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 Insurance 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 (November 5, 2020, 8:09 PM EST) -- American Airlines must face claims it refused to refund customers for flights canceled due to the pandemic, Geico has been accused of overcharging for auto insurance premiums while vehicle use declined during COVID-19 shutdowns, and the Trump administration has been hit with a lawsuit alleging it failed to provide critical information about testing and contact tracing.

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.

Commercial Contracts

A Texas company that attempted to buy more than $1.8 million worth of respirator masks urged a Louisiana federal judge not to trim its suit accusing a California attorney of breaching his contract, arguing that the court has jurisdiction.

Share Holders LLC and Charlie Holder, which does business as Advantage Testing, argued the court has personal jurisdiction over BAFF Consultants Inc. and its President Farhan Mirza because the company was properly notified of the lawsuit and voluntarily appeared at a phone hearing in August.

Advantage Testing, which sells drug, alcohol and industrial hygiene tests, tasked California lawyer Thomas Gruenbeck with ordering 500,000 KN95 masks that were promised to arrive within two business days, but alleged that Gruenbeck instead used $1.25 million of Advantage Testing's funds for the masks without permission. BAFF Consultants had agreed to sell the masks to Advantage Testing, according to the suit.

Public Policy

A D.C. federal judge on Thursday ordered mail facilities in North Carolina and Pennsylvania to conduct sweeps for undelivered ballots twice a day after the U.S. Postal Service submitted data showing thousands of ballots postmarked over the weekend were not delivered to local election boards by Election Day.

The twice-daily sweeps will take place at facilities serving the states that have a Friday ballot receipt deadline — the last deadline to accept mail-in ballots. According to data filed in court Thursday, USPS delivered about 150,000 ballots nationwide by Wednesday. Of this amount, roughly 8,000 to 9,000 ballots were not delivered by Tuesday evening despite being mailed by Sunday.

U.S. House Republicans' bid to overturn Democratic rules allowing lawmakers to cast legislative votes for up to 10 colleagues during the coronavirus pandemic appeared imperiled Monday after a D.C. Circuit panel voiced skepticism during oral arguments over the GOP lawmakers' ability to sue.

The dispute landed in the appellate court's docket after U.S. District Judge Rudolph Contreras in early August dismissed the case lodged by more than 150 GOP lawmakers, led by Minority Leader Kevin McCarthy, R-Calif., and four constituents against House Speaker Nancy Pelosi, D-Calif., and a pair of nonpartisan House officials. The district judge found that the U.S. Constitution's speech or debate clause gives congressional officials immunity from lawsuits over legislative acts such as voting.

And Texas Attorney General Ken Paxton is asking a state court to toss an order imposing a curfew on El Paso County residents and shutting down nonessential businesses to stem a recent spike in the county's COVID-19 cases, arguing the county executive overstepped his authority and undermined the governor.

Texas and 10 El Paso businesses are suing Judge Ricardo Samaniego, the El Paso County executive, for his order urging residents to stay home, imposing a 10 p.m. to 5 a.m. curfew and closing all nonessential businesses. The Thursday order, issued in reaction to a spike in the county's COVID-19 cases, improperly imposes tighter restrictions than those outlined in Gov. Greg Abbott's most recent statewide order, they said. In a Sunday motion for injunctive relief, Texas called the order "patently unlawful" and claimed it reflects a clear abuse of power. 

The top federal prosecutor in Philadelphia has thrown his support behind a lawsuit from a local veterans group challenging the constitutionality of an ongoing ban on large public gatherings that the city is enforcing to help curb the spread of the coronavirus.

U.S. Attorney William McSwain said the city's policy of refusing to issue permits to gatherings of 150 or more people stood in stark contrast to its willingness in recent months to allow public protests over racial injustice. McSwain's office and the U.S. Department of Justice's Civil Rights Division filed a letter of interest as part of the lawsuit filed by the Philadelphia Vietnam Veterans Memorial Society, alleging that the city's ongoing ban on large public gatherings violated its First Amendment rights.

And a group of Illinois restaurants have sued the state's governor, saying Gov. J.B. Pritzker unlawfully issued multiple declarations to extend his emergency powers and enable him to ban indoor dining amid the pandemic.

Shakou, Pazzi Di Pizza and other Chicago-area restaurants claim in their state court lawsuit that the clock ran out on the emergency powers that would allow Pritzker to order them to cease indoor dining in April, yet that's exactly what the governor ordered on Oct. 27. The restaurants say they don't dispute that Pritzker had the power to declare a "disaster" in March, which triggered his emergency powers for 30 days. But the next eight declarations he made extending those powers are "predicated on the exact same disaster, COVID-19," they said.

Health Care

The federal government failed to swiftly provide critical information about COVID-19 testing and contact tracing and harmed the public's ability to adequately respond to the coronavirus pandemic, according to a lawsuit filed in New York federal court.

The U.S. Department of Health and Human Services and Centers for Disease Control and Prevention disregarded the All-Hazards Preparedness and Advancing Innovation Act of 2019, which required the agencies to create a database of information about key health information related to the pandemic, according to the lawsuit, which was filed by a Brooklyn charter school, health nonprofit and others.

Instead, the government inadequately reacted to the pandemic by "shifting their responsibilities to local governments and private entities, refusing to empower the public with information and access it needs, and shutting their doors to experienced input that would produce a more resilient response," Coney Island Prep and Housing Works Inc. said.

And an Illinois federal judge on Monday granted Abbott Laboratories a temporary restraining order against a former marketing executive it alleges took trade secrets, including information related to its COVID-19 products, when he left the company for a similar role with a competitor.

U.S. District Judge Virginia Kendall said after arguments on the matter Monday that the circumstantial evidence Abbott presented was enough to warrant a two-week restraining order that will keep Jerome Clavel, its former vice president of global marketing, from starting a new position at Bio-Rad Laboratories and to allow expedited discovery for Abbott to investigate what information was allegedly taken.

Based on that evidence, trade secrets have already been misappropriated, Judge Kendall said, pointing to Abbott's assertion that Clavel connected at least five USB devices on his work laptop the day he surrendered it to the company and forwarded to his personal email account documents containing confidential demand forecasts and market assumptions for an Abbott COVID-19 test.

Employment

A New York federal judge has denied workers at Amazon's Staten Island warehouse a court order forcing the e-commerce giant to boost COVID-19 protections, defanging a novel suit alleging the company's pandemic policies amount to a "public nuisance."

U.S. Federal Judge Brian Cogan said it's the place of the Occupational Safety and Health Administration, not the courts, to decide whether Amazon is doing enough to protect workers at its JFK8 fulfillment center, dismissing without prejudice the workers' claims that Amazon's alleged inaction poses a public nuisance and that the company breached its duty to provide a safe workplace. Judge Cogan also dismissed with prejudice a linked wage claim