COVID-19 Litigation Roundup

June 8, 2020
Alston & Bird LLP

Overview

As many local economies begin reopening, the number of workplace suits alleging failure to protect workers, or alleging actual coronavirus exposure, has steadily increased.  This past week, a district court denied McDonald’s motion to dismiss one such suit alleging public nuisance.  We expect the number of such filings to continue climbing as more workplaces reopen. 

Multiple suits were also filed last week challenging the scope and pace of reopening orders.  As local economies gradually reopen at varying speeds and with widely-varying rules, we expect to see more of these claims.  And, notwithstanding the progress toward reopening, we continue to see suits brought by states to enforce their still-existing restrictions.

Now-common lawsuits seeking refunds continue to be filed in significant numbers, as do insurance coverage claims for business losses.  Likewise, last week saw considerable litigation between landlords and tenants.  Allegations related to COVID-19 continue to seep into more traditional claims such as employment discrimination – with plaintiffs alleging the pandemic was used as a pretext for wrongful termination – and securities fraud, where the impact of traditional securities violations is alleged to have been exacerbated by the pandemic.

Finally, a district court judge in Washington indicated this week that the majority of judges in his district believe they will not be able to resume jury trials until sometime in 2021.  This commentary is anecdotal only.  But given courts’ challenges with accommodating social distancing requirements and expected juror resistance to appearing for jury service, it is likely that cases, including the COVID-related cases we have been reporting on every week, will have a longer than usual runway toward trial.

Consumer Class Action Refund Claims

As has been the case every week since we began tracking COVID-19 litigation, new suits were filed targeting universities, music festivals, resorts, and airlines, seeking refunds for services rendered impossible or impracticable by the pandemic. 

Even a temporary disruption of services threatens to provoke a lawsuit where the service provider does not provide compensation for the pause.  To wit, a New York suit alleges Amazon committed deceptive trade practices by temporarily suspending its Prime shipping service without crediting Prime members. 

Refund lawsuits are also starting to expand in scope from the typical targets to providers of auxiliary services related to those defendants.  A private school bus transportation company was hit with a class action lawsuit for allegedly failing to provide refunds after its transportation services ceased due to school closures caused by the pandemic.

Misrepresentation/Fraud Claims

The rush to market COVID-19 related products has been accompanied by misrepresentation actions brought by public and private plaintiffs.  Last week brought more government enforcement actions, including by the state of Louisiana, which alleges that a retailer falsely advertised availability of medical supplies, including hand sanitizers and personal protective equipment. Louisiana alleges that when customers made a purchase, their credit cards were charged at an inflated price, but the products were not delivered. 

More lawsuits were filed by private plaintiffs alleging false claims related to the efficacy of hand sanitizer and the availability of COVID-19 testing kits.

Government Agency Actions

As we predicted last week, plaintiffs have rushed to challenge the scope and pace of reopening orders.  This past week brought challenges from a Putt-Putt Golf facility in Kentucky and a Missouri Bingo Hall

Despite progress toward reopening, states continue to bring actions to enforce their stay-at-home orders. This week, New Mexico  brought an enforcement action against a restaurant to preclude it from engaging in business due to persistent violations of safety restrictions on dine-in food service.  Many businesses sanctioned by local authorities are fighting back.  In Colorado, a restaurant brought an action to reverse the state’s revocation of its restaurant license after it opened for dine-in service on Mother’s Day.

Lastly, as research advances into potential therapies and treatments for the coronavirus, lawsuits related to regulation of these treatments are gaining steam. The Association of American Physicians & Surgeons is seeking an injunction against the FDA’s Emergency Use Authorization, which largely prohibits the use of donated hydroxychloroquine on COVID-19 patients, on the ground that the prohibition is arbitrary and political in nature.

Workplace

While employment lawsuits of all types continue to be filed, we have begun seeing an increase in workplace exposure and failure-to-protect claims as more and more businesses begin to reopen. In a lawsuit filed in the Eastern District of New York, Amazon employees at a Staten Island fulfillment center allege that Amazon has failed to comply with federal and state safety laws and guidance.  The suit strikes new ground by alleging a public nuisance to workers and their family members.

