Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (August 13, 2020, 7:02 PM EDT) -- Ticket buyers say StubHub is on the hook for refunds for events canceled due to the coronavirus pandemic, one of the biggest egg suppliers in the country has been accused of price-gouging, and the Judicial Panel on Multidistrict Litigation has opted not to centralize all COVID-19 insurance cases.

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.

Public Policy

A Seventh Circuit Judge pushed back Tuesday on Illinois Republicans' claim that they should be exempted from group-size limits like religious gatherings are under Gov. J.B. Pritzker's latest COVID-19 safety order, saying the party isn't comparing apples to apples under the First Amendment.

Counsel for the Illinois Republican Party urged a three-judge panel during oral argument to revive its bid to hold gatherings larger than the 50-person limit set in the latest coronavirus safety order, arguing the exemption for religious gatherings should apply to all protected First Amendment expression. But U.S. Circuit Judge Amy Coney Barrett said the party seems to be comparing its asserted speech rights to a group that has "an additional interest" under the amendment, which is the right to freely exercise religion.

And a New Jersey gym that has been defying Gov. Phil Murphy's coronavirus shutdown asked a state court judge to halt its constitutional challenge until the state's criminal charges against the owners are resolved, saying the owners could incriminate themselves in the process of litigating the civil matter. The gym also lost its business license this week.

In Georgia, Gov. Brian Kemp has withdrawn his lawsuit from an Atlanta court Wednesday against the city's mayor and council over their allegedly too-restrictive coronavirus pandemic protections, saying mediation solved one issue and he'll address a remaining problem with a statewide executive order.

Also in Georgia, a group of voters and election advocates lost their bid to have the state's electronic voting system replaced with paper ballots for a third time, when a federal judge ruled they relied on information rendered obsolete by the coronavirus pandemic.

And in Pennsylvania, the NAACP and the League of Women Voters have filed separate state and federal suits challenging the Keystone State to improve how it will conduct the November election in light of the COVID-19 pandemic.

The NAACP's suit, filed in the Commonwealth Court of Pennsylvania, said fewer, consolidated polling places, repeat-touch voting machines and limited options for early voting or mail-in voting during the June 2 primary had abridged people's right to vote, particularly in minority communities. The League of Women Voters' federal suit, filed in the Eastern District, said the current setup for checking mail-in and absentee ballots didn't give voters enough notice to correct their ballots if their signatures didn't match their voter registration, leading some votes to be improperly discarded.


A private prison operator urged a Florida federal judge Wednesday to toss a proposed class action alleging it misled investors about its response to the COVID-19 pandemic and caused the company's stock price to drop, calling the suit a textbook example of a baseless "strike suit."

Investor Steve Hartel omitted the numerous disclosures The GEO Group included in its regulatory filings and in public statements when he filed his suit alleging the company hid that COVID-19 had spread in one of its facilities, the company said in its motion to dismiss Wednesday.

And Sorrento Therapeutics Inc. investors represented by Pomerantz LLP, Kirby McInerney LLP and Robbins Geller Rudman & Dowd continue to fight for appointment as lead plaintiff in a proposed securities class action accusing the company of misleading the public after its chief executive characterized some of its COVID-19 research as a "cure" for the virus.

Lead plaintiff motions in the action were due July 27, and court records show that seven separate parties put in lead plaintiff bids. Of those seven proposed lead plaintiffs, three still contend they should be appointed to lead the suit in briefs filed Tuesday in California federal court.

In Illinois, a federal judge said Wednesday that she would consider an Illinois securities broker's bid to block an upcoming arbitration hearing from proceeding over Zoom, but that he has "a steep hill to climb" as she weighs issues including whether she has jurisdiction over his lawsuit.

U.S. District Judge Joan Lefkow signaled during a remote hearing that she was leaning toward siding with the Financial Industry Regulatory Authority's argument that she has no jurisdiction over broker Carlos Legaspy's claim that the regulator exceeded its authority when it decided to conduct an Aug. 17 evidentiary hearing through Zoom rather than in person.

