Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (October 22, 2020, 5:46 PM EDT) -- The nation's top court has upheld Pennsylvania's three-day mail-in ballot extension, a group of North Carolina restaurants are the first to win "physical loss" insurance coverage in court in light of state-mandated COVID-19 shutdowns, and CVS wants out of a suit challenging its claims to the effectiveness of its hand sanitizer.

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 litigation across the country.

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

Employment

A New Jersey state judge has trimmed a lawsuit by a former health official who alleged state officials badmouthed him after firing him for complaining about being asked to administer private COVID-19 tests to relatives of a Gov. Phil Murphy staffer, according to an order made available Wednesday.

In a two-page order with no accompanying memorandum, Superior Court Judge Douglas H. Hurd dismissed with prejudice Christopher Neuwirth's claim for post-employment retaliation under the New Jersey Conscientious Employee Protection Act and dismissed without prejudice paragraphs of the complaint spelling out the allegations.

The state's former assistant health commissioner, Neuwirth alleges he was fired after alerting ethics authorities to the request that he collect saliva specimens from two relatives of Murphy's chief of staff, George Helmy, as a "favor." After the firing, Neuwirth claims, the state said Neuwirth was terminated for failing to disclose his outside consulting work, even though he'd received permission for it.

And the Port Authority of Allegheny County in Pennsylvania is pushing a federal judge to toss a union's suit claiming that its members' constitutional rights were violated by a ban on masks that say "Black Lives Matter," saying the policy has already been jettisoned.

The Port Authority urged U.S. District Judge J. Nicholas Ranjan on Tuesday to dismiss a suit by Amalgamated Transit Union Local 85 and three of its members challenging a uniform policy that restricted messages or insignias supporting the BLM movement. The workers claim the policy trampled their rights under the First and 14th amendments as well as under the Pennsylvania Constitution.

But since the policy being challenged was replaced in mid-September, about two weeks before the suit was filed, the Port Authority argued in Tuesday's motion that the plaintiffs no longer have standing to maintain their suit. 

In Illinois, Abbott Laboratories filed a new lawsuit Tuesday asking a federal judge to stop a former employee from using its name, trademarks and private information to sell COVID-19 diagnostic tests that were made by other companies.

Abbott says former employee Justin Brown was fired in April for falsifying expense records but has continued to use his work equipment and a deceptive email address to falsely associate himself with the company.

And a health insurance company on Monday urged a Florida federal court to dismiss a former executive's claims that she was fired for taking medical leave and requesting to work remotely during the COVID-19 pandemic, arguing she never asked for any kind of medical leave and was never forced to come into the office.

Doctors HealthCare Plans Inc. said it could not have violated the Family and Medical Leave Act when it fired Julie Ferro in June because she had never requested time off under the law, which states it is the employee's responsibility to notify the employer that leave is required.

Food & Beverage

A New York City eatery asked the Second Circuit on Tuesday to block Gov. Andrew Cuomo's rule forbidding New York City restaurants from serving dine-in customers after midnight, arguing there is neither a real nor substantial relationship between the restriction and the public health interest.

The Graham, a bar and eatery near the city's Bushwick and Williamsburg neighborhoods, said in its motion unsealed Wednesday that U.S. District Judge Brian M. Cogan was incorrect in the way he applied the "real or substantial relation" test of Jacobson v. Massachusetts  this month while declining to block the so-called food curfew.

In 1905, the landmark U.S. Supreme Court decision in Jacobson found that the state acted reasonably to protect public health when it allowed local health authorities to require smallpox vaccinations. But Judge Cogan's finding that it is "common sense" that "if a restaurant is open 24 hours, it has a greater chance of exposing people to contagion [than] if it is ... open for 16 hours" misses the mark, The Graham said. Under such an approach, literally any restriction subject to Jacobson would be allowed, the eatery said.

Personal Injury & Medical Malpractice

A COVID-19 outbreak that ripped through a Pittsburgh-area nursing home and led to hundreds of infections and dozens of deaths was caused by the home's reckless, willful and wanton conduct, according to a suit filed Wednesday in Pennsylvania state court on behalf of 15 patients, 10 of whom died.

