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Unprecedented: COVID-19 Litigation Trends, Issue 9 

by Joseph V. Schaeffer, Niall A. Paul, Megan W. Mullins

Published: June, 2020

Submission: June, 2020

 



This ninth edition of Unprecedented, our weekly update on COVID-19-related litigation, continues to be dominated by shutdown challenges and workplace injury and wrongful death claims. But as governments discuss contact tracing as a way to control COVID-19’s spread, a data breach lawsuit against Deloitte illustrates the risks associated with creating the systems and collecting the necessary information. And, a lawsuit alleging an HIV+ employee was fired after requesting accommodations for his high-risk status showcases how COVID-19 has created a new minefield of employer liability.
 
We hope you find these cases, and the questions they raise, to be informative.
 
Will Massachusetts’ new liability shield for health care facilities bar claims against long-term care facilities?
 
Despite Massachusetts implementing a new law shielding certain health care facilities from liability when care has been affected by the COVID-19 pandemic, a Boston-area attorney is actively seeking clients from among the families of the “[m]ore than 4,200 long term care residents in Massachusetts [who] have died from COVID-19 complications, according to data released by the Dept. of Public Health.” The lawyer is intent on challenging the new law.
 
As we have seen with the ongoing wrongful death suits against healthcare facilities, the thrust of the complaints against the facilities, as well the challenge to the Massachusetts law, are based largely upon a lack of communication or transparency. The attorney planning the challenge told local media, “You have a right to know whether your roommate has it. You have a right to know whether staff is carrying it. You have a right to know whether the building is infected by it. The same holds true for COVID[-19]. You can’t make the exception for COVID[-19].” There is an obvious clash of rights at the center of the transparency debate with medical record and patient privacy demands running headlong into the families' desires to know risks. Balancing those competing interests may be key to avoiding or addressing litigation. News coverage is available here.
 
Are shutdown orders surviving court scrutiny?
 
Most of the shutdown challenges we have discussed in Unprecedented thus far have been unsuccessful—with the notable exception of shutdown challenges based on First Amendment free exercise cases, in which plaintiffs have balanced losses with a few notable successes. In the most notable such from last week, however, the U.S. Supreme Court denied a California church’s request to enjoin enforcement of Governor Newsom’s shutdown order by a narrow 5-4 margin.
 
In South Bay United Pentecostal Church et al. v. Newsom et al., the U.S Supreme Court considered a church’s request for the Court to enjoin enforcement of Governor Newsom’s shutdown order, which limits places of worship to 25 percent of capacity or a maximum of 100 attendees. Upon referral by Justice Kagan, the full Court denied the application by a 5-4 margin. Justices Kagan, Sotomayor, Ginsburg, Breyer, and Roberts voted with the majority, whereas Justices Thomas, Alito, Gorsuch, and Kavanaugh would have granted the application. In a concurring opinion from the Court’s one-sentence order, Chief Justice Roberts emphasized the church’s high burden on an application for injunctive relief while also noting the importance of giving government latitude to respond to a pandemic. Most notable for pending and future cases raising similar challenges, however, Justice Roberts appears to have considered the shutdown order to be a law of neutral and general application: “Similar or more severe restrictions [than those imposed upon places of worship] apply to comparable secular gatherings, including lectures, concerts, movie showings, spectator sports, and theatrical performances where large groups of people gather in close proximity for extended periods of time. And the [Shutdown] Order exempts or treats more leniently only dissimilar activities, such as operating grocery stores, banks, and laundromats, in which people neither congregate in large groups nor remain in close proximity for extended periods.” But reflecting the growing split among the lower courts, Justice Kavanaugh, in a dissent joined by Justices Thomas and Gorsuch, would have applied strict scrutiny and enjoined California’s shutdown order: “The Church would suffer irreparable harm from not being able to hold services on Pentecost Sunday in a way that comparable secular businesses and persons can conduct their activities.” The Court’s Order and the concurring and dissenting opinions are available here.
 
In comparison to the South Bay United Pentecostal Church case, the U.S. Supreme Court’s denial of an Illinois church’s application for injunction against Governor Pritzker received far less attention. The obvious distinction, however, is found in the Court’s Order: the Illinois Department of Public Health released new guidance after the application. Our report on the Seventh Circuit’s denial of an application for injunctive relief is found in Unprecedented Issue 8, and the U.S. Supreme Court’s Order is available here.
 
Other cases that we have previously flagged have likewise seen developments. A New Haven, Connecticut bar’s wide-ranging shutdown challenge (See Unprecedented Issue 3) failed to result in the requested injunctive relief—with the federal district court judge holding that the bar lacked standing for economic harms because they were traceable to its own decision to close and changes in consumer behavior. Similarly, a request by a group of Maryland residents and businesses for an injunction against Governor Hogan’s shutdown order (see Unprecedented Issue 5) was denied by the U.S. District Court for the District of Maryland and then almost immediately appealed to the Fourth Circuit Court of Appeals. And in a church’s challenge to Nevada Governor Sisolak’s shutdown order (see Unprecedented Issue 8), the presiding judge vacated its previous briefing order and directed the church to clarify its requested relief in light of recent developments loosening restrictions (See Docket Entry 13). Similar developments are likely in many other shutdown challenges as America opens back up—particularly when the plaintiffs sought only injunctive relief.
 
Can governments suspend evictions because of the COVID-19 pandemic?
 
In Unprecedented Issue 7, we reported on a group of Union City, New Jersey landlords who challenged that city’s ordinance placing a moratorium on certain rent increases and eviction proceedings.
 