And Carnival Corp. urged a Florida federal judge Monday to consolidate a proposed investor class action alleging the cruise company hid COVID-19 infections on its ships with other suits making similar claims, saying they all deal with the same set of facts concerning Carnival's response to the pandemic.

Carnival said a potential class suit led by investor Abraham Atachbarian — who is opposing consolidation — should be combined with another already consolidated action to "prevent inefficiency and waste of the court's and the litigants' resources" because they arise out of the same alleged facts and legal theories.


The Judicial Panel on Multidistrict Litigation rejected Wednesday two petitions to centralize hundreds of cases filed by businesses seeking insurance coverage for losses during the COVID-19 pandemic, but indicated centralization could still be appropriate for cases against four insurers.

In the much-anticipated ruling, the seven-member JPML denied motions lodged by two groups of policyholder plaintiffs, one of which sought to centralize the nation's federal business interruption cases in the Northern District of Illinois in Chicago, and the other of which asked for them to be centralized in the Eastern District of Pennsylvania in Philadelphia.

Noting that the cases involve more than 100 insurers and a wide variety of different policy forms, the JPML concluded an "industry-wide MDL in this instance will not promote a quick resolution of these matters."

And in an apparent first, a Missouri federal judge allowed a group of hair salons and restaurants to proceed with a proposed class action claiming Cincinnati Insurance Co. wrongfully refused to cover their losses during COVID-19 shutdowns, holding Wednesday that the businesses adequately alleged they suffered a covered "direct physical loss."

U.S. District Judge Stephen R. Bough denied Cincinnati's motion to dismiss, permitting the group of five business owners to continue pursuing coverage under multiple prongs of their "all-risk" policies with the insurer, which do not contain a common exclusion for virus-related losses. The ruling marked the first known instance of a policyholder's COVID-19 coverage suit surviving a dismissal bid.

Ralph Lauren Corp. has sued Factory Mutual Insurance Co., seeking full coverage under its $700 million policy after its wholesale revenue dropped 93% from the year before due to COVID-19, alleging the insurer is wrongfully limiting its coverage to "communicable disease."

The fashion giant alleges Factory Mutual has "fraudulently" investigated and "wrongfully shoehorned" its claim into a small sublimit of coverage while defrauding its policyholders, including Ralph Lauren, of the full coverage that it is obligated to pay.

Ralph Lauren said the pandemic has forced its global stores to shut down and caused the complete closure of its U.S. stores. The company said that, despite efforts to sell online, its revenues slid 66% for the first quarter, its North America store sales fell 77%, and its wholesale sales dropped 93% from the previous year.


A New York federal judge ruled Wednesday that the City University of New York isn't required to reinstate thousands of faculty members it recently laid off, taking issue with a union's claim that the coronavirus relief bill calls on the school to retain those members after receiving federal aid.

The Professional Staff Congress, a union representing professional CUNY employees, had claimed the school illegally let go of 2,800 adjunct faculty and staff members after receiving $251 million in federal coronavirus relief. Under the Coronavirus Aid, Relief and Economic Security Act, employees are to be paid "to the greatest extent practicable," and the union has argued that means that if CUNY has the cash to do so, it must.

But U.S. District Judge Jed Rakoff on Wednesday denied the union's motion for a preliminary injunction, holding that Congress didn't intend to create a private remedy for enforcement of the relevant relief bill provision. The act's requirement that educational institutions keep paying employees "to the greatest extent practicable" isn't a right enforceable by the employees themselves, he said.

Also in New York, Amazon told a federal judge that workers who filed a suit claiming the company's Staten Island warehouse conditions pose a COVID-19 risk should take their complaints to the Occupational Safety and Health Administration.

