COVID-19 Litigation Report – August 2020 #1

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Using timely research, Blank Rome’s COVID-19 litigation team provides a weekly report highlighting the latest cases and updates in key litigation areas, such as workplace claims, class actions, breach of contract claims, and more. The team also looks at emerging trends surrounding the pandemic and offers practical considerations for your business. 


TRENDS THAT WE ARE SEEING:

  • Cases brought by the state and federal government against businesses for false claims related to availability of masks, gloves, and other PPE.
  • Actions against commercial leaseholders for non-payment of rent and other purported lease violations.
  • Discrimination and unlawful termination claims as a result of employers’ alleged actions in failing to properly consider an employee’s situation during the pandemic.
  • Contract claims relating to failure of performance relating to COVID-related cancellations or other pandemic-related reasons for non-performance.
  • Class actions seeking the return of monies paid for services that were never delivered due to the pandemic.
  • Insurance claims seeking coverage for losses due to closures because of governmental orders and pandemic issues.

PRACTICAL CONSIDERATIONS:

  1. Be transparent with employees, customers, and clients regarding precautions taken in response to COVID and impact of pandemic on the operation of your business. 
  2. Follow CDC Guidelines, and any state or local orders, for your workplace, and make periodic updates to your business reopening guidelines.
  3. Consider all potential COVID-related arguments that will made by employees when contemplating any termination decision; carefully consider requests for employee accommodations, and properly document.
  4. Consider all contract claims for cancelled events and failed deliverables due to COVID.
  5. Seek counsel (by insurance counsel) if unable to obtain coverage from an insurer that is denying coverage during the pandemic.
Subject Matter Case Details

Misleading Business Practices

  • Unfair practices:
    • Government sued seller who used several websites and PayPal accounts to offer products popular during the COVID-19 pandemic, such as hand sanitizer and disinfection wipes, and failed to deliver any of the purchased products (Florida).
    • Seller tried to capitalize on the COVID-19 pandemic by advertising that it would ship PPE within 24 to 48 hours, but failed to ship the PPE to businesses and medical practices (Missouri).
    • State sued clinic that falsely claimed to have COVID-19 and antibody tests in order to drum up business during the pandemic (Texas).

Customer Safety

  • Masks (California): Debt collector entered woman's gated, private property during the COVID-19 pandemic without permission and without personal protective equipment to repossess her car due to an alleged default in payment.

Workplace Claims

  • Retaliation claims (Washington): Agency fired realtor after she raised concerns about giving in-person tours of apartments during the COVID-19 pandemic and about agency’s possible noncompliance with state laws by threatening tenants with eviction.
  • Employment:
    • Dental practice fired employee after she expressed concern about returning to work during the COVID-19 pandemic (Connecticut).
    • University terminated professor even though student enrollment was not affected by the pandemic (Missouri).
    • Business failed to protect driver's job while he took family leave to care for his four children after Pennsylvania schools shut down at the beginning of the COVID-19 pandemic. Business offered him a route two hours away from his home after replacing driver with another while he was on leave (Pennsylvania).
    • Trucking and transportation company violated the Emergency Paid Sick Leave Act of the Family First Coronavirus Response Act by failing to allow workers to take leave due to risk of Covid-19 as recommended by their physicians (Tennessee).
  • Discrimination (New Jersey): School district did not renew the contract for plaintiff science teacher, who has hip and leg conditions making it difficult to walk at times, after he took medical leave and then the COVID-19 pandemic struck (New Jersey).

Class Actions

  • Tuition and fees for higher education (California): Students brought class actions against universities for refusing to refund tuition, fees, and on-campus living expense fees even though classes and on-campus facilities were suspended.
  • Travel (Kansas & Ohio): insurers refused to provide coverage to travelers when their scheduled trips were cancelled because of numerous governmental restrictions caused by the COVID-19 pandemic.  

Breach of Contract Claims

  • Arizona & Florida: Bank failed to pay fee owed to tax agent who helped businesses obtain Paycheck Protection Program loans during the COVID-19 pandemic.
  • Delaware: Leaseholder sues retailors owing over $30 million in back rent after retailors tried to renegotiate leases, relying upon the pandemic as leverage in order to retain and improve profitability.
  • Massachusetts: Company failed to pay plaintiff for marketing leads services, claiming it could not because of financial hardship caused by the COVID-19 pandemic.
  • New Jersey: Commercial renter suddenly vacated its lease during the COVID-19 pandemic in violation of its early termination provision, making it difficult for property owner to find a replacement leasee.
  • Virginia: Shopping center sued retailers that stopped paying rent following the issuing of a statewide stay-at-home order.

Weddings and Other Event Cancellations (Contract)

  • Holders of Yankees seasons tickets petition for arbitration regarding postponed games (New York).
  • Event planner refused to return client’s deposit after client was forced to cancel a Bar Mitzvah because of the COVID-19 pandemic (New York).
  • Hotel refused to return payment for rooms that were booked for an event cancelled as a result of COVID-19 (New York).
  • Venues refused to return deposits for weddings cancelled due to COVID-19 (Pennsylvania).
  • Organization sues economist who refused to refund money paid to him to speak at an event after the event was canceled because of the COVID-19 pandemic (Virginia).

Insurance Coverage

Several suits alleging business interruption and revenue/profit losses by an urgent care, department stores, dental providers, surgery practices, restaurants, movie theaters, real estate agencies, and hotels (Florida, Massachusetts, Missouri, New York, Pennsylvania, & Texas). Other cases:

  • Florida: Chiropractor seeks declaration that insurance policy provides coverage for the COVID-19 pandemic.
  • Mississippi: Insurer refused to pay business interruption insurance benefits to consulting service after it was forced to stop its educational consulting services to school districts due to the COVID-19 pandemic.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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