Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (April 23, 2020, 8:44 PM EDT) -- Grocery stores and suppliers have been accused of jacking up egg prices, a New York nurses union says health care workers haven't been adequately protected, and the Missouri attorney general is suing the Chinese government over alleged misinformation that exacerbated the coronavirus outbreak.

While courts across the country are altering procedures, restricting access and postponing certain cases to stem the spread of the novel coronavirus, the pandemic has also prompted a wave of litigation across the country.

Here's a breakdown of some of the COVID-19-related cases from the past week.

Public Policy

Missouri Attorney General Eric Schmitt sued the Chinese government, Chinese Communist Party, and other Chinese officials and institutions Tuesday in federal court, claiming their actions led to the spread of COVID-19 and the loss of billions of dollars for the state.

Schmitt alleges a widespread coverup and misinformation campaign by Chinese authorities during the critical first few weeks and months of the discovery of the virus in the Chinese city Wuhan, saying that it ultimately led to the unnecessary spread of the virus. Chinese authorities were bound by certain international laws to accurately report the threat the virus posed to the world community but failed to do so, he claims. The result was a violation of various Missouri laws, including creating a public nuisance and breach of duty, according to the suit.

Meanwhile, Massachusetts' attorney general is facing litigation over her emergency regulation banning most types of debt collection during the pandemic.

The suit, filed by ACA International on Monday, targets Healey's March 27 announcement temporarily banning debt collection methods that can require people to leave their homes or have in-person contact, such as filing new debt collection lawsuits, garnishing wages and repossessing vehicles. The regulation, which is set to expire either June 24 or when Massachusetts declares an end to the current state of emergency, also bans unsolicited debt collection calls to consumers.

ACA's complaint says the prohibitions are hurting business, noting that six classes of collectors are specifically excluded from the rules. According to the suit, ACA members — which include third-party collection agencies, law firms, creditors, asset-buying or debt-buying companies, and vendor affiliates — with Massachusetts operations have reported dips in revenue of 20% to 50%.

Consumer Protection

Some makers and sellers of eggs have illegally marked up their prices to take advantage of increased demand during the pandemic, according to lawsuits filed in Texas and California.

In Texas, Attorney General Ken Paxton on Thursday accused the country's largest egg producer, behind brands such as Egg-Land's Best and Land O' Lakes, of raising the price of a dozen eggs by 300%.

And Whole Foods, Walmart, Trader Joe's, Costco and a host of other grocery businesses are illegally marking up the price of eggs in violation of Golden State law in the midst of the pandemic, according to a California federal lawsuit filed Monday.

More than two dozen grocery stores, wholesalers and producers have been nearly tripling the price of eggs over the past month following Gov. Gavin Newsom's emergency declaration that ordered all nonessential workers to stay home as the virus swept around the world, according to the class action complaint.

Amazon was also hit with a price-gouging lawsuit on Tuesday, with California consumers accusing the online retail giant of exploiting consumers amid the pandemic by drastically increasing prices for high-demand items, like face masks, pain relievers and disinfectants, in violation of Golden State law.

As many consumers avoid brick-and-mortar stores, Amazon.com Inc. is illegally reaping the benefits by increasing the prices of items by nearly 700% in some cases, which is "flagrantly unlawful" under a California law that prohibits increases of more than 10%, according to the lawsuit.

Employment

The New York State Nurses Association filed three lawsuits in state and federal court Monday, saying the state Department of Health and two hospitals failed to adequately protect health care workers as they treated an influx of COVID-19 patients.

The union said the New York Department of Health; Montefiore Medical Center in the Bronx; and Westchester County Health Care Corp., which operates the Westchester Medical Center; compromised the health and safety of nurses by providing inadequate equipment, training and working conditions.

The lawsuits detail a range of allegations, including the rationing of personal protective equipment at the hospitals, not providing testing for nurses, and forcing nurses to work while they have COVID-19 symptoms or are awaiting coronavirus test results.

In another suit, a transportation workers union has accused the director of Miami-Dade Transit of failing to hand out enough disinfectant supplies and personal protective equipment like masks to protect bus and train operators from the virus.

The Transport Workers Union of America, which represents 2,800 Miami-Dade Transit employees through its Local 291, says in its lawsuit that Alice Bravo, director of Miami-Dade County's Department of Transportation and Public Works, has not taken the necessary measures to keep transit workers safe as they transport essential workers to their jobs.

Media and Entertainment

Ticket buyers continue to turn to the courts to seek refunds for shows and sporting events that have been canceled to curb the spread of coronavirus, with Ticketmaster and Major League Baseball the latest to face lawsuits.

Ticketmaster and its parent Live Nation Entertainment Co. were hit with a proposed class action in California federal court over their refund policies for events postponed due to COVID-19, alleging they are making customers eat the costs of thousands of disrupted events by retroactively changing their refund policy.

