Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (August 20, 2020, 6:13 PM EDT) -- President Donald Trump and other Republicans are challenging vote-by-mail measures in court, Clorox has been hit with a lawsuit over splash-less bleach that allegedly fails to disinfect, and American Airlines is looking to escape claims that it owes refunds for flights canceled amid the coronavirus pandemic.

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

An immunocompromised, 60-year-old health insurance executive in Miami was fired in violation of federal law over health issues that put her at greater risk of COVID-19 complications, she alleged in a lawsuit filed Wednesday in Florida federal court.

Julie Ferro alleged that local health plan Doctors HealthCare Plans Inc. and its CEO Rafael Perez violated the Family and Medical Leave Act when firing her in June, according to the Southern District of Florida complaint. Ferro says she has rheumatoid arthritis and high blood pressure, among other medical issues, and that she was dismissed because she has previously dealt with serious medical problems and likely will again.

And Florida bankruptcy firm Kingcade Garcia McMaken was hit with a federal wage lawsuit Monday by a paralegal claiming she wasn't paid overtime despite long workweeks and never received emergency sick time compensation when she had COVID-19.

Mayra Santos-Urquiola claims the Miami firm violated the Fair Labor Standards Act throughout her 16-year tenure and, more recently, ran afoul of the Emergency Paid Sick Leave Act when she took time off after her coronavirus diagnosis.

Legal Industry

A group of law school graduates told Pennsylvania's highest court Monday that ongoing delays and uncertainty surrounding the administration of the bar exam in the midst of a global pandemic represent an unconstitutional burden that warrants emergency admission to the practice.

Law Students For Equitable Responses to COVID-19 said the threat of cyberattacks and technical glitches in the planned online administration of Pennsylvania's bar exam in October rendered the test an unreliable means of gauging a would-be attorney's competence compared to a well-regulated emergency licensure system.

LSERC also said in its petition Monday that the state's continued reliance on the bar exam represented an infringement on the rights of law students to possess property and pursue their own happiness under the Pennsylvania Constitution.

Public Policy

Delaware Republicans filed a lawsuit Wednesday in Chancery Court seeking to bar the state from proceeding with universal vote-by-mail measures for the Nov. 3 general election, arguing the measures violate the state's constitution and "threaten the integrity" of the election.

The Republican State Committee of Delaware's suit seeks injunctive relief against the First State's Department of Elections and its Commissioner Anthony J. Albence, as well as a declaration by the court that the vote-by-mail measures in place for the upcoming general election are "unconstitutional."

And President Donald Trump's reelection campaign has demanded a New Jersey federal court block an executive order from Democratic Gov. Phil Murphy authorizing vote-by-mail procedures for the November general election amid COVID-19 concerns, claiming the move was unconstitutional and would lead to voter fraud in a state with "a sordid history of illegitimate elections."

Four days after the governor signed the directive — which orders that vote-by-mail ballots be sent to all active registered voters — the campaign and national and state GOP committees launched a suit Tuesday accusing Murphy of usurping the state Legislature's authority to regulate elections and creating "a recipe for disaster" with respect to invalid voting.

Food & Beverage

A federal judge said Wednesday he would quickly decide on a popular Manhattan cafe's request to block New York state liquor authorities from taking its liquor license, after allegations that its "pandemic parties" flouted guidelines for controlling COVID-19.

U.S. District Judge Lewis A. Kaplan, who is handling the Cloister Cafe's suit to block the New York State Liquor Authority's Aug. 7 license revocation, asked for more information but vowed to decide on a possible temporary restraining order by next week.

The popular East Village cafe's complaint — the first in federal court against Gov. Andrew Cuomo's widely publicized clampdown on bars and restaurants over virus protocols — claims its due process rights were violated during a late-night hearing revocation before a liquor authority "kangaroo court."