Following their lead, a group of New York landlords sued Governor Cuomo over his executive order that has placed a moratorium on evictions for non-payment and, at tenants’ discretion, requires landlords to apply security deposits to defray rental obligations. The landlords argue this has the effect of giving their tenants the present-sense impression that they are not bound to pay rent and, moreover, impairs their security for repairing any property damage. The effect, according to the landlords, is an impairment of their contractual obligations in violation of the U.S. Constitution's contract clause and a taking in violation of the Fifth Amendment’s takings clause. A copy of the complaint is available here.
 
Should governments be worrying about more than just shutdown challenges?

We reported last month that Pennsylvania Auditor General and the Pennsylvania Senate both were engaged in investigative reviews of Governor Wolf’s creation and administration of a statewide shutdown order.
 
In North Carolina, a similar effort to uncover governmental decision making has prompted a lawsuit against Governor Cooper and two cabinet secretaries. More than two dozen media companies have asked a court to order the government officials to respond to FOIA requests that seek information on responses to the COVID-19 pandemic. News coverage is available here.
 
What was the target of fraud claims last week?
 
Several issues of Unprecedented have discussed fraud claims coming out of the COVID-19 pandemic in areas ranging from the CARES Act to price gouging to false advertising.
 
One of the most recent claims was filed last week by the Los Angeles city attorney’s office, on behalf of the People of the State of California, against Wellness Matrix Group and others. The lawsuit alleges the defendants sold at-home COVID-19 serology tests and COVID-19 disinfectants, complete with false claims to FDA and EPA approval, as part of a scheme to take advantage of public fear and anxiety. News coverage of the lawsuit is available here, and a copy of the complaint is available here.
 
Will the growing number of business interruption lawsuits be consolidated?
 
Groups of plaintiffs in Philadelphia and Chicago have filed a petition to assign a single judge to hear all business interruption lawsuits filed in federal court. So far, at least 101 lawsuits have been filed with the central issue being whether COVID-19 closures are considered a physical loss of property for purposes of triggering insurance coverage. The lawsuits have been filed by various types of businesses and restaurants across the country, some of which allege that they may not survive the pandemic if they are unable to receive an insurance payout. Legislation has been introduced in eight states that would force insurers to pay these claims (Louisiana’s has since been dropped), and President Trump has stated his support for businesses making claims for business interruption coverage when their policies contain no virus exclusions. News coverage is available here.
 
Will refund lawsuits pick up as restrictions on businesses and gatherings continue into summer?
 
Ultra Music Festival, an outdoor electronic music festival held each year in Miami, has been hit with a class action lawsuit over ticket refunds. The complaint alleges that, after Ultra announced the cancellation of the March festival, it sent emails to ticketholders stating their tickets would be valid for either Ultra Miami 2021 or 2022. Ticketholders also were given 30 days to choose which future festival they wanted to attend, although the deadline was allegedly repeatedly extended. Indeed, Ultra’s refund policy provides that it may issue a full or partial refund or postpone the event for a future date. However, the lawsuit alleges that Ultra’s policy is unjust and unenforceable. View news coverage here and here.
 
Is COVID-19 opening up new risks for data privacy and security?
 
Deloitte Consulting LLP, which helped develop Ohio’s unemployment system, has been sued by two groups of residents for allegedly allowing personal information to be exposed in a data breach. According to the complaints, applicants for unemployment benefits have had home addresses and social security numbers exposed to other users, forcing them to take various steps to ensure that they do not become victims of identity theft. Both lawsuits are asking for an unspecified amount of damages, as well as orders requiring the firm to take steps to protect applicants from identity fraud. See news coverage here, and a copy of the complaints here and here.
 
Will FMLA-related complaints continue to increase as businesses begin to reopen?
 
A lawsuit has been filed by an anonymous plaintiff against Dee Packaging Solutions, Inc., alleging, among other claims, violations of the Family and Medical Leave Act. According to the complaint, the plaintiff, who is HIV positive, required time off work amid the COVID-19 pandemic as suggested by his health care provider, but was ultimately discharged from his job. The plaintiff alleges he was not given notice of his rights under the FMLA, and was not permitted time off or given the option to use his PTO hours to cover his absence. The complaint states the plaintiff experienced unfair treatment due to his HIV-positive status and sexual orientation, resulting in a violation of the FMLA. A copy of the complaint is available here.
 
How many more COVID-19-related citations will follow OSHA’s first?
 
The Occupation Safety and Health Administration has issued its first citation in the U.S. related to COVID-19. The citation states a Georgia nursing home failed to report to OSHA within 24 hours that six employees had been hospitalized due to work-related incidents. Although the citation itself does not specifically mention the virus, OSHA has confirmed that the six nursing home workers had tested positive. OSHA also confirmed it has received over 4,500 complaints during the pandemic, but despite investigating each complaint, only one citation has been issued. See news coverage here, and view the citation here.
 
Are commercial lease disputes the next trend in COVID-19 litigation?
 
The first major lawsuit between a Chicago commercial landlord and tenant alleges that one of the city’s largest law firms failed to pay $3.8 million in April and May rent. Although the law firm admits it has held back rent payments, it alleges it is within the terms of the lease. According to a statement by the firm’s co-managing partner, the lease includes a rent abatement provision that covers situations such as the COVID-19 pandemic. The firm also has stated the landlord has been credited for the limited space that has been used for its intended purpose, but maintains it has invoked the rent abatement provision for areas that are currently unoccupied. View news coverage here and the complaint 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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