.
3. Debt Collectors Sue Nevada Department of Business and Industry Over Medical Debt Law
Overview: Nevada and out-of-state debt collectors sued the Commissioner of the Nevada Department of Business and Industry Financial Institutions Division over a new law that prevents debt collectors from obtaining payments on medical debt, ostensibly in response to the COVID-19 pandemic.
The Complaint: On June 25, 2021, debt collectors filed suit in the U.S. District Court for the District of Nevada, alleging that a new law, Senate Bill 248, violates federal law by not allowing debt collectors to secure payments for lawful debts. The debt collectors allege that Senate Bill 248 is preempted by the Fair Debt Collection Practices Act and the Fair Credit Reporting Act, conflicts with existing provisions of Nevada law, and violates the First and Fourteenth Amendments of the U.S. Constitution.
Our Take: Although the volume of COVID-19 cases is decreasing, state legislatures and Congress may continue to pass legislation under the guise of addressing certain adverse financial effects of the pandemic. We would expect such efforts would trigger similar litigation.