The REAL Trending U.S. Litigation Topics Regarding COVID-19: April 20-24, 2020 

April, 2020 - Joseph V. Schaeffer, Niall A. Paul, Megan W. Mullins

Another week brings another round of COVID-19-related lawsuits. We are identifying some early trends and provide a synopsis of the more relevant lawsuits below.

Will nursing homes be overwhelmed by wrongful death lawsuits?

The daughter of a woman suspected to have died from COVID-19 has filed a wrongful death suit against the company who owns the Life Care Center of Kirkland where her mother was a resident. The suit alleges that the Life Care Center, which allegedly has 120 cases of COVID-19 and 37 deaths, was negligent in failing to alert officials within 24 hours of what it suspected was an influenza outbreak. The complaint also alleges the Life Care Center failed to quarantine residents and staff, but instead admitted new residents and held a Mardi Gras party. According to the plaintiff, the Life Care Center concealed and suppressed facts from its residents in order to hide the risk of danger, thus causing her mother’s “catastrophic injuries, subsequent complications and ultimate death.”

Retirement and assisted living facilities should take note and take inventory of the policies and procedures necessary to mitigate their risk. News coverage is available here, and the complaint is available here.
Can Attorneys General use the COVID-19 pandemic as an excuse to limit debt collection methods?

A group of debt collectors is challenging a March 27 order of the Massachusetts Attorney General, which temporarily banned methods of collecting debts that would require individuals to leave their homes and/or have in-person contact with other people. Among these practices are repossessing vehicles and property and filing debt collection lawsuits. According to the AG, the regulation also protects debtors from financial hardship resulting from debt collection during the pandemic. The plaintiffs, however, argue the order has resulted in unlawful negative impacts on their businesses. News coverage is available here, and the complaint is available here.
Will COVID-19-related sanitation measures give rise to a new breed of “donning and doffing” claim?

In Chicago, Cook County prison guards have brought a proposed class action against the county and Sheriff Tom Dart, arguing they should receive compensation for the time they spend sanitizing their uniforms, showering, and taking other precautions related to COVID-19 after returning home from their shifts. The class consists of 11 correctional officers, who are asking to be paid for at least one full work week to compensate them for “sanitation activities” since Governor J.B. Pritzker declared a state of emergency due to COVID-19 on March 9. In this donning and doffing-style suit, the officers contend that, given the sanitation measures needed to prevent the spread of COVID-19, they should be paid for the 30 minutes they spend cleaning, as it is now an “expected job function.” News coverage is available here.
How does the WARN Act’s “unforeseen business circumstances” provision apply in a pandemic?

In Florida, Hooters issued written termination notices to almost 700 employees--and terminated them that same day. Now, two former employees have filed a class action lawsuit alleging the company’s failure to provide any advance notice violated the Worker Adjustment and Retraining Notification Act (“WARN”). Under the WARN Act, employers with more than 100 employees are generally required to provide at least 60-days’ notice of a mass layoff unless it was the result of “unforeseen business circumstances” or a natural disaster. In this case, even if COVID-19 is found to be a qualifying circumstance exempting the company from the notice requirement, the plaintiffs have argued that Hooters nevertheless was required to provide notice as soon as it became aware of the situation, but instead gave no advance notice at all. Plaintiffs further allege Hooters failed to explore other viable options as alternatives to the mass layoff. News coverage is available here, and the complaint is available here
Will employees voicing concerns about COVID-19 response plans today be filing whistleblower claims tomorrow?

A Detroit-area nurse was fired after posting a short video showing her dressed in PPE. But she alleges the hospital’s reliance on its social media policy was a pretext for retaliation based on her previous comments about PPE and staffing requirements in light of COVID-19. News coverage (with a link to the complaint) is here.
What lessons can employers learn from a wrongful arrest claim over an Instagram post?

