Unprecedented: COVID-19 Litigation Trends, Issue 8

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This eighth edition of Unprecedented, our weekly update on COVID-19-related litigation, follows what we hope was a restful and meaningful Memorial Day weekend. For the third week in a row, shutdown challenges, workers' compensation claims, and wrongful death lawsuits have dominated the news cycle. But, we are also seeing a continuation in refund claims and an uptick in fraud claims involving everything from alleged misuse of sick days to corporate press releases. And once again, we expect workers' compensation claims and personal injury claims to pick up now that parts of America have reopened and the remaining parts are following.

We hope you find these cases, and the questions they raise, to be informative.

What were last week’s battlegrounds in the shutdown challenges?

In Issue 7 of Unprecedented, we asked whether the challenges over shutdown orders will burn out once restrictions are lifted. At least for now, the answer is no. Last week saw several new lawsuits and decisions involving government shutdown orders, with many once again being led by religious organizations. As exemplified by a case out of Mississippi—where the church challenging shutdown orders was burned to the ground—these cases have become a particular flashpoint over how society should respond to the COVID-19 pandemic.

In Oregon, a group of plaintiffs led by Elkhorn Baptist Church obtained a preliminary injunction against enforcement of Governor Brown’s shutdown orders. The trial court concluded that the state emergency powers invoked by Governor Brown included temporal limitations that had been exceeded without authorization. The Supreme Court of Oregon, however, stayed enforcement of the injunction order while it considered Governor Brown’s request for mandamus relief that would permanently lift the injunction order. News coverage by JURIST is available here, a copy of the trial court order is available here, and a copy of the Supreme Court of Oregon’s stay order is available here.

In Illinois, the Seventh Circuit Court of Appeals denied an emergency motion for injunction pending appeal filed by two religious organizations. Like the trial court, which denied the organizations’ request to enjoin Governor Pritzker’s shutdown orders on First Amendment grounds, the Seventh Circuit held that the orders were responses to an extraordinary public health emergency and appeared to be neutral and generally applicable. The Seventh Circuit’s Order is available here.

In Mississippi, a federal judge expressed rare frustration with a church that moved to expedite a decision on its request to enjoin a local municipality’s shutdown ordinance—even after the municipality voluntarily amended its ordinance to permit drive-in services. Although the case raises interesting questions about whether (and to what extent) state shutdown orders preempt municipal efforts, and the court noted a recent decision from the Sixth Circuit favoring the church. he court chastised the church for, in its opinion, failing to take the COVID-19 pandemic seriously. Citing a video of church members congregating in a local Walmart to make a point to the municipality about shutdown orders applying differently to churches than retailers, the court noted that “plaintiff’s burden in this case is not merely to convince this court that it is correct on abstract legal issues, but also that it is sufficiently trustworthy that granting the injunction it requests would serve the public interest.” The court then invited the church to take the issue up with the Fifth Circuit, which it did, prompting an order granting the church limited injunctive relief while recognizing the need for restraint in an ever-changing legal landscape. As Judge Willet noted in concurrence, however, the Fifth Circuit’s injunction order offers perhaps little solace. The church was burned to the ground last week, with parking lot graffiti stating, “Bet you Stay home Now YOU HYPOKRITS (sic).” The lower court’s order is available here, and the Fifth Circuit’s order is available here.

In Michigan, Governor Whitmer won the first round in her dispute with the Michigan Legislature over the scope of her emergency powers. The Legislature had filed a motion for emergency declaratory judgment with the Michigan Court of Claims, challenging the constitutionality of the state’s Emergency Powers of Governor Act ("EPGA") and alleging that both the EPGA and another statute the state’s Emergency Management Act ("EMA") had been violated, and the emergency powers were unconstitutional or had been exceeded. Although the Court of Claims agreed Governor Whitmer had exceeded her authority under the EMA, this was a hollow victory for the Legislature. The Court of Claims denied the Legislature’s remaining challenges and held that Governor Whitmer could lawfully exercise emergency powers under the EPGA. The Court of Claims dismissed the case, and the Legislature quickly announced its intent to appeal. News coverage of the order (with a link to the order itself) is available here.

In Nevada, a nonprofit ministry sued Governor Sisolak and other government officials over the enforcement of that state’s shutdown orders. The ministry alleges the shutdown orders violate federal constitutional rights to travel, due process and equal protection, and just compensation for takings, as well as several state constitutional guarantees. Like most plaintiffs challenging shutdown orders, the ministry questions the severity of the COVID-19 pandemic and the need for its organization to close when others—most notably big box retailers—are allowed to stay open. The complaint is available here.

