Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (October 8, 2020, 7:15 PM EDT) -- Major League Baseball has scored a win in lawsuits seeking refunds for games postponed due to the coronavirus, Pfizer Inc. and Regeneron Pharmaceuticals Inc. face patent infringement claims over their development of COVID-19 vaccines and treatments, and court battles rage on against cruise lines accused of mishandling the pandemic. 

While courts across the country are altering procedures, restricting access and postponing certain cases to stem the spread of the virus, 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.

Food & Beverage

A federal judge on Tuesday declined to block New York Gov. Andrew Cuomo's rule forbidding New York City restaurants from serving dine-in customers after midnight, saying the dangers of COVID-19 provide a rational basis for the curb that could prevent the spread of the deadly virus.

At the end of a telephone injunction hearing, Brooklyn U.S. District Judge Brian M. Cogan denied a request by The Graham, a bar and eatery near the city's Bushwick and Williamsburg neighborhoods, to block the so-called "food curfew."

The September lawsuit says the midnight service cutoff, announced Sept. 9, is "arbitrary and unsupported by anything except speculation" that kicking diners out of restaurants earlier than usual combats the spread of COVID-19.

Public Policy

Litigation over mail-in and absentee voting continues, as states grapple with how to best conduct the upcoming November election in a global pandemic.

The U.S. Supreme Court on Monday temporarily reinstated South Carolina's requirement that absentee ballots be signed by witnesses, a Republican-backed measure that had been struck down by a pair of lower courts that found the requirement would be risky for voters in the midst of COVID-19.

This year, the Palmetto State, like many others, substantially expanded absentee voting during the pandemic. Legislators deliberately chose not to do away with the witness requirement, deeming it key for deterring election fraud, according to the case before the high court. 

The state's Democrats have argued the witness requirement increases the risk of COVID-19 infection and transmission and unconstitutionally burdens the right to vote. On Monday, the Supreme Court sided with the Republicans and granted a stay, though it also held that any ballots cast before the stay was issued may not be rejected for failing to comply with the witness requirement.

And the Seventh Circuit said Tuesday that the coronavirus pandemic "does not undermine" but rather "reinforces" its decision to deny an injunction that would allow all eligible Indiana voters to cast mail-in ballots, saying it's not the court's place to second-guess state officials on the eve of the November election.

Calling the COVID-19 pandemic "the most severe public health crisis of the past century," a panel of the appellate court acknowledged there may be difficulties with in-person voting in November's general election, but "it's the pandemic, not the state" that will affect voters' determination to cast a ballot. Indiana's absentee-voting laws are not to blame, the panel said.

In Florida, a federal judge expressed concern Thursday that a crash of the state's online voter registration on the last day before books closed for the November election may have prevented potential voters from registering, but said a further extension of the deadline could add thousands of provisional ballots to an already difficult election.

In a telephone hearing on a preliminary injunction request by voting rights groups, U.S. District Judge Mark Walker said he was not sure the state's corrective action — which extended the deadline to Oct. 6 at 7 p.m. after the system crashed late on Oct. 5 — was enough, given the short notice people had in the middle of a workday. The original deadline was Oct. 5 at midnight.

The Texas Supreme Court on Wednesday said Harris County can't send unsolicited applications for mail-in ballots to every voter in the county, holding the move is out of step with what clerks statewide are doing and "threatens to undermine" the uniform operation of election laws.

The ruling is a win for the Texas government, which was fighting to overturn two lower court rulings allowing Harris County Clerk Chris Hollins to mail out the applications. Texas argued Hollins was acting outside the scope of specified powers under the Texas Election Code by sending mail-in ballot applications to voters who didn't request them.

And President Donald Trump's reelection campaign lost its challenge to New Jersey's coronavirus-prompted remote voting procedures Tuesday, with a judge ruling that federal election law doesn't stop election officials from counting ballots before and after Election Day.

U.S. District Judge Michael Shipp denied the campaign's bid for a preliminary injunction to stop the Garden State from counting mail-in ballots starting 10 days before the Nov. 3 election and up to two days after the election, a system codified in a state law passed in late August as election season began bearing down on the ongoing COVID-19 pandemic.