In a memorandum supporting its motion to dismiss the suit Tuesday, Amazon told U.S. District Judge Brian Cogan the employees' workplace safety claims went too far and their public nuisance claims, which assert a risk to public health due to allegedly lax COVID-19 protocols at the facility, are impossible to investigate in a city like New York. OSHA has already been dealing with COVID-19 prevention in the workplace through site visits and investigations, Amazon said Tuesday, and it has "special expertise" in keeping workplaces safe.

A former SoulCycle executive accused the company Tuesday in New York federal court of offering "shifting, nebulous excuses" for retaliating against her for taking maternity leave, before finally landing on the COVID-19 pandemic as pretext to illegally fire her.

Jordan Kafenbaum said she worked for SoulCycle Inc. for seven years and was serving as senior director of instructor programming and talent management when she was terminated in April about four weeks into her maternity leave.

And Las Vegas casino unions and MGM Resorts announced Monday they have resolved a dispute centering on allegations that the resorts' "unreasonable" COVID-19 rules didn't protect employees.

The Culinary Workers Union Local 226 and Bartenders Union Local 165 said in a joint statement with MGM that the two sides had agreed to end a legal battle that was voluntarily sent to arbitration last month.

Consumer Protection

StubHub's new parent company Viagogo Entertainment Inc. on Wednesday became the latest ticket marketplace to be hit with a proposed class action over its alleged failure to give customers refunds for events that were canceled in response to the coronavirus pandemic.

Switzerland-based Viagogo, which recently bought StubHub from eBay for $4.05 billion, is trying to retroactively discontinue its guarantee of a full refund for tickets to any canceled event purchased through the company's website, according to the complaint filed by Lauren Shiflett in Florida federal court.

It's because of that refund guarantee that customers buy their tickets at a premium through Viagogo, rather than from an outside venue at a cheaper price, Shiflett said. She and other Viagogo customers are contractually entitled to that guarantee on account of buying tickets through the company, according to the complaint.

And in Massachusetts, outdoor gear retailer Recreational Equipment Inc. and a hand sanitizer company have been accused of seeking to capitalize on the COVID-19 pandemic by falsely marketing an alcohol-free product as a "proven alternative to alcohol sanitizers," according to a putative class action filed in federal court Tuesday.

The suit claims REI and Wilbraham, Massachusetts-based SafeHands Solutions LLC were "preying upon the crisis caused by the coronavirus" to boost the sales of their sanitizer — which uses benzalkonium chloride, rather than alcohol, as a disinfectant — when demand for sanitizing products was high.

But despite the product's claims, there are no reliable studies to support the idea that SafeHands' product is an effective alternative to alcohol-based hand sanitizers, the suit says, countering that the benzalkonium chloride product is "substantially less" effective.

Native American

Cook Inlet Region Inc. has urged the D.C. Circuit to uphold a lower court decision that it and other Alaska Native corporations are eligible for part of $8 billion in COVID-19 relief, saying they satisfy a key requirement in the CARES Act that was borrowed from a federal contracting law.

The Anchorage-based regional ANC, known as CIRI, asked to be allowed to file an amicus brief backing the U.S. Treasury Department against a group of federally recognized tribes, who claim in their appeal that the companies don't qualify as "Indian tribes" with "tribal governments" eligible for funding under the Coronavirus Aid, Relief and Economic Security, or CARES, Act.

CIRI urged the circuit court in a motion Tuesday to affirm a D.C. district judge's decision in favor of the ANCs, but said it should do so on a different basis than the lower court relied on.

Legal Industry

New York state urged a federal judge Tuesday to toss a law firm's allegations that state officials abused their power by ordering the firm to stop doing business in person due to the pandemic, saying the firm isn't "somehow exempt" from orders aimed to protect the public health.

In a 63-page motion to dismiss, the state attorney general's office argued that none of HoganWillig PLLC's "plethora" of claims is viable, particularly since Gov. Andrew Cuomo's executive orders aim to combat the coronavirus public health crisis.

