Top Developments in COVID-19 Litigation

August 9, 2021

Jason A. Levine, Gillian H. Clow, and Giles Judd

OVERVIEW

This week’s top COVID-19 litigation developments include: new complaints against Grubhub over delivery surcharges during the pandemic; accusations that a New York City hotel used the pandemic as an excuse to fire older workers and replace them with younger ones; a proposed $85 million settlement to resolve class actions over “Zoombombing”; and a proposed class action challenging the University of Massachusetts’ vaccination mandate for students.

1. Food Delivery App Grubhub Faces Complaints Over Delivery Surcharges During the COVID-19 Pandemic

Overview: Grubhub faces complaints brought in Massachusetts and New York City regarding the food delivery app’s alleged surcharge on the cost of food items above state and city ordinances capping that amount.

The Complaint:  On July 29, 2021, the Commonwealth of Massachusetts sued Grubhub in state court, alleging that Grubhub fees charged to restaurants exceeded the state’s statutory limit of 15% of the menu price of an online order.  The complaint alleges that Grubhub’s practice “damaged restaurants financially during the declared COVID-19 emergency, often raising restaurant costs by thousands of dollars.”  The Commonwealth seeks restitution from Grubhub in the amount of fees restaurants paid above the 15% statutory cap, as well as civil penalties of $5,000 per violation.

A bakery filed a similar lawsuit against Grubhub in the Southern District of New York, alleging the delivery service had violated a New York City ordinance capping the delivery and other service fees that third-party delivery service providers may charge restaurants at 20% of the purchase price of a menu item.  Grubhub has moved to compel the bakery to arbitrate its claims on an individual basis, arguing that the bakery’s claims are governed by the arbitration provision in the services agreement it entered into with Grubhub.

Our Take:  Over a year and a half into the COVID-19 pandemic, we are continuing to see new cases and legal theories emerge in terms of the pandemic’s effects on businesses.  Grubhub and DoorDash have, for example, sued the City of San Francisco over its imposition of a permanent price cap.  We will be interested to see what effect, if any, the pandemic context has on the willingness of courts (and potentially arbitrators) to enforce these price caps. 

2.  New York Hotel Accused of Using Pandemic as an Excuse to Fire Older Workers

Overview:  A veteran housekeeper who had worked for the Kimberly Hotel in New York for 25 years brought a putative class action complaint this week, alleging that the hotel used the COVID-19 pandemic as an excuse to fire older workers and replace them with younger ones.

The Complaint:  The plaintiff alleges that she was initially furloughed in March 2020 as a result of the pandemic, and ultimately received a letter in November 2020 informing her that her employment would be terminated in February 2021 due to decreased hotel occupancy and travel restrictions.  The complaint asserts that 30-40 employees have been fired since October 2020, most with significant experience working at the hotel and the majority over 40 years of age.  Although operations resumed at the hotel in March 2021, the hotel allegedly began hiring new, younger employees.  Plaintiff alleges that this conduct violates the Age Discrimination in Employment Act (ADEA) and the New York State Human Rights Law – Age Discrimination.

Our Take:  With the COVID-19 pandemic and related shutdowns came unavoidable furloughs, some of which, like plaintiff’s, were made permanent before any reopening even occurred.  Plaintiff will bear the initial burden of showing that age was the reason for her termination, and the five months that passed between that termination and the hotel’s subsequent hiring decisions may increase the difficulty of that showing, particularly in the context of the changes to the hospitality industry as it reopened.

3. Zoom Proposes $85 Million Offer to Settle All Claims Related to Alleged “Zoombombing” Data Privacy Breaches

Overview:  A proposed class of Zoom users have agreed to an $85 million settlement with the videoconferencing giant, which would resolve all actions consolidated in the Northern District of California for purported data privacy breaches in connection with the use of Zoom.

Overview/ Background:  We previously reported on these actions, noting the court’s decision that, under Section 230 of the Communications Decency Act, Zoom was not responsible for the offensive content displayed by individuals who interrupted Zoom meetings without authorization (“Zoombombers”), but that it could be held accountable for the data breach itself.  Both parties have now asked the court to approve a settlement offer that would provide $85 million for paying valid claims, costs, service fees of class representatives, and attorneys’ fees.  The proposed settlement will also require Zoom to establish additional security measures, including in-meeting notifications that would allow users to better understand who can access their user information, as well the development of a documented process for communicating with law enforcement about disruptions involving illegal content.  Because class certification has not yet occurred, the court would need to certify the class for settlement purposes.

Our Take:  The proposed settlement, if approved, would bring months of litigation to an end against the videoconferencing company, which experienced unprecedented growth as a result of the pandemic. 

4. Students Allege That University of Massachusetts’s Vaccine Mandate Violates Their Constitutional Rights

Overview:  Two students at the Boston and Lowell locations of the University of Massachusetts filed a complaint for declaratory and injunctive relief in the District of Massachusetts against their respective schools for purported violations of their Due Process rights under the Fourteenth Amendment, arising from the university’s newly-instituted COVID-19 vaccine mandate.

Overview:  The university’s mandate requires that all students “who are coming to campus, or physically accessing campus resources for the fall semester, and wish to live, learn and/or conduct research on campus” be vaccinated against COVID-19.  Exceptions due to disability, medical, or religious reasons are permitted.  The mandate does not extend to faculty and staff.  The students argue that this mandate constitutes a violation of their Due Process rights under the Fourteenth Amendment.  They assert that this policy is not consistent with that of the Department of Public Health, which has yet to mandate vaccination for schooling within the Commonwealth of Massachusetts, nor with that of the Biden Administration, which has required federal workers either to be vaccinated “or face regular testing.”  One of the students also asserts that her religious exemption was improperly denied, in violation of state law, along with the First and Fourteenth Amendments of the U.S. Constitution.

Our Take:  Although the plaintiffs in this case sought a testing alternative, other lawsuits have challenged even that approach.  Most recently, a law professor at the Antonin Scalia Law School sued his employer, for purported constitutional violations arising from the university’s requirement that unvaccinated employees either wear masks or submit to regular testing.  While that mandate is more in line with the Biden Administration’s requirement for federal employees, it remains to be seen how courts will resolve such mask/testing mandates, or requirements for proof of vaccination.  The recent district court decision, and subsequent denial of a preliminary injunction pending appeal by the Seventh Circuit, upholding a similar vaccine mandate at the Indiana University should be a pertinent precedent.

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