During the past 12 months, we’ve published several articles on the 10 March 2020, Public Readiness and Emergency Preparedness Act (PREP Act) Declaration related to COVID-19 as well as covering the five amendments to the PREP Act since then.

While you can read our prior publications providing key background on the Declaration here, we also wrote an article on the earliest jurisprudence involving consideration of PREP Act immunity in the context of removal. As we commented there, the New Jersey and Kansas federal courts’ decisions in those cases – remanding for lack of federal question jurisdiction upon finding PREP Act protections inapplicable to allegations of negligent failure to use COVID-19 countermeasures and that the PREP Act applies only to acts, not failures to act, relating to covered countermeasures – hinted at the start of a possible trend among the judiciary to take a narrower reading of the scope of PREP Act immunity than what would otherwise seem to be fairly broad-sweeping coverage conferred under the plain language of the PREP Act.  

Since then, the United States Department of Health and Human Services (HHS) has, in no uncertain terms, rebuked these early courts’ narrowed interpretations of PREP Act immunity head on. Indeed, within days of our piece discussing these initial court decisions, the HHS issued its Fourth Amendment to the PREP Act Declaration (Fourth Amendment) in which it added explicit language stating that there can be situations where not administering a covered countermeasure to a particular individual – such as where public health authorities determine that certain categories of persons like first responders should have priority to receive a vaccine – can fall within the PREP Act and the Declaration’s liability protections.[1] This language in the Fourth Amendment seemed to leave no doubt as to the Secretary’s intention for a broad application of the PREP Act. Just over a month later, the Secretary then doubled down on this position by way of its Fifth Advisory Opinion 21-01 (Advisory Opinion 21-01) issued on 8 January 2021.[2] This advisory opinion appears to be aimed squarely at the judiciary and seems to evince the Secretary’s frustration with these recent federal courts’ interpretations of the PREP Act. Most notably:

• Advisory Opinion 21-01 expands on the language of the amended Declaration to clarify that the PREP Act provides complete preemptive federal jurisdiction for cases in which it is a defense.[3] The Secretary further commented that, even in the case of plaintiffs seeking to avoid federal jurisdiction through artful pleading, “federal courts are free to entertain discovery to ascertain, for jurisdictional purposes, the facts underlying the complaint.”[4] 
• Also in Advisory Opinion 21-01, the Secretary reiterated HHS’ position that PREP Act protections apply in cases where the complainant alleges harm from the defendant’s complete failure – or even refusal – to use covered countermeasures, particularly in those cases where such a failure arises from the conscious allocation of scarce resources among potential countermeasure recipients. In other words, the “decision-making that leads to the non-use of covered countermeasures by certain individuals is the grist of program planning [as defined in PREP Act], and is expressly covered by the PREP Act.”[5]   
• Referring to the recent court decisions finding that the PREP Act cannot be read to apply to the non-administration or non-use of a covered countermeasure, the Advisory Opinion states, “[T]his ‘black and white’ view clashes with the plain language of the PREP Act, which extends immunity to anything ‘relating to’ the administration of a covered countermeasure.”[6] 
• Finally, Advisory Opinion 21-0 clarifies that pursuant to Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308 (2005) – which recognized that a case involving interpretation of a federal statute constitues a substantial question of federal law and therefore belongs in federal court – “ordaining the metes and bounds of PREP Act protection in the context of a national health emergency necessarily means that the case belongs in federal court.”[7] 

This and other commentary from the HHS thus seems to repeatedly emphasize its intention that courts take a broad interpretation of PREP Act coverage and immunity. Yet, as indicated by another more recent court decision discussed below, the judiciary appears poised to continue applying a narrower reading of the PREP Act where possible. 

Another federal court sets further implied limits on PREP Act immunity 

In Avicolli v. BJ’s Wholesale Club, Inc., the U.S. District Court for the Eastern District of Pennsylvania considered whether a distributor of hand sanitizer was immune from tort liability under the PREP Act. 2021 WL 1293397 (D.N.J. 7 April 2021). Although the court ultimately found that a substantive analysis of immunity was premature, the case provides further insight into how courts are interpreting the scope of liability under the PREP Act and related guidance. 