Insurance

A proposed class of travelers is asking the Judicial Panel on Multidistrict Litigation to consolidate a group of suits against the American unit of Assicurazioni Generali Group, saying consolidation is appropriate to streamline claims that the insurer failed to pay up on policies for trips canceled because of COVID-19.

In her motion, the named plaintiff in one of the cases, Tralisa Sheridan, told the panel that all of the plaintiffs she seeks to group together made nearly identical claims, all against CSA Travel Protection, that stem from insurance policies with the same terms. She seeks to bring together eight suits from Texas, Kansas, South Carolina, California, Ohio, Illinois and New York, as well as any additional suits that are filed. She asked that they be consolidated in the Eastern District of Texas because it is centralized geographically and is the only district that's already hearing multiple cases in the proposed MDL.

Markel Insurance Co. has urged an Illinois federal judge to toss a proposed class action brought by a group of gyms in Mississippi and Alabama seeking COVID-19 loss coverage, arguing Wednesday there had been no physical alteration of the gyms' properties and that the policy's virus exclusion bars coverage.

Markel said the gyms failed to show their properties were damaged, contaminated or physically altered, but only alleged their losses were due to government closure orders issued "as a result of" and "caused by" COVID-19. Yet the policy's virus exclusion applies "wherever the virus is in the chain of causation leading to the insured's alleged losses," the insurer claimed.

In Kansas, Continental Casualty Co. told a federal judge Monday that "COVID-19 damages human lungs, not property," saying its policyholder can't rely on an absence of virus exclusion for coverage when it failed to show a physical loss in the first place.

The insurer said the court should toss the proposed class action brought by Alliance Radiology PA because the radiologists failed to allege any physical alteration of their covered properties, and their workplaces were never closed by state-mandated orders.

Native American

A D.C. federal judge on Wednesday refused the Shawnee Tribe's bid to force the Treasury Department to retain $12 million in COVID-19 funding the tribe claims it's owed, saying the court had no say over how the government decided to divvy up $8 billion for tribal governments in the CARES Act.

The Oklahoma-based tribe had asked the court for a preliminary injunction, claiming it was underfunded in an initial $4.8 billion distribution of the Coronavirus Aid, Relief and Economic Security Act funding because Treasury used an allegedly "false" population data point when calculating how much money to give to the tribe, showing the tribe as having a population of zero when it actually has more than 2,100 members.

U.S. District Judge Amit P. Mehta, who has handled several suits connected with the tribal CARES Act funding, said the Shawnee Tribe's argument "fares no better" than the Prairie Band Potawatomi Nation's earlier effort for an injunction, which the judge rejected in June.

And Treasury Secretary Steven Mnuchin urged the D.C. Circuit on Tuesday to uphold a lower court's ruling that Alaska Native corporations are eligible to partake in the $8 billion of coronavirus relief earmarked for tribal governments, saying Congress clearly meant to include them when it passed the CARES Act.

The Confederated Tribes of the Chehalis Reservation and other federally recognized tribes have asked the appellate court to overturn a D.C. district judge's June 29 decision, arguing that the for-profit companies don't qualify as "Indian tribes" with "recognized governing bodies" that are eligible for funding under the Coronavirus Aid, Relief and Economic Security Act.

Sports & Betting

The New Jersey gym that's repeatedly flouted COVID-19 pandemic orders to shut down was hit with a $134,000 judgment Tuesday by a state court judge who slammed the business' "willful and contumacious" defiance during an unprecedented public health crisis.

Superior Court Judge Robert T. Lougy granted the sanctions bid by Health Commissioner Judith Persichelli against Atilis Gym in what has emerged as the Garden State's most contentious battle over Gov. Phil Murphy's coronavirus order for nonessential businesses to shutter or limit operations.

The gym contends the state needs to provide a scientific basis for forcing businesses to close, but the court said owners Ian Smith and Frank Trumbetti should have challenged the order by appealing it, not through defiance.