The Wisconsin Institute for Law & Liberty has filed a lawsuit on behalf of a high school student who was allegedly forced by a patrol sergeant, following the county sheriff’s orders, to remove an Instagram post claiming she had COVID-19 symptoms. According to the Complaint, which claims a violation of the teenager’s First and Fourteenth Amendment rights, the sheriff’s office received a complaint from the teenager’s school about the post, prompting the sergeant to visit her at home and allegedly threaten to cite her for disorderly conduct if the post was not removed. At the time, the county had no confirmed cases of COVID-19, which is theorized by the Complaint to be the reason behind the sheriff’s order. Although the defendant here is a government official, this case serves as a warning for employers to be mindful of how they deal with employees’ social media activity during the pandemic. News coverage is available here and here (with a link to the complaint).
Can the Small Business Administration exclude some types of businesses from the Paycheck Protection Program?

A District Court judge has denied a claim brought by American Association of Political Consultants against the Small Business Administration seeking an emergency injunction to stop it from denying consulting firms access to loans available through the Paycheck Protection Program due to their political or lobbying activities. Judge Royce C. Lamberth recognized the hardships that will be suffered by the plaintiffs and others similarly situated, but nevertheless denied the AAPC’s First Amendment claim, finding that the loans are actually subsidies, and therefore the government’s regulations on them are valid. The AAPC has since filed a notice to appeal the case to the U.S. Court of Appeals for the D.C. Circuit. News coverage is available here, and the District Court order is available here.
Can consumers reject postponements and force businesses to offer refunds?

In yet another refund claim, the MLB, its teams, and four ticket companies have been named in a lawsuit seeking a refund of costs and fees of tickets purchased for the 2020 season. The MLB, however, has stated it hopes that as many of the games as possible will still be played, and has told the teams to “postpone” the games rather than cancel them. Accordingly, the MLB has advised ticketholders to keep their tickets for use when the games are rescheduled. The plaintiffs, however, who seek class action certification, argue that even if the games are postponed, it is unlikely ticketholders will attend due to fear of COVID-19, and those tickets should instead be refunded. News coverage is available here, and the complaint is available here.
Does the shift from campus to online education entitle college students to refunds?

The University of Colorado Boulder faces a class action lawsuit brought by its students, claiming they should receive a reduced rate of tuition, and partial refunds for tuition already paid in full. The plaintiffs allege that their tuition cost reflects rates for live in-person instruction, not online classes as the university is currently providing. Interestingly, the plaintiffs also make the claim that any degrees issued based on pass/fail credits, as many universities have implemented in the wake of the pandemic, are necessarily diminished in value. This is likely to be one of many lawsuits against colleges seeking refunds for tuition and potentially diminution in value of graduates’ degrees. News coverage is available here and here, and the complaint is available here.
Are third-party resellers opening Amazon up to liability for price-gouging?

A class action lawsuit has been filed against Amazon, claiming the company has engaged in “unconscionable” price-gouging. The plaintiffs, a group of California consumers, allege that Amazon inflated the prices of face masks, cold remedies, and other products by more than 600 percent. Under California law, a 10 percent price increase during a state of local emergency is illegal. The lawsuit claims consumers have been forced to order essentials online, as they cannot safely visit a brick-and-mortar store, but have been hit with increased prices as a result of Amazon’s attempt to make a profit from the pandemic. In response to similar cases, Amazon has attributed the price increases to “bad actors” among the third-party resellers using its platform and has highlighted its efforts to combat price-gouging in combination with state attorneys general. News coverage is available here.
How are the courts going to decide the flood of business interruption coverage disputes?

Insurance giant Chubb, Ltd. and its subsidiary Westchester Surplus Lines Insurance Co. are facing a class action lawsuit filed by a Florida restaurant, which alleges they have refused to provide coverage under business interruption policies. The suit claims the insurance companies have breached contracts with policyholders who hold “all-risk” property insurance policies by failing to pay, since the policies do not specifically exclude business interruptions caused by viruses or pandemics. As shutdown orders continue to impact business, we expect to see the floodgates open on these business interruption coverage disputes. News coverage is available here and the complaint is available here.
Will the Department of Justice relax antitrust enforcement to promote collaborative efforts against COVID-19?