Jodi Gill and several others filed the suit in Beaver County accusing Comprehensive Healthcare Management Services LLC of negligently operating its facility, Brighton Rehabilitation and Wellness Center, by failing to take sufficient steps to prevent the spread of the coronavirus among patients and staff, failing to provide staff with personal protective equipment, and downplaying the severity of the virus even as it spread through the facility.

The suit filed on behalf of 15 of the more than 330 patients who contracted the virus at the nursing home also alleges the Brighton facility was understaffed and unprepared even before the pandemic and notes that state health regulators unearthed scores of health violations during multiple inspections that took place in the past 30 months.

The same nursing home can't claim immunity from a housekeeper's COVID-19 wrongful death suit because a federal law only gives health care providers protection for treatments and protective measures they use, not measures they were allegedly negligent in ignoring, a Pennsylvania federal judge ruled Oct. 16.

Senior U.S. District Judge Arthur J. Schwab said Comprehensive Healthcare couldn't use the federal Public Readiness and Protection Act to claim federal preemption and immunity from a lawsuit the estate of Elizabeth Wiles filed claiming Brighton Rehab had failed to take precautions and prevent staff like her from catching the coronavirus.

Consumer Protection

CVS Health wants to end a federal suit alleging the company misleadingly states its store-brand hand sanitizers kill 99.99% of all germs, calling the customer pushing the case an "opportunist" who hasn't even said he used the product, let alone that he was injured by the so-called false advertisement.

In a motion to dismiss the case filed Tuesday, the drugstore chain urged a California federal court to throw out claims by Joseph Mier, saying no reasonable consumer would expect the hand sanitizer to kill 99.99% of all germs known to mankind, especially as the back of the label clarifies that it works on "99.99% of many common harmful germs & bacteria."

According to court documents, Mier first filed his suit in state court in May, and CVS removed it to federal court last week. Mier alleges that the labeling on CVS store-brand hand sanitizers is misleading as it claims the product is effective against 99.99% of germs, but that there are a number of pathogens it cannot destroy.

A Texas federal judge has asked American Airlines Inc. for more evidence that it can compel arbitration under a third-party travel agency's terms of use with passengers seeking refunds for flights canceled due to COVID-19, saying search results pulled from an internet archive website won't suffice.

U.S. District Judge Reed O'Connor ordered the airline to submit either a declaration or deposition supporting its argument by Oct. 30, ruling he will not accept as evidence a copy of Expedia Group's and Hotwire's terms of use pulled from nonprofit library Internet Archive's Wayback Machine, which allows users to retroactively view websites and pages on certain dates.

And the operator of three Pittsburgh-area amusement parks has told a Pennsylvania federal court that its mandatory mask policy does not violate the Americans with Disabilities Act and argued that exceptions sought by patrons who claimed their disabilities prevented them from wearing masks would unnecessarily expose other patrons and staff to COVID-19.

California-based Festival Fun Parks LLC, which does business as Palace Entertainment and runs the Kennywood Park, Sandcastle Waterpark and Idlewild & Soakzone amusement parks in Allegheny and Westmoreland counties, said Oct. 16 that its mandatory face covering policy was a legitimate safety requirement that was allowed under the ADA. It argued that the lawsuit brought by the families of several children with disabilities such as autism should be dismissed.

Insurance

A North Carolina judge has ruled that The Cincinnati Insurance Co. owes a group of restaurants coverage for their losses stemming from state-mandated COVID-19 shutdowns, a move the group's attorneys say is the first decision to hold that shutdown orders to contain the virus caused a "physical loss."

Superior Court Judge Orlando F. Hudson Jr. said the plain definition of the term "direct physical loss" includes an "inability to utilize … something in the real, material or bodily world, resulting from a given cause," and does not need physical alteration to trigger coverage. Because the virus and government shutdown orders deprived the restaurant owners of the normal use of their property, the judge granted summary judgment to the restaurants, led by North State Deli LLC, on their claim for declaratory relief in an order published Oct. 7.

Allstate Insurance Co. fired back Wednesday at the remand of a dentist's COVID-19 coverage suit to state court, saying Texas federal courts have long recognized the "popular tactic" of naming nondiverse insurance adjusters in an attempt to defeat diversity jurisdiction.

The carrier said in an objection that U.S. District Judge Richard B. Farrer incorrectly ruled that Orsatti DDS PC, a dental office in Bexar County, Texas, sufficiently stated its claim against insurance claim adjuster Blessing Sefofo Wonyaku.