Mergers & Acquisitions

A Delaware vice chancellor on Wednesday denied CorePower Yoga LLC's bid to toss a suit by one of its franchisees seeking to force the yoga studio chain to finalize the purchase of 34 studios, ruling he can't yet make a "fact-intensive" decision as to coronavirus-related breach of contract claims.

During a hearing held via telephone, Vice Chancellor Joseph R. Slights III said CorePower's arguments in support of its dismissal bid asked him to decide questions of law that need more of a factual record to play out, adding it was seeking a determination on "fact-intensive" issues "too early in the case."

One of those issues concerns whether the seller, Level 4 Yoga, breached warranties in a sale agreement struck last year when studios set to be sold were shut down due to the COVID-19 pandemic.

Environmental

The U.S. Environmental Protection Agency allegedly violated the Endangered Species Act by issuing a policy temporarily suspending some compliance obligations during the coronavirus crisis without ensuring it wouldn't jeopardize protected wildlife, green groups said Tuesday.

The EPA did not consult with the U.S. Fish and Wildlife Service and National Marine Fisheries Service prior to issuing the controversial policy despite being required to under the law, the Center for Biological Diversity, Waterkeeper Alliance Inc. and Riverkeeper Inc. say in a complaint filed in New York federal court.

Banking


A Florida federal judge on Monday dismissed an accounting firm's proposed class suit claiming that agents for loan recipients under the federal Paycheck Protection Program should get a portion of the processing fees received by lenders, finding the coronavirus relief bill and enacting rules create no such entitlement.

The case was apparently the first filed of at least 50 cases now pending around the country that raised the same issue of first impression about the federal government's emergency program, dubbed the CARES Act, which has doled out hundreds of billions of dollars to help small businesses weather the coronavirus pandemic. On Aug. 6, the Judicial Panel on Multidistrict Litigation denied a motion to consolidate the cases.

In Monday's order, U.S. District Judge T. Kent Wetherell II expressed skepticism that the plaintiff, Pace, Florida-based accounting firm Sport & Wheat CPA PA, will be able to successfully amend its complaint but said he would give the firm a chance to do so or alternatively enter a final judgment and let it appeal his rulings before the Eleventh Circuit, if it wishes.

Immigration

The American Civil Liberties Union hit the Trump administration with a proposed class action alleging the federal government is skirting immigration law by detaining unaccompanied children in hotels for days before deporting them amid the coronavirus pandemic.

The ACLU, representing a 16-year-old Guatemalan boy who came to the U.S. unaccompanied to escape persecution, told a D.C. federal court that special powers given to the government during public health crises don't allow it to detain unaccompanied children in hotels and deny them access to legal proceedings.

Even during a public health crisis, immigrants who are trying to escape torture or persecution must be given opportunity to seek relief in the U.S., according to the Friday complaint, which targets the U.S. Department of Homeland Security.

Transportation

A Pittsburgh-area school district says its bus company is refusing to provide transportation for the upcoming academic year unless the district pays off a $2.2 million bill for services in the prior school year cut short by the COVID-19 pandemic.

The McKeesport Area School District said it paid Pennsylvania Coach Lines Inc. $1.6 million for the bus service it provided up until Pennsylvania Gov. Tom Wolf ordered schools closed on March 13 because of the pandemic.

But the bus company insisted that it be paid for the remainder of the year or it would not provide services for the upcoming one, and it refused to provide paperwork the district needed to seek state funding, the district alleged in a motion for a preliminary injunction.

Consumer Protection

A California woman is suing The Clorox Co. in federal court, saying it hides the fact that Clorox Splash-Less Bleach can't disinfect surfaces by omitting the amount of the active ingredient on its packaging.

In her lawsuit, Shana Gudgel said the company's deception is worse now during the COVID-19 pandemic that has consumers across the country buying up Clorox bleach and other products to disinfect surfaces and rooms that may have come in contact with the virus.