In May 2020, Plaintiffs Dennis and Nadine Avicolli purchased a seventeen-ounce bottle of hand sanitizer from Defendant BJ’s Wholesale Club (BJ’s). Unbeknownst to the Avicollis, the manufacturer subsequently recalled all 17-ounce bottles two months later because they contained methanol or wood alcohol. Nadine Avicolli ingested some of the hand sanitizer in August 2020, suffering weakness of one side of her body and substantial loss of vision, among other things.[8]

The plaintiffs brought product liability claims against the retailer, manufacturer, and distributor of the hand sanitizer, alleging negligence, strict liability, breach of warranty, and violations of Pennsylvania’s consumer protection statute. Defendant retailer BJ’s moved to dismiss the complaint, asserting immunity under the PREP Act as a “covered person” distributing a “covered countermeasure. ”[9] Specifically, BJ’s argued that it was immune from liability under the Declaration because: (i) it is a “covered person” as a “distributor”; (ii) hand sanitizer is a “covered countermeasure” because it is a “qualified pandemic or epidemic product”; and (iii) the claims arose from the “administration or use” of the hand sanitizer.[10] 

The court denied the defendant’s motion to dismiss, finding that the facts alleged in the complaint were insufficient to afford defendants immunity under the PREP Act.[11] Focusing on the method of distribution to define the limits of PREP Act immunity, the court noted that neither plaintiffs nor the defendant provided a basis for inferring that BJ’s obtained the hand sanitizer through one of the two means of distribution specified by the Secretary of Health and Human Services.[12] Citing an advisory opinion issued by the Office of General Counsel for the Department of Health and Human Services, the court concluded that BJ’s did not qualify for PREP Act immunity because it neither obtained the hand sanitizer under agreement with the federal government nor in response to the COVID-19 pandemic.[13]

While the court declined to reach the merits of whether BJ’s sale of hand sanitizer fit within the PREP Act’s coverage, it distinguished the facts of the case from those that would allow an inference that the hand sanitizer was obtained through qualifying channels sufficient to be immune from liability: “ [F]or example, a distillery which began obtaining and selling hand sanitizer as part of a coordinated effort to mitigate the spread of COVID-19. ”[14] In other words, BJ’s sale of hand sanitizer was consistent with its standard business operations rather than a response specifically tailored to combat the pandemic. 

Comment

At bottom, Avicolli suggests that a retailer obtaining hand sanitizer for re-sale before the pandemic would presumably be excluded from immunity under the PREP Act, unlike a retailer that obtained a product after the start of the pandemic to specifically assist in mitigating the spread of COVID-19. Although the court simplistically focuses on whether a retailer obtains a product before or after the start of the pandemic, Avicolli does not consider a third option: a retailer who obtains a covered countermeasure before the start of the pandemic but sells the product as part of a response to the pandemic. Thus more generally, the case serves as yet another signal that the judiciary is likely to continue reading implied limitations into the scope of the coverage conferred under the PREP Act Declaration, notwithstanding HHS guidance to the contrary. It’s ultimately unclear whether other courts will find pre-pandemic purchasing and immunity under the PREP Act as mutually exclusive. Regardless, establishing a timeline of such purchases may be important to a PREP Act immunity defense and may, at least in some courts, determine whether a defendant can limit its liability for COVID-19-related claims.

References

1    Fourth Amendment, available at https://www.phe.gov/Preparedness/legal/prepact/Pages/4-PREP-Act.aspx.  

2    Advisory Opinion 21-01, available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/2101081078-jo-advisory-opinion-prep-act-complete-preemption-01-08-2021-final-hhs-web.pdf.

3    See Advisory Opinion 21-01 at 2.

4    Id. at 4.

5    Id. at 2-3.  The advisory opinion does, however, distinguish between such non-use and cases that involve “the complete failure to use covered countermeasures (such as the failure to purchase any countermeasures…)” for which PREP Act immunity may not apply. Id. at 3-4 (emphasis added).

6    Id. at 3.

7    Id. at 4-5.

8    Avicolli, 2021 WL 1293397 at *1.   

9    Id. at *2, 3.

10  Id. at *4.  

11   Id.  

12   In March 2020, former Secretary of Health and Human Services issued a declaration limiting immunity to “Covered Countermeasures obtained through a particular means of distribution.” 85 Fed. Reg. 15198-01 (17 March 2020). Liability was limited for “Covered Persons for [the manufacture, testing, development, distribution, administration, or use of one or more Covered Countermeasures] related to (a) present or future federal contracts, cooperative agreements, grants, other transactions, interagency agreements or memoranda of understanding or other federal agreements; or (b) activities authorized in accordance with the public health and medical response of the Authority Having Jurisdiction to prescribe, administer, deliver, distribute, or dispense the Covered Countermeasures following a declaration of an emergency.” Id. 

13   Id. at *4. The court looked to the following guidance when construing the Declaration: w[e] interpret these two conditions broadly to include (1) any arrangement with the federal government, or (2) any activity that is part of an authorized emergency response at the federal, regional, state, or local level. Such activities can be authorized through, among other things, guidance, requests for assistance, agreements, or other arrangements”. Department of Health & Human Services, Office of the General Counsel, Advisory Opinion on the Public Readiness and Emergency Preparedness Act and the March 10, 2020 Declaration Under the Act (17 April 2020, modified on 19 May 2020).      

14   Id. at *4.

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