A former Illinois state representative and current attorney at Edelson PC has been chosen by policyholders to fight their multidistrict litigation against Society Insurance Co. over COVID-19 business interruption coverage.

Arthur Turner Jr., of counsel at Edelson's Chicago office, was designated as plaintiffs' liaison counsel by Society's policyholders on Tuesday. The attorney has represented plaintiffs in Biscuit Cafe Inc. et al. v. Society Insurance Inc. with other attorneys at Edelson. This month, the Judicial Panel on Multidistrict Litigation centralized in Illinois 34 lawsuits accusing Society of wrongfully denying coverage for businesses' losses during the COVID-19 pandemic. 

A California federal judge has thrown out a set of counterclaims by Geragos & Geragos in its dispute with Travelers Casualty Insurance Co. of America over COVID-19 business interruption coverage, finding a virus exclusion in its policy bars coverage.

In a Monday order, U.S. District Judge Philip S. Gutierrez dismissed with prejudice all four of Geragos' counterclaims against the insurer, saying the virus exclusion was brought into play by the firm's own allegations that the government orders that limited its business were based on "dire risks of exposure with the contraction of COVID-19."

And a California hotel operator has asked the state's highest court to bypass an intermediate appellate court and immediately review its appeal of a decision absolving its insurer from having to cover its losses amid the COVID-19 pandemic, saying the case involves an issue of "great public importance" that is present in many similar coverage actions.

The Inns by the Sea, which operates five boutique hotels along the Golden State's central coast, said in an Oct. 16 petition for transfer that the California Supreme Court should directly tackle its appeal of a state judge's August ruling dismissing its suit against California Mutual Insurance Co., which is currently pending before a midlevel appellate court in San Jose.

The Inns said its case is a strong candidate for immediate transfer to the California high court because it involves a key question that lies at the heart of countless suits concerning the availability of coverage for businesses' losses due to government-mandated COVID-19 shutdowns — whether the novel coronavirus is capable of causing "direct physical loss of or damage to property" under the terms of a standard "all-risk" policy.

All-risk policies' coverage for lost business income is typically conditioned on the policyholder suffering a direct physical loss of or damage to its insured property.

Public Policy

The U.S. Supreme Court on Monday upheld Pennsylvania's deadline extension for mail-in ballots for the upcoming election, rejecting state Republicans' qualms with the measure, which added three days for ballots to be received as long as they are mailed by 8 p.m. on Election Day in the key battleground state.

Last month, the Pennsylvania Supreme Court pushed the deadline to receive ballots for the Nov. 3 election to Nov. 6. The state high court also held that as long as there wasn't evidence showing they had been mailed after Election Day, ballots without a legible postmark would be assumed to have been mailed on time.

The Republican Party of Pennsylvania and Republican leaders in the state legislature pounced on that portion of the ruling, urging the U.S. Supreme Court to halt their implementation. The extension would allow ballots to be cast after Election Day, the Republicans argued. But they ultimately failed to sway a majority of the Supreme Court justices, and the state's ruling was upheld Monday via a 4-4 deadlock.

And a nonprofit is suing the Trump administration for withholding details about billion-dollar contracts with Moderna, Regeneron and other pharmaceutical giants for COVID-19 vaccine development and manufacturing.

Knowledge Ecology International, an organization that advocates for access to medical technologies, sued the U.S. Department of Health and Human Services and the U.S. Department of the Army on Oct. 16 in D.C. federal court seeking information about multiple vaccine contracts.

Records that HHS and the U.S. Department of Defense provided in response to Freedom of Information Act requests about the Genentech, Regeneron and Moderna contracts, and parts of the Sanofi and Janssen vaccine contracts, were filled with unlawful redactions, Knowledge Ecology International said. As a result, details about the scope of the contracts, cost sharing and management of the contract rights were missing.

Hospitality

A California federal judge has refused to certify a proposed class action against Princess Cruise Lines that claims it let passengers board a ship although it knew people on a previous voyage had COVID-19 symptoms, ruling that a class action waiver in the passengers' contract is well communicated.

U.S. District Judge R. Gary Klausner's order Tuesday said the passage contract's class action waiver is enforceable because Princess's email confirming passengers' bookings and a confirmation PDF both advise guests to click on a required "cruise personalizer" information link that contains an easily accessible website page containing the contract.