In Texas, American Airlines Inc. has told a Texas federal judge he should toss a proposed class action seeking refunds for flights canceled amid the COVID-19 pandemic because the passengers suing canceled their own flights or never bought tickets from the airline.

American, the nation's largest airline by fleet size, also asked U.S. District Court Judge Reed C. O'Connor to compel arbitration because two of the three named plaintiffs, James Saunders and William Holloway, agreed to arbitration clauses when they bought their tickets, according to its motion to dismiss.

And an Amazon vendor has agreed to pay more than $192,600 to resolve 3M Co.'s trademark lawsuit accusing it of price-gouging on N95 masks during the COVID-19 pandemic, money that the industrial giant said is set for charity.

In a Thursday joint notice of settlement, 3M — along with Mao Yu and several affiliated companies named as defendants — asked the court to sign off on the parties' agreed-upon consent judgment and permanent injunction.

Commercial Contracts

Loyola University Chicago has urged an Illinois federal judge to toss a proposed class action seeking to recover tuition and fees after COVID-19-related school closures, saying the suit is at its core an impermissible educational malpractice action repackaged as breach-of-contract claims.

Seeking dismissal with prejudice, the university said Friday it had no other choice but to shift to remote learning during the global pandemic, calling it "the only workable solution to an unprecedented crisis." The school said named plaintiff Andreea Gociman, whose son is an undergraduate student at Loyola, lacks standing to bring her claims at all, because she's not a party to any contract with Loyola.

Illinois doesn't recognize the tort of educational malpractice because it requires "improper judicial interference in academic affairs and second-guessing the professional judgment of educators and administrators making difficult educational determinations," the university said. Because Gociman contends the quality of her son's instruction was diminished because of the move to online learning, it would require an analysis of the quality of education, a hallmark of an educational malpractice claim, Loyola argued.

Intellectual Property

IHealth Labs has accused a variety of companies in California federal court of selling knockoff versions of its infrared forehead thermometer, which the California health care company said has been its best seller during the COVID-19 pandemic.

In its complaint, iHealth Labs Inc. claims that parties "of unknown makeup" have been selling products that are confusingly similar to its iHealth Infrared No-Touch Forehead Thermometer. The suit targets various parties, including Fingix, i-Enterprise and Hong Ta LLC, although the complaint says they "likely reside and/or operate in foreign jurisdictions."

IHealth Labs says that even though it is the singular authorized seller of the iHealth NoTouch, the defendants have sold counterfeit versions of the product on Amazon.

Securities

An Illinois federal judge has blocked a securities broker's bid to prevent his upcoming arbitration hearing from proceeding through Zoom, saying he's unlikely to succeed on claims that the Financial Industry Regulatory Authority violated any contracts or subjected him to irreparable harm.

U.S. District Judge Joan Lefkow on Thursday said broker Carlos Legaspy can't temporarily restrain FINRA from allowing an arbitration panel on Monday to proceed with his evidentiary hearing remotely because he's unlikely to prove the regulator violated either the FINRA Code of Arbitration or the uniform submission agreement that set out the contours of the underlying proceeding.

Judge Lefkow also rejected Legaspy's argument that he faces irreparable harm by proceeding with the hearing, particularly if he loses. Legaspy argued that he and his brokerage, Insight Securities Inc., are defending themselves with an eroding insurance policy and that Insight could face business-ending economic consequences if they lose, "but the harms of Legaspy's losing the arbitration are not at issue," Judge Lefkow said.

--Additional reporting by Amanda Ottaway, Rose Krebs, Pete Brush, Daphne Zhang, Andrew Westney, Jeannie O'Sullivan, Bill Wichert, Matt Fair, Juan Carlos Rodriguez, Nathan Hale, Sarah Martinson, Matthew Santoni, Mike Curley, Adam Lidgett and Lauraann Wood. Editing by Marygrace Murphy.

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

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