Coronavirus Litigation: The Week In Review

By Celeste Bott
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.

Sign up for our California newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!



Law360 (July 9, 2020, 7:55 PM EDT) -- A federal court for the first time decided a COVID-19 insurance coverage case on the merits, ruling against a policyholder, while Amazon says workers are exploiting the coronavirus pandemic for workplace reforms, and a coalition of states is suing the U.S. Department of Education over a new rule it says will unfairly limit public schools' access to coronavirus relief funding.

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

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

Employment

Amazon says workers at its Staten Island warehouse are just looking "to exploit the pandemic" to get workplace reforms, asking a New York federal judge to deny the workers' motion for an injunction ordering the reforms in a lawsuit claiming the company has violated New York state workplace safety law and created a public nuisance that puts the workers in harm's way.

Amazon also argued the case shouldn't even be in court because the Occupational Safety and Health Administration has primary jurisdiction. The workers are asking for an injunction directing the company to take steps including granting them paid and unpaid leave, providing time during the workday to wash hands and take other safety steps, and stepping up contact tracing without relying on surveillance video. 

Meanwhile in Florida, Celebrity Cruises is looking to send to arbitration a lawsuit filed by a pair of Filipino crew members looking to represent some 1,700 Filipino workers who were allegedly forced to remain on board without pay after the cruise industry was shut down due to COVID-19.

The cruise line argued before a Florida federal court on Monday that former employees Ryan Maunes Maglana and Francis Karl Bugayong agreed to arbitrate any dispute arising under their employment contract in the Philippines under Philippine law.

The family of a Philadelphia-area meatpacking plant worker who died of COVID-19 has urged a judge not to ditch their federal wrongful death suit, saying statements from the government and the plant itself contradict claims that the suit is barred by workers' compensation laws.

The family of Enock Benjamin told U.S. District Judge John R. Padova on Tuesday that their suit can't be tossed in favor of a workers' compensation claim, since a dispute remains over whether plant owner JBS Souderton or its parent company JBS USA Holdings Inc., which the plant says has been dissolved, actually employed Benjamin.

And a San Diego woman claims she was discriminated against and fired from her job with an insurance company because she was trying to juggle care for her two young children while she worked from home during the coronavirus pandemic, according to a lawsuit filed in California state court.

Drisana Rios, who until last month worked as an account executive for global insurance firm HUB International, said she experienced nothing but shame, harassment and inflexibility from her supervisor, Daniel Kabban, when she transitioned to working from home with her 4-year-old daughter and 1-year-old son in March, according to the complaint.

Immigration

Harvard University and the Massachusetts Institute of Technology urged a federal court on Wednesday to halt the Trump administration's new requirement that international students whose universities go fully online during the pandemic leave the U.S. or risk deportation.

In the first lawsuit challenging the policy, which was announced Monday, the universities claimed that U.S. Immigration and Customs Enforcement issued the policy arbitrarily, without offering "any reasoned basis for the sudden and dramatic change of position."

The policy also fails to consider the risks to foreign students in the U.S., who must, under the rule, arrange last-minute international travel during a pandemic or transfer schools weeks before the semester's start, and well after transfer deadlines, the suit says. The schools also accused the Trump administration of using the rule to force universities to reopen and hold in-person classes.

And a Massachusetts suit claims the Trump administration "dithered" before reversing course and arbitrarily excluding immigrant students from receiving aid during the COVID-19 pandemic, seeking to block the restrictions. 

The complaint, filed in federal court Monday by a Haitian student at Bunker Hill Community College, seeks to mirror the result of a California suit in which a judge said it was likely illegal for the U.S. Department of Education to keep foreigners from assistance under the Coronavirus Aid, Relief and Economic Security, or CARES, Act.

The latest suit claims the administration violated the Administrative Procedures Act when it abruptly reversed guidance that would have allowed any college student to take advantage of the Higher Education Emergency Relief Fund, and instead restricted the money to those who qualify for financial aid under Title IV of the Higher Education Act.