Immigration

A New Jersey federal court case over social distancing limitations to video immigration hearings during the COVID-19 pandemic may be moot now that lawyers have the option to appear via video separately from their clients, a judge said Thursday.

Appearing frustrated at times during a conference, U.S. District Judge John Michael Vazquez was "puzzled" as to why the claims by the Garden State chapter of the American Immigration Lawyers Association should proceed given the group's members can now participate in hearings from a different location than their counsel.

AILA's July complaint alleges the requirement that attorneys appear alongside their clients for video conferences in Newark Immigration Court puts parties at risk for virus transmission.

Judge Vazquez refused last month to grant the group's preliminary injunction seeking to halt the requirement, saying he needed more information, but he indicated Thursday he's "grateful" the court has since expanded the social distancing possibilities for the hearings.

And the Ninth Circuit has preserved a lower court order barring the Trump administration from holding asylum-seeking children in hotels for more than three days before deporting them, finding in a ruling Sunday that the administration wasn't likely to win its case defending the practice.

A three-judge panel for the federal appeals court refused to lift a California federal judge's decision that limited these hotel stays for minors to three days except in emergency circumstances flagged to the court.

The federal government has "more than adequate" capacity to hold these migrant children in licensed facilities, rather than alone in hotels, before sending them out of the country under the administration's coronavirus-related order to expel migrants seeking protection at the U.S. border, the judges concluded.

Legal Industry

Law school graduates registered for the Golden State's two-day bar exam should be ready to take the online test as scheduled beginning Monday, the California Supreme Court said in a letter to law school deans, rejecting requests for an open-book version of the exam.

Chief Justice Tani G. Cantil-Sakauye in a two-page letter said none of the other states administering the test online due to the coronavirus pandemic have switched to an open-book format.

She also noted that administering the exam without limiting what materials the test-takers can consult would violate the National Committee of Bar Examiners policy. The NCBE has not changed its policy to allow for an open-book format, according to the letter.

Hospitality

Royal Caribbean Cruises Ltd. misled investors about the scope of the coronavirus's negative impact on its business, according to a would-be class action filed in Florida federal court.

The Miami-based company assured investors in February that "it was only experiencing a slowdown from bookings in China," but a series of corrective disclosures and cruise cancellations revealed the true extent of the virus' damage to Royal Caribbean's business, investors say in the suit in the U.S. District Court for the Southern District of Florida.

And two retirement funds are opposing a bid by a solo investor and Stull Stull & Brody to lead options investors in consolidated suits alleging Carnival Corp. hid COVID-19 infections on its ships, calling the proposal an "improper end-run around" the Private Securities Litigation Reform Act.

The funds for New England carpenters and Massachusetts laborers, which are represented by Bernstein Litowitz and Kessler Topaz, told a Florida federal court Monday they are the presumptive lead plaintiffs because they have asserted the largest financial interest in the related Carnival suits and have specifically said their suits involve claims on behalf of Carnival options investors.

Holland America and parent company Carnival have urged a federal judge in Washington state to toss a suit claiming they exposed more than 1,000 cruise ship passengers to COVID-19 on a vessel that sailed out of Argentina in March, saying their contract contains a class action waiver.

Carnival Corp. and Holland America Line Inc. argued in their motion to dismiss the proposed class action brought by passengers Leonard C. Lindsay and Carl E.W. Zehner that both men agreed to the cruise contract they reference throughout their Sept. 11 amended complaint.

The contract includes "a clear and unambiguous class action waiver" common to cruise ship passenger tickets, and courts have repeatedly enforced such waivers, Carnival and Holland America said.

And Princess Cruise Lines Ltd. has asked a federal judge to dismiss a negligence lawsuit brought by the widow and daughter of a passenger who died after contracting COVID-19 aboard the ship, arguing their claims are preempted by the relevant maritime law known as the Death on the High Seas Act.

Because Juishan Hsu and Vivian Chen claim their deceased loved one Chung Chen contracted the coronavirus aboard the round-trip Ruby Princess cruise from Australia to New Zealand, the cruise line argues their claims should be tossed because Chen wasn't injured on U.S. soil. Although Chen died in Los Angeles, Princess Cruise Lines said, DOHSA covers deaths from an injury that occurred three nautical miles from shore.