The U.S. DOJ has announced in an April 20, 2020 letter that it will not bring an antitrust challenge against medicine distributor AmerisourceBergen’s plans to coordinate with other health care suppliers to distribute pandemic medicines. The DOJ has cited the need for collaborative efforts to “identify global supply opportunities, ensure product quality, and facilitate product distribution of medications and other healthcare supplies” during the unprecedented pandemic. The letter states the DOJ’s intentions with regard to these antitrust challenges will remain in effect one year from the date of the letter, at which time it may consider the need for an extension. News coverage is available here and the DOJ letter is available here.
Will executive orders restricting interstate travel pass constitutional muster?

Along with COVID-19 and emerging litigation, several literary or pop culture references also consistently emerge. Pandemic or Contagion movies and even dystopian novels are thrown around, but one important new case in North Carolina brings to mind Thomas Wolfe's "You Can't Go Home Again" -- at least not to your second home if it is in Dare County, North Carolina. For six plaintiffs, Wolfe's prophetic novel title tells the modern story of Dare County, which used armed law enforcement to close its "borders" to non-residents to help limit the number of people in the county and prevent the spread of the virus. The Outer Banks closure to nonresident property owners is one of the most restrictive reported. The out-of-state property owners have filed a federal lawsuit raising constitutional interstate commerce objections to the closure noting in their complaint that people from neighboring counties can enter and leave, but the out of state plaintiffs are banned “solely because they are residents of another state." The Complaint states "[t]his prohibition on the entry of out of State residents who own property in Dare County is in violation of the Privileges and Immunities Clause, Art. IV, § 2, cl. 1 of the United States Constitution."

This suit also presents a very interesting challenge to actions by decree or "orders" and we expect to see similar challenges to "executive" type action. The Complaint alleges the Dare County State of Emergency Declaration was "enacted pursuant to a resolution which amended the Dare County Code of Ordinances." According to the Complaint, the emergency rules must be enacted by ordinance, and not by resolution. "The Dare County State of Emergency Declaration is therefore an ultra vires act of the County as it was not lawfully enacted in accordance with a valid Emergency Management Ordinance."

The Complaint seeks an injunction blocking enforcement of the Emergency Declaration because "Plaintiffs have suffered and are continuing to suffer injury from the challenged actions of Defendant, Dare County, as those actions violate the Plaintiffs’ rights … by prohibiting Plaintiffs’ right to travel in the State of North Carolina, to engage in a common calling, and to obtain medical treatment in Dare County. Each of these rights are specifically given to the residents of Dare, Currituck, Hyde, and Tyrrell counties, but are denied the Plaintiffs as they are out of State residents." 

While Dare County's restrictions are more stringent than many others, this suit is one to watch for its constitutional challenge and its ultra vires allegation as well. News coverage is available here and here. The complaint is available here.

Will shelter-in-place orders survive constitutional challenges?

The Michigan United Conservation Clubs has filed a Complaint against Governor Gretchen Whitmer and the Michigan Department of Natural Resources Director asking the judge to strike down a blanket ban on motorboat usage as part of the state’s expanded stay-at-home order. The order, of course, is part of the Governor’s efforts to slow the spread of COVID-19 by limiting travel and the number of people at gas stations and on boat ramps. While the order does not specifically mention motorboats--and allows for the usage of kayaks and canoes--Governor Whitmer’s office later stated the prohibition extends to electric and gasoline-powered motorboats. The MUCC, however, argues the temporary ban is unconstitutional, as it is unfair and vague, and because it still allows individuals to gather in groups to use non-motorized kayaks and canoes. News coverage is available here and here.

Another complaint filed against Governor Whitmer by a landscaping company and several individuals similarly alleges her stay-at-home order unconstitutionally deprives them of their property and interferes with their First Amendment right to association. News coverage (with a link to the complaint) is available here.

Any questions?

Spilman’s COVID-19 Task Force is monitoring litigation arising out of this pandemic to help keep our clients informed and in front of liability issues. Contact us with any questions or requests for tracking particular types of litigation arising out of the COVID-19 pandemic.


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