Public Policy

A coalition led by California and Michigan sued the U.S. Department of Education and Secretary Betsy DeVos in California federal court on Tuesday, challenging a new rule they say would unfairly inhibit public schools' abilities to access federal COVID-19 relief funding.

The rule, issued July 1, requires that federal coronavirus relief funds be distributed based on the number of students in any private school that wish to participate, and that equitable services be provided to all students enrolled, even those from affluent families, according to the complaint.

The regulation not only contradicts the plain language of the coronavirus relief legislation, but could also mean that public schools serving low-income students would receive less money while funding is diverted to their private school peers, the complaint says. And it violates the Administrative Procedure Act and the U.S. Constitution, according to the coalition of states, including Maine, New Mexico, Wisconsin and the District of Columbia.

In New Jersey, the AMC movie theater chain, other theater owners and their trade groups have hit Gov. Phil Murphy and the state health commissioner with a federal lawsuit alleging they are unconstitutionally keeping theater doors shuttered amid the COVID-19 pandemic while permitting similar venues like churches to reopen.

The owners and trade associations provided representatives of Murphy and Commissioner Judith Persichilli with "detailed safety protocols" for reopening theaters in the state, but instead of addressing them "in any meaningful way," the executives "have chosen to continue to discriminate against movie theaters," according to the complaint filed Monday.

And eight bar businesses suing Texas Gov. Greg Abbott in state court over his recent decision to shut down standalone bars during the COVID-19 pandemic have appealed a judge's ruling that denies their bid for a temporary restraining order, saying the governor's action is unconstitutional.

The bars lodged a notice of appeal on Thursday that slams District Court of Dallas County Associate Judge Monica Purdy's order a day earlier that denied without explanation their TRO request. They now seek an expedited emergency hearing before presiding Judge Martin Hoffman and ask that he vacate the associate judge's order.

Securities

The GEO Group Inc. was hit with a proposed class action Tuesday in Florida federal court alleging the private prison operator made misleading statements about its response to the COVID-19 pandemic, resulting in damage to investors after an article revealed woeful conditions at one of its halfway houses.

Plaintiff Steve Hartel, a Colorado resident, is seeking to lead a class of shareholders who bought the Boca Raton, Florida-based business's stock between Feb. 27 and June 16 of this year. The complaint, which also names GEO Group Chief Executive Officer George C. Zoley and Chief Financial Officer Brian R. Evans as defendants, alleges the company and top executives violated federal securities laws.

And a New York federal judge on Thursday appointed Pomerantz LLP as lead counsel to represent iAnthus Capital Holdings Inc. investors over claims the cannabis company tried to use the coronavirus pandemic to explain away a missed $4.4 million interest payment, after four firms vied for the position.

U.S. District Judge Lewis A. Kaplan appointed Jose Antonio Silva, who claims he lost more than $2.2 million in the alleged scheme, as lead plaintiff, and appointed Silva's attorneys from Pomerantz as lead counsel.

The proposed class action asserts that iAnthus made false and misleading statements about its expanding business operations without disclosing to stockholders that it did not use escrowed funds to make necessary interest payments. On April 6, iAnthus announced it had defaulted on $4.4 million in interest payments to the private equity firm Gotham Green Partners because of the coronavirus pandemic, as well as a decline in cannabis markets overall.

Consumer Protection

A Virginia court has unsealed documents related to Microsoft's recent efforts to prevent alleged cybercriminals from stealing its users' personal information through a "COVID-19-themed" phishing campaign, the company said.

Two unnamed defendants allegedly used professional-seeming domains — including Officeinventorys.com, Officesuitesoft.com and Officesuited.com — and tricked victims with emails "designed to look like they come from an employer," according to a June 30 complaint unsealed this week.

The company said its digital crimes unit managed to block other alleged phishing attempts by the same defendants last year. Recently, however, the defendants have allegedly sent pandemic-related emails to millions of customers, meriting legal action, Microsoft said.