The firm sued Cuomo and state Attorney General Letitia James in May challenging executive orders Cuomo signed in March that restricted business activities. The firm alleges that the orders violate the U.S. Constitution and that James' assertions that businesses will face civil and criminal penalties for not complying violates the firm's rights under the equal protection clause.

Food & Beverage

Grocery chain Albertsons urged a California federal judge on Monday to toss a negligence claim in a class action accusing it of exploiting consumers amid the coronavirus pandemic by drastically increasing prices for high-demand items such as toilet paper and medical supplies, saying the claim doesn't allege a statutory violation.

Albertsons argued in its 11-page motion to dismiss that consumer Eleisha Redmond's negligence claim should be nixed because it is "wholly unclear" and doesn't allege Albertsons actually had a duty to ensure that, during a declared public emergency, it doesn't sell food and other items at excessive prices.

Redmond's suit, filed in June, alleges some Albertsons-owned stores have taken advantage of the novel coronavirus pandemic that has killed more than 156,000 Americans by selling essential items far in excess of their pre-COVID-19 prices.

And Hillandale Farms, one of the largest egg suppliers in the United States, was accused Tuesday by the attorney general of New York of gouging the price of eggs during the COVID-19 pandemic in an illegal scheme to profit off the deadly virus in the state.

According to New York Attorney General Letitia James, Hillandale jacked up the price of its eggs in March and April as New York became a hotspot of COVID-19 outbreaks, with more than 4 million cartons sold at inflated prices to grocery store chains, U.S. military facilities and wholesale food distributors throughout the state. The lawsuit alleges violations of New York's General Business Law and Executive Law due to Hillandale's average price for a dozen eggs increasing by around five times from January through April, generating total revenues of about $8 million.

In Texas, family members of a Tyson Foods meat plant worker who died after contracting COVID-19 have dropped their suit against the food giant in federal court, but their attorney told Law360 on Monday they will be filing a "stronger" version of the case in the future.

Jose Chavez's wife and children filed a notice of dismissal Aug. 7, less than two weeks after Tyson lodged a motion to have their suit, which accused the company of not doing enough to stop the virus' spread, thrown out.

Commercial Contracts

Manchester University, a small liberal arts school in Indiana, called on a New Jersey federal court Tuesday to end a graduate's proposed class action over the cancellation of in-person classes in spring 2020 because of COVID-19, saying the school has no relevant ties to the Garden State.

Plaintiff Hermela Mebrahtu, who identified herself as a New Jersey resident in the May 1 action, "cannot show that Manchester had any connections with New Jersey that relate to her claims," the university said in urging the court to toss the suit on the grounds it has neither general nor specific jurisdiction over the school.

Mebrahtu, who is originally from Ethiopia, "lived in on-campus housing for international students" and "traveled to New Jersey after the campus shutdown because her boyfriend resided there," according to the university's brief. She graduated following the semester, the school said.

Cybersecurity & Privacy

Advocacy group Consumer Watchdog has hit Zoom Video Communications Inc. with a lawsuit in D.C. Superior Court, claiming the company falsely promised it was using end-to-end encryption to protect its users' communications in an effort to boost its brand amid the COVID-19 pandemic.

The new complaint, filed by the watchdog group late Monday on behalf of members of the public, alleges Zoom violated the District of Columbia Consumer Protection Procedures Act by falsely and repeatedly advertising end-to-end encryption as part of the security measures it uses.

The group asserted that Zoom did this in order to distinguish itself from its competitors and attract new customers as demand for videoconferencing services skyrocketed amid stay-at-home orders issued as a result of the global health crisis.

--Additional reporting by Jeannie O'Sullivan, Rosie Manins, Rachel O'Brien, Emilie Ruscoe, Jeff Sistrunk, Hailey Konnath, Lauren Berg, Andrew Westney, Lauraann Wood, Amanda Ottaway, Craig Clough, Dorothy Atkins, Brian Dowling, Bill Wichert, Allison Grande, Carolina Bolando, Mike LaSusa, Jon Steingart and Daphne Zhang. Editing by Marygrace Murphy.

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