Robert Archer and other named plaintiffs asked Judge Klausner on Aug. 31 to grant certification in their proposed class action accusing Princess and its parent company, Carnival Corp., of negligently exposing more than 2,400 passengers to the coronavirus on the Grand Princess vessel as it traveled from San Francisco to Hawaii.

A proposed consumer class has asked a Connecticut federal court not to toss their suit alleging a travel company wrongly withheld insurance premiums that tourists paid for trips canceled due to COVID-19, saying the company got its refund argument backward.

Lead plaintiff John Beermann on Oct. 15 opposed a bid by Tauck Inc., doing business as Tauck World Discovery, to dismiss his putative class action because he isn't a Connecticut resident and wasn't injured in that state, claiming the travel company is using this argument in an attempt to avoid honoring the plain terms of its protection plan.

Beermann told the court he has properly stated a valid claim under the Connecticut Unfair Trade Practices Act but asked anyway that the court give him an opportunity to add a Connecticut resident as a named plaintiff.

And broker-dealer asset management firm Cambridge Investment Research says its agreement to host an annual conference at a Walt Disney-branded hotel is null due to the coronavirus pandemic, telling a Florida federal court that "it would be illegal, impossible or impracticable for the hotel to provide the contracted for guest experience due to government restrictions and the concern for the health and well-being of attendees."

Commercial Contracts

A group of students is urging a federal judge not to throw out its suit claiming Harvard University shortchanged it by refusing to reimburse its tuition when it scrapped in-person learning due to COVID-19, insisting the school failed to keep its contractual promises.

In an opposition filed Wednesday, the students sought to rebut Harvard's dismissal bid, claiming that while the decision to shift to an online-only learning format during the health crisis is understandable, the failure to reimburse tuition to students who expected the in-person Harvard experience is not.

DePaul University has asked an Illinois federal court to toss a similar lawsuit by students seeking refunds of fees and tuition in light of the school's move to remote classes during the COVID-19 pandemic, arguing the case amounts to impermissible "educational malpractice" claims.

In a motion to dismiss filed Tuesday in the Northern District of Illinois, the private Catholic university based in Chicago argued that the Seventh Circuit and other courts have established "overwhelming precedent foreclosing educational malpractice actions." Courts are unwilling to wade into educational malpractice issues because there is no standard of care by which to evaluate educators, the university said.

Two Florida universities have also shot back at proposed class actions this past week over their decisions not to issue partial tuition and fee refunds after classes were moved online due to the COVID-19 pandemic, saying the suits are rooted in students' subjective disappointment that does not hold up in court.

In their respective motions, Nova Southeastern University sought dismissal of recent graduate Leo Ferretti's proposed class action, while Lynn University, which already filed a motion to dismiss, added a motion to strike undergraduate student Raymond Gibson's class allegations.

Native American

Two Native American tribes are backing up the Shawnee Tribe of Oklahoma before the D.C. Circuit, saying a lower court should not have shied away from reviewing the U.S. Treasury Department's faulty method for allocating $8 billion in coronavirus relief funding this spring.

The Miccosukee Tribe of Indians of Florida and Prairie Band Potawatomi Nation in Kansas filed amicus briefs agreeing with the Shawnee that U.S. District Judge Amit P. Mehta should have reviewed the Treasury's logic in distributing virus funds to tribes under Title V of the Coronavirus Aid, Relief and Economic Security Act.

The Shawnee tribe appealed this month, after Judge Mehta's Sept. 10 decision that the government's use of Indian Housing Block Grant population data was not reviewable under the Administrative Procedure Act. Tribes have criticized the housing metric as arbitrary and inaccurate, leading to undercompensation because it wrongly categorized the Shawnee and other small tribes as having a population of zero.

--Additional reporting by Daphne Zhang, Craig Clough, Jeannie O'Sullivan, Chris Villani, Dave Simpson, Mike Curley, Katie Buehler, Y. Peter Kang, Joyce Hanson, Vin Gurrieri, Lauraann Wood, Emma Whitford, Carolina Bolando, Hailey Konnath, Jeff Sistrunk and Matthew Santoni. Editing by Orlando Lorenzo.

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

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