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Law360 (March 24, 2020, 8:46 PM EDT) -- China engaged in a "cover-up" of COVID-19 in the weeks following the country's first diagnosis and sparked a pandemic that has caused U.S. small businesses to suffer billions of dollars of damages due to government shutdowns, according to a proposed class complaint filed in Nevada federal court.
The suit was filed Monday by five small businesses, including a wholesale florist and restaurant operator, and claims that despite credible scientific evidence showing that the coronavirus was highly contagious and deadly — along with pleas for action by whistleblower doctors and others — the People's Republic of China failed to take appropriate actions to stem the spread of the virus, which was first detected on Nov. 17.
"International treaties, agreements and common decency required the PRC and the other defendants to inform the international community shortly after November 17, 2019 about this 'new' dangerous, contagious and deadly virus," the 23-page complaint states. "They did not. Instead, they engaged in a campaign of falsehoods, misinformation, cover-up and destruction of evidence."
As part of the alleged cover-up, China "intimidated doctors, scientists, journalists, and lawyers and ordered the destruction of medical testing and data, which would have exposed defendants' attempted cover-up to the public," according to the complaint.
It seeks to establish a class of small businesses, which is defined by the Small Business Administration as companies with fewer than 500 employees, that suffered damages as a result of the coronavirus pandemic.
Robert Eglet, an attorney for the small businesses, said at a press conference Tuesday that China's negligence caused billions in lost income for the more than 1 million small businesses that were forced to shutter or significantly reduce operations.
"These damages exceed hundreds of billions of dollars and may increase to the trillions in the future," Eglet said, explaining that additional states and municipalities could impose small business shutdowns if they have not already done so.
While a sovereign nation such as China is covered by the Foreign Sovereign Immunities Act, which generally bars individuals from suing foreign countries, the small businesses contend that an exception applies because China and its agencies "have acted clearly contrary to the precepts of humanity, transparency, and/or their conduct is prohibited by the internal laws of the PRC and its provincial and municipal governments."
Eglet said litigation could take years to resolve.
"This is not an easy undertaking by any stretch of the imagination but we're in it for the long haul," he said.
In terms of recovery of money damages, the attorney said China has "trillions of assets" parked in the U.S., "so a judgment is collectable."
An attempt to contact China's Foreign Ministry for comment was not successful.
The proposed class is represented by Robert T. Eglet and Tracy A. Eglet of Eglet Adams.
Counsel information for China was not immediately available.
The case is Bella Vista LLC et al. v. The People's Republic of China et al., case number 2:20-cv-00574, in the U.S. District Court for the District of Nevada.
--Editing by Adam LoBelia.
For a reprint of this article, please contact reprints@law360.com.