Insurance

The Judicial Panel on Multidistrict Litigation has centralized in Illinois over 30 lawsuits accusing Society Insurance Co. of wrongfully denying coverage for business losses during the COVID-19 pandemic, but declined to create MDLs to group similar cases against The Hartford, Travelers, Cincinnati Insurance Co. and Lloyd's of London underwriters.

The panel concluded that centralization before U.S. District Judge Edmond E. Chang of the Northern District of Illinois would provide an efficient path for the resolution of the 34 business-interruption coverage actions pending against Society in federal district courts in the Prairie State and five other Midwestern states.

And a Texas federal judge has remanded a dentist's COVID-19 coverage suit against Allstate Insurance Co. to state court, ruling the insurer failed to show a claim adjuster was wrongly joined, defeating the suit's diversity of jurisdiction required in federal court.

U.S. District Judge Richard B. Farrer said Wednesday that Orsatti DDS PC, a dental office in Bexar County, Texas, sufficiently showed it properly included an insurance claim adjuster in the suit, which lacks complete diversity of citizenship to stay in the district court.

Also in Texas, a federal judge on Wednesday tossed a suit by a Dallas eatery group alleging The Cincinnati Insurance Co. stiffed it on coverage for losses stemming from COVID-19, saying the eateries' allegations weren't enough to sustain a breach of contract claim.

U.S. District Judge Sidney Allen Fitzwater sent Vandelay Hospitality Group LP back to the drawing board, saying because the complaint had been filed in state court before its removal, the group should get the chance to replead to meet federal court standards.

According to the order, the allegations in the amended petition were "factually conclusory and/or legal conclusions" that did not plausibly plead that the restaurants had suffered physical loss or damage that would be covered by the policy, and without such an allegation, they can't allege a breach of contract on Cincinnati's part.

Allied Insurance Co. of America is not obligated to cover losses that a Georgia Cajun restaurant suffered when it closed amid the COVID-19 pandemic, a federal judge in the Peach State ruled Tuesday, finding the eatery did not allege a requisite "physical loss of or damage to" its property.

Chief U.S. District Judge Thomas W. Thrash Jr. granted Allied's motion to dismiss the complaint filed by Acworth, Georgia-based Henry's Louisiana Grill Inc. and an affiliate, concluding the restaurant operator cannot tap into the business income or "civil authority" coverage in its policy with the insurer.

The operators of the Last Hotel in St. Louis, Missouri, are suing The Cincinnati Insurance Co. and one of its agents, saying the company hasn't covered its losses stemming from the COVID-19 pandemic despite "crisis events" such as communicable diseases being included in the policy.

That endorsement provides coverage for crises including contamination of the premises, which in turn includes communicable diseases, according to the complaint, which was removed to Illinois federal court on Monday.

And a landmark Miami-area theater dropped its virus-related coverage claims against SCOR SE on the same day it filed a response urging a Florida federal judge to reject the insurer's subsidiary's bid to toss the case and demanded a hearing.

On Monday, Actors Playhouse Productions Inc., which operates the Miracle Theatre in Coral Gables, Florida, said it would voluntarily dismiss all claims against SCOR without prejudice. Steven C. Marks, counsel for Actors Playhouse, told Law360 on Tuesday the theater is not dropping the entire suit, but only tossing claims against SCOR because General Security rather than SCOR is the one that provided the policy.

Sports & Betting

A California federal judge has handed Major League Baseball and two Bay Area MLB teams victories in a proposed class action by fans seeking refunds nationwide for tickets they bought to games postponed due to the COVID-19 pandemic, ruling ticket buyers already received refunds.

U.S. District Judge Dale S. Fischer said in her Tuesday order granting MLB's motion to dismiss that each of the six plaintiffs who bought a ticket directly from a team has received a full refund or credit. 

In New Jersey, a judge on Thursday ruled that a gym battling the state over COVID-19 business restrictions must comply with pandemic operation rules in the wake of its "continued noncompliance," as evidenced by a social media video depicting maskless patrons disregarding social-distancing mandates and a crowd limit. 

Superior Court Judge Robert Lougy granted the bid by state Health Commissioner Judith Persichilli to enforce a court order reflecting that gyms are now permitted to operate during the pandemic, albeit subject to a 25% capacity restriction and other precautions aiming to contain the spread of the coronavirus.