Also in California, a pair of New York baseball fans sued MLB, all its teams and online ticket sellers Monday seeking refunds for fans across the country who purchased tickets to games that have been postponed indefinitely due to the pandemic, in what could be the first such lawsuit against a major sports league.

The fans allege that more than a month past Opening Day, MLB has said games are postponed, rather than canceled, as a "pretext" for it and its online ticket sellers such as Ticketmaster and StubHub to avoid paying refunds.

AMC Theaters was forced to shutter its movie theaters in mid-March, but it still owes $7.5 million in rent, according to its Palm Springs landlord, who filed suit against the theater chain Wednesday in Florida federal court, claiming that the impact of the pandemic is an insufficient reason to skip out on rent and demanding rent payments through 2030.

Landlord Palm Springs Mile Associates Ltd. said that while it "recognizes the challenges posed by COVID-19, including on its own business," AMC is nonetheless "obligated to pay rent and that obligation is not excused."

Securities

An investor hit Inovio Pharmaceuticals Inc. executives with a derivative action on behalf of the company in Pennsylvania federal court Monday, accusing the board of directors of lying about the successful development of a COVID-19 vaccine in just three hours.

Shareholder Pedram Beheshti brought breach of fiduciary duty, gross mismanagement, unjust enrichment and other claims against eight company directors, including CEO J. Joseph Kim, just over a month after Inovio investors slapped the company and Kim with a proposed class action over the purported vaccine.

Beheshti alleges that between Feb. 14 and the present, the biotech company's executives artificially inflated its stock price by telling the public in financial filings and in a March 2 televised meeting with President Donald Trump that Inovio's vaccine was put together three hours after obtaining the virus' genome sequence, and that it could be tested on humans by April.

Insurance

A pair of businesses suing for insurance coverage after they were forced to close their doors as a result of the pandemic pressed Monday for a new federal multidistrict litigation program to consolidate the growing number of similar cases sprouting up nationwide.

Newchops Restaurant Comcast LLC and LH Dining LLC told the U.S. Judicial Panel on Multidistrict Litigation that the availability of business interruption insurance in light of the novel coronavirus would be a key question requiring a uniform answer as the country deals with the economic fallout of the pandemic.

The petition pointed to nearly a dozen lawsuits filed from coast to coast in which businesses have sought declarations that they were entitled to coverage for loss of income when they were forced to close up shop as a result of orders from state and local authorities shuttering certain nonessential businesses.

Travelers Casualty Insurance Co. of America, facing its own claims seeking coverage for coronavirus losses, fought back in California federal court Monday, saying it has no duty to cover law firm Geragos & Geragos APC for business losses during the pandemic because the virus has not caused "physical loss or damage" to the firm's offices.

The company's complaint comes a week after Geragos & Geragos launched a series of complaints in Los Angeles Superior Court accusing Travelers of wrongfully denying coverage to it and several other California businesses. Travelers says the policy Geragos & Geragos holds simply does not cover the outbreak, and has exclusions specifically for business losses resulting from a virus.

Transportation

Adding to the cascade of recent lawsuits against major airlines over coronavirus cancellations are complaints filed this week against Spirit Airlines, Hawaiian Airlines and American Airlines.

Spirit and Hawaiian were both hit Tuesday with proposed class actions claiming the carriers stole travelers' fares by not offering refunds for flights canceled during the pandemic. The federal suits filed in Massachusetts and Hawaii, respectively, say the airlines are flouting the guidance of federal regulators and breaching their contracts with customers by refusing to issue refunds.

American Airlines was sued in Texas federal court Wednesday, with would-be passengers alleging that its refusal to refund passengers for canceled flights flouts federal guidance and violates consumer protection laws.

Banking

A pair of small-business owners asked a Texas federal judge Wednesday to block Wells Fargo from limiting eligibility for its federal coronavirus relief lending, seeking an emergency court order against the bank similar to one that Bank of America avoided last week.

Plaintiffs Edward Scherer of Texas and Donald Kowall of California urged U.S. District Judge David Hittner to issue a temporary restraining order that would suspend Wells Fargo Bank NA's policy of allowing only its preexisting business checking clients to apply for a Paycheck Protection Program loan from the bank.

Scherer and Kowall have alleged in a proposed class action that the bank's gating policy violates the CARES Act by giving preexisting clients preferential access to the relief loans, which are being distributed on a first-come, first-served basis and have been in such high demand that the program exhausted its initial $349 billion lending capacity in just two weeks.

--Additional reporting by Lauren Berg, Craig Clough, Chris Villani, Sarah Jarvis, Carolina Bolando, Zachary Zagger, Hannah Albarazi, Reenat Sinay, Mike Curley, Matt Fair, Jon Hill, Brian Dowling and Linda Chiem. Editing by Aaron Pelc.

For a reprint of this article, please contact reprints@law360.com.

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