And the Federal Trade Commission sued online retailer SuperGoodDeals.com in New York federal court Wednesday, saying the site promised to ship orders of personal protective equipment within a day but failed to live up to that promise.

In the complaint, the FTC says the site aimed to capitalize on demand for items like N95 masks, respirators and other PPE as the COVID-19 pandemic began to take hold in the U.S., marketing the equipment with the same "Pay Today, Ships Tomorrow" tagline it uses for other goods.

In addition, the FTC said, the site's advertising specifically claimed that orders for N95 masks would ship the following day. But while the company often printed shipping labels for orders the following business day, it frequently waited weeks before sending the products themselves out the door, according to the complaint, which also named the retailer's owner and CEO, Kevin J. Lipsitz.

And in California, online ticket sellers StubHub and Last Minute Transactions on Wednesday pushed a federal judge to send to arbitration baseball fans' proposed class action seeking refunds for those who purchased tickets to games that have been postponed indefinitely due to the coronavirus pandemic, saying the fans "have attempted to avoid their binding contract in their agreement with the StubHub defendants by masquerading their potential claims in groundless allegations of conspiracy and fraud."

Insurance

A Michigan judge gave teeth to one of insurers' chief arguments against coverage for losses during the COVID-19 pandemic with a first-of-its-kind ruling last week that a restaurant owner cannot tap its business interruption policy because its eateries did not sustain "direct physical loss or damage."

Ruling from the bench via Zoom on July 1, 30th Circuit Judge Joyce Draganchuk dismissed Gavrilides Management Co. LLC's suit seeking $650,000 from Michigan Insurance Co. for losses it suffered after Gov. Gretchen Whitmer issued executive orders in March that limited its two restaurants to take-out and delivery orders. 

Attorneys who represent insurance carriers told Law360 the ruling is another early vindication of insurers' position that the COVID-19 virus and resulting government stay-at-home orders have not caused any direct physical loss or damage that would trigger policyholders' business interruption coverage.

In Ohio, a bar urged a federal judge to reject Cincinnati Insurance Co.'s bid to bring in the Ohio Supreme Court to certify whether COVID-19 causes a physical loss at the heart of the insurer's case, saying the issues don't involve questions of state law but are governed by "universal principles" for interpreting "standardized" insurance terms.

Troy Stacy Enterprises Inc. told an Ohio federal court Monday that the question of whether the pandemic creates physical damage in property insurance did not include any important issues unique to Ohio law. It is "premature" to involve the Ohio Supreme Court, which is not in a position to answer the question at this stage, the bar said, alleging Cincinnati is seeking a favorable ruling before the case is consolidated in multidistrict litigation, noting there are pending motions to centralize the litigation with the Judicial Panel on Multidistrict Litigation.

And three minor league baseball teams, including one attached to the New York Yankees, are taking Philadelphia Indemnity Insurance Co. to Pennsylvania state court, alleging the company has wrongly denied them coverage for the losses they stand to suffer because of the season's cancellation.

Nostalgic Partners, which owns the Staten Island Yankees, Greenville Drive LLC, which owns the team of the same name, and 7th Inning Stretch, which owns the Delmarva Shorebirds, told the Philadelphia Court of Common Pleas on Thursday that their revenue is almost entirely based on drawing fans to watch games, yet they still have fixed yearly costs.

According to the complaint, the losses stem from health concerns over the COVID-19 pandemic, the governmental response to it and Major League Baseball's recent decision not to give any players to the minor league teams, canceling the 2020 season.

--Additional reporting by Jon Steingart, Suzanne Monyak, Hailey Konnath, Nathan Hale, Emma Whitford, Daphne Zhang, Bill Wichert, Mike Curley, Jeff Sistrunk, Caroline Simson, Rachel Scharf, Chris Villani, Lauren Berg, Zachary Zagger and Joyce Hanson. Editing by Philip Shea.

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

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Beta
Ask a question!