The state moved to enforce the order after Atilis Gym, which launched the battle in May with a constitutional challenge to Gov. Phil Murphy's order for nonessential businesses to close, continued to disobey the rules and even revealed the defiance in an Instagram video depicting a panoramic view of the gym.

And a Pennsylvania federal judge rejected four student athletes' claims that the Pennsylvania Interscholastic Athletic Association violated their rights when it reduced the number of participants in a golf tournament due to the COVID-19 pandemic.

U.S. District Judge Susan Paradise Baxter ruled that the PIAA and its local district were neither arbitrary nor capricious when they reduced the number of male golfers who could qualify for the District 10 championship tournament by about half as part of their pandemic precautions.

The four plaintiffs were three seniors and a junior at Conneaut Area Senior High School and Slippery Rock Area High School who would have otherwise qualified for the tournament if the field had not been suddenly narrowed just over a week beforehand.

Banking

JPMorgan Chase urged an Illinois federal judge Monday to send to arbitration a "meritless" proposed class action alleging the major bank cheated small businesses out of federal stimulus funds from the Paycheck Protection Program in favor of funding larger businesses.

Sha-Poppin Gourmet Popcorn LLC alleges Chase didn't properly process its application for a loan under the PPP, instead "prioritizing its favored customers."

But Chase argued Monday that when opening its business checking account in March 2018, Sha-Poppin consented to the arbitration provision in the account agreement, and again later in the digital services agreement when Sha-Poppin tried to apply for the loan.

And federal authorities announced criminal charges Tuesday against a star of the VH1 series "Love & Hip Hop: Miami" and a Pennsylvania towing company owner for allegedly participating in a fraud ring that sought to obtain more than $24 million in forgivable COVID-19 relief loans through the PPP.

Diamond Blue Smith, 36, a member of the hip-hop group Pretty Ricky who uses the stage name Baby Blue Whoaaaa, and Tonye C. Johnson, 28, of Flourtown, Pennsylvania, were charged with wire fraud, bank fraud, and conspiracy to commit wire fraud and bank fraud in complaints unsealed Tuesday in the Southern District of Florida, according to the U.S. Department of Justice.

Intellectual Property

Pfizer Inc. and Regeneron Pharmaceuticals Inc. were accused Monday of using poached technology in their development and testing of COVID-19 vaccines and treatments, according to a pair of patent infringement suits lodged in California and New York federal court.

San Diego-based Allele Biotechnology and Pharmaceuticals Inc. is claiming the pharmaceutical giants infringed its patented mNeonGreen technology, which it said is an important reagent used to develop therapeutics for the virus. The technology was patented in 2019, and it's used in testing antibody and vaccine candidates, Allele said.

Notably, the technology was used in Regeneron's experimental "antibody cocktail" given to President Donald Trump last week to treat his COVID-19 infection. Hundreds of organizations and universities have licensed the mNeonGreen technology, but Pfizer and Regeneron aren't among them, according to Allele.

Commercial Contracts

A California federal magistrate judge said during a hearing on Monday that she intends to dismiss a pair of proposed class actions accusing the Regents of the University of California of withholding campus fee refunds following coronavirus-related closures, finding the students hadn't overcome the UC Regents' qualified immunity defense.

U.S. Magistrate Judge Sallie Kim expressed sympathy for students seeking reimbursements amid the COVID-19 pandemic, but said they hadn't shown sufficient precedent to back up their argument that the state-run university's regents and its former president Janet Napolitano lack entitlement to qualified immunity under the 11th Amendment of the U.S. Constitution.

Under the students' theory, anyone unhappy with the services provided could file suit against the government, Judge Kim said, and the 11th Amendment, which establishes the principle of state sovereign immunity, "would have no meaning" under such a theory.

--Additional reporting by Jeannie O'Sullivan,  Dean Seal, Daphne Zhang, Carolina Bolando, Mike Curley, Michelle Casady, Joyce Hanson, Nathan Hale, Jeff Sistrunk, Pete Brush, Rachel O'Brien, Hailey Konnath, Suzanne Monyak, Hannah Albarazi, Lauren Berg, Rachel Stone and Matthew Santoni. Editing by Philip Shea.

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

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