As discussed in a previous round-up, McDonald’s workers in Illinois also filed a public-nuisance suit against Chicago-area McDonald’s restaurants.  An Illinois state court judge concluded she had jurisdiction to hear the dispute and denied a motion to dismiss on primary jurisdiction grounds. The case will now proceed to a hearing on the workers’ preliminary injunction motion.

In a case filed in the District of Columbia District Court, Lyft drivers are alleging that the company’s sick leave policies violate DC’s Accrued Safe and Sick Leave Act by only providing paid sick leave for drivers who have confirmed cases of COVID-19 or are required to be in quarantine by a public health agency.

In a type of employment discrimination claim that may become more common, a 90-year old plaintiff claims he was wrongfully fired under the guise of the COVID-19 pandemic.

Paycheck Protection Program/CARES Act

As with prior weeks, this week saw an influx of dozens of lawsuits filed by loan processing agents alleging financial institutions failed to pay them for processing PPP loans.

Insurance

Loss-of-business claims continue to roll in against insurers, brought by plaintiffs across many industries.  This week, we noted new cases filed by: restaurants – from Harold’s Chicken Shack and In-N-Out Burgers to Chicago’s Purple Pig; gyms like Planet Fitness; hotels ranging from a Holiday Inn Express to Las Vegas’ Treasure Island casino; a museum; and even an escape room.

Defamation

In the District Court of Minnesota, Ethiopian Airlines filed a lawsuit alleging defamation against an individual and an online publisher who allegedly made numerous defamatory statements in a videotaped interview broadcast on YouTube—including statements claiming that the airline played a role in spreading the virus and that it laid off employees as a result of the pandemic. 

Trademark

In the trademark sphere, 28 Mile Vodka filed a lawsuit against Hopmaniacs, LLC in the Northern District of Illinois, seeking a declaratory judgment that 28 Mile Vodka’s sale of antibacterial alcohol skin sanitizer under the mark “Tough Town” – which it began to distribute during the COVID-19 pandemic – does not infringe defendant’s “Toughtown” mark, which is the name of an India Pale Ale.

Failure to Warn or Protect

In a response to a motion to compel subpoenaed documents, DOJ raised concerns about several law firms in the Southern District of West Virginia that served subpoenas at the home of an FBI agent during the COVID-19 pandemic, allegedly jeopardizing the health and safety of the agent and his family.

The District Court of Wyandotte County, Kansas saw a new wrongful death suit alleging a health care facility did not adequately protect its residents from COVID-19.

Lease/Rent

Landlords continue to file suit against tenants to uphold leases.  Tenants are pushing back, saying that COVID-19 releases them from paying the remainder of the lease obligation, and refusing to occupy the leased space. On the flipside, retailers are also suing building owners, alleging that the landlords refused to consider any abatement of rent and instead evicted them. 

Force Majeure

The ongoing dispute over whether COVID-19 constitutes a force majeure is alive and well. In a lawsuit filed in Tarrant County, Texas, the defendant company claimed force majeure when it was unable to make payments for sand.

In a Fulton County, Georgia lawsuit, plaintiff contracted with defendant to host her wedding of up to 200 guests. Plaintiff asserts that the COVID-19 pandemic triggered the force majeure/acts of God clause allowing her to terminate the agreement “without liability,” and seeks a refund of her pre-payment.  

Securities Disclosure

Securities disclosure cases are beginning to emerge as the market impacts of COVID-19 have exacerbated alleged shortcomings. In the Northern District of Georgia, a plaintiff claims that an investment firm’s mismanagement of his assets was compounded by the economic impacts of COVID-19, causing the plaintiff to lose more than one million dollars. 

In a Tarrant County, Texas lawsuit, a plaintiff company alleges that defendant breached its contract and fiduciary duties by taking $100,000 that belonged to the company in the midst of COVID-19, which ultimately caused plaintiff’s insolvency.

Impact on Trials

Great uncertainty remains regarding the operations of courts across the country.  But a Seattle federal judge commented this week in a letter to counsel that most of the judges in the Western District of Washington believe that trials will not be held in the district until 2021, citing concerns about social distancing guidelines and the safety of jurors.

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.  Alex AkermanGillian Clow, Debolina Das, and Kaelyne Wietelman are litigation associates at the firm.