And in Virginia, that state’s Supreme Court denied a request by a Gold’s Gym franchisee to enjoin Governor Northam’s shutdown order. The denial marks the second defeat for the franchisee, with a similar request refused by a trial court. As a result, the Governor’s shutdown orders will remain in effect while the franchisee litigates its case. News coverage of the Supreme Court of Virginia’s order is available here.

What are the allegations supporting wrongful death claims against nursing homes?

Nursing homes and assisted living facilities have been hard hit by the pandemic. With modified procedures, open communication, new protocols, and some luck, certain facilities have been able to avoid the ravages of the virus and the resulting litigation. But, one Illinois operation suffered the loss of life of 20 residents and staff and is now facing two separate wrongful death lawsuits. Bria Health Services of Geneva in Illinois has been hit with two lawsuits brought by family members of two different residents who died of COVID-19. In the first lawsuit, the daughter of the deceased resident alleged the facility “took essentially no precautions” and they did not communicate to the daughter that her mother was gravely ill with the virus and bed-ridden. A copy of the complaint is available here.

In the second lawsuit, the husband of a deceased resident sued alleging many of the same failings, but also claimed a nurse practitioner at the facility informed the family their family member “had a cough and a chest X-ray that indicated signs of pneumonia.” Yet, despite those symptoms, the complaint alleges the resident was neither isolated nor tested for coronavirus as requested by her family. News coverage is available here.

Both families allege the nursing home ignored directives from the state and federal government, including guidance issued specifically for long-term care facilities to help control the spread of COVID-19. Specifically, one complaint states the facility “failed to isolate those residents from asymptomatic residents, failed to ensure adequate supplies of PPE were easily accessible to residents and staff, failed to implement continuous screening of residents and staff, including temperature checks and the use of checklists to identify symptomatic individuals, and failed to notify either the Kane County Health Department or the [Illinois Department of Public Health] of symptomatic residents to determine if COVID-19 testing was indicated.” According to the lawsuits, the facility’s medical director confirmed in an interview with the local press “that residents exhibiting COVID-19 symptoms were not presumed to be coronavirus-positive until mid-April, triggering rampant community spread of the virus amongst the facility’s residents and staff.” The facility has yet to respond in court or comment on the lawsuit.

Spilman’s COVID-19 Task Force has been advising nursing homes and similar facilities on how best to address their COVID-19 concerns. Many resources are available on the Task Force web page, but two of particular relevance here relate to new mandatory testing and contractual arbitration agreements.

What types of claims and issues are confronting employers?

Tyson Foods has been sued for one billion dollars (yes, really) in a suit claiming that failure to provide PPE caused the death of an employee from COVID-19. The complaint contains allegations relating to a workplace fall and knee injury, as well as general working conditions and the spread of COVID-19. The thrust of the COVID-19 claims are close working conditions and a lack of PPE. Furthermore, the employee’s family alleges that Tyson tested thousands of Tyson employees for COVID-19, and that at least 4,500 tested positive for the virus. It also alleges Tyson employs a “rigged” worker’s compensation system that denied appropriate benefits to the family of the deceased employee. Another lawsuit that may bring the Texas Workers' Compensation system into play can be found here. Click here for the complaint. This suit also comes amidst possible federal legislation to shield meat processing facilities from litigation and liability from coronavirus infection unless the plaintiff can prove criminal misconduct or gross negligence by the company. News coverage of this proposed legislation is available here.

A nurse has anonymously filed a $1 million lawsuit against Good Samaritan Hospital of Suffern, New York, claiming she was assigned to care for a patient exhibiting COVID-19 symptoms, yet was refused PPE despite her multiple requests. The complaint alleges the attending doctor negligently refused to test the patient for COVID-19 during his treatment at the hospital, but the patient’s family had him tested after his death and he was positive for the virus. Later, the plaintiff nurse developed symptoms and tested positive. The complaint accuses the hospital of failing to accommodate her requests for PPE even though she was at higher risk due to kidney disease. See news coverage here and a copy of the complaint here.

Meanwhile, McDonald’s is the latest employer to face a class-action lawsuit alleging insufficient COVID-19 protections for its workers. The complaint, filed in a Cook County, Illinois circuit court, claims that McDonald’s failed to take adequate steps in response to the pandemic and has disregarded government guidance regarding employee protective measures. The complaint also alleges that employees were not notified when another employee became COVID-19 positive. The lawsuit asks the court to issue an injunction that would require McDonald’s to halt a policy under which workers must reuse face masks, to make face coverings mandatory for customers, and to notify employees when another worker has tested positive for the virus. See news coverage here and a copy of the complaint here.

The AFL-CIO has filed a petition asking the D.C. Circuit to compel the Labor Department to adopt emergency standards for workers in anticipation of businesses reopening. The petition, which demands that OSHA adopt the temporary emergency standards, states that additional protections are needed as individuals return to work and person-to-person contact increases. The AFL-CIO has been calling for higher protections since the beginning of the COVID-19 pandemic. However, OSHA has yet to implement new standards in response to initial petitions. See news coverage here, and read the petition here.

A New York attorney has sued his former employer, claiming that he was fired after contracting COVID-19 and asking to work remotely until he recovered. According to the complaint, which alleges a violation of the Family and Medical Leave Act, the plaintiff became COVID-19 positive and was given more than a week off work to recover. After becoming well enough to continue working, the plaintiff alleges he asked for time off to move himself and his family to Europe for the remainder of the pandemic. The complaint accuses the employer of refusing to accommodate his request, despite other employees working remotely. This lawsuit will likely be one of many FMLA-based claims as businesses slowly reopen and employees are called back to work. A copy of the complaint is available here.

And finally, an Atlanta man has been charged with defrauding his employer after he allegedly faked a letter from a medical provider stating that he had tested positive for COVID-19. After receiving the letter, the man’s employer stopped all business and underwent sanitization procedures of the workplace. The man has been accused of causing “unnecessary economic loss to his employer and distress to his coworkers and their families.” Click here to view the press release from the U.S. Attorney’s Office for the Northern District of Georgia.

When will third-party negligence claims expand beyond the cruise industry?

Celebrity Cruises is the subject of a negligence lawsuit filed by a couple after one of them allegedly contracted COVID-19 while aboard a cruise ship. The complaint alleges the cruise line negligently exposed its passengers to the virus because it knew that a passenger was exhibiting symptoms, but continued its scheduled activity and dining options. This lawsuit comes after employees of Celebrity Cruises sued their employer, alleging it failed to protect its workers from the virus. Other cruise lines are also facing COVID-19 related lawsuits, including wrongful death allegations and negligent exposure claims, and the CDC has implemented a no-sail order until at least July. See news coverage here.

Who was sued for COVID-19 refunds last week?

Harvard is the latest college to face a lawsuit demanding refund of tuition costs as a result of the shift to online-based learning. The complaint alleges that Harvard’s online classes are “subpar,” and that students who paid tuition and fees for the semester have been deprived of adequate facilities and materials and do not have the same access to faculty as they would on campus. The complaint contains similar allegations to those filed against more than 20 other colleges across the nation, which also seek reimbursement of tuition and fees. See news coverage here and a copy of the complaint here.

What areas are ripe for fraud claims?

As concerns over misuse of Paycheck Protection Program funds continue to grow, the U.S. Justice Department has sent grand jury subpoenas to large banks, seeking borrowers’ private financial and personal records. The Department has already taken action against some businesses that fraudulently received funds by lying about the state of the business and/or its number of employees, and the subpoenas will help identify potential businesses that may have fraudulently taken advantage of the $660 billion program. The subpoenas would also allow the Justice Department to hear witness testimony if needed as part of a criminal investigation. See news coverage here and here.

The Securities and Exchange Commission has charged biotechnology company Applied BioSciences Corp. with fraud in relation to a press release issued by the company, which stated it was offering and shipping COVID-19 home tests to the general public for private use. The SEC’s complaint alleges the company’s claims were misleading, as the tests could only be administered in consultation with a medical professional, and that the company had not shipped any tests as of March 31. View the SEC press release here and a copy of the complaint here.

Elanco Animal Health Incorporated, a company that develops, manufactures, and sells food and other products for animals, has been hit with a class action lawsuit alleging it hid its inventory backlog problems from investors. The complaint accuses Elanco of making materially false and/or misleading statements, and failing to disclose material adverse facts about the business, operations and prospects. Specifically, the complaint alleges that Elanco hid that its distributors were not experiencing sufficient demand to sell through its inventory. See the announcement of the class action lawsuit here.

Now that a court has made strip clubs eligible for the Paycheck Protection Program, will other excluded industries gain access, too?

Strip clubs are now eligible for funding under the Paycheck Protection Program after the Eastern District of Michigan court found that the Small Business Association lacked authority to bar their eligibility. The SBA had previously adopted a rule excluding businesses of a “prurient sexual nature” from receiving PPP funds, but the court issued an injunction preventing it from enforcing those provisions and prohibiting the businesses from obtaining loan guarantees. The injunction applies only to the specific plaintiffs, but may signal similar court orders in the future regarding PPP eligibility. View the order here.

Is there any court business that will not be conducted by Zoom?

A Texas court held the country’s first jury trial by Zoom last week, with early reports being that the experiment was a success. As courts try to balance the need to move cases forward with public health concerns, more remote jury trials may follow. News coverage is available here.

In more somber news, a Singapore judge last week sentenced a man to death via Zoom—a signal that the platform has gained currency for even the most significant legal matters. News coverage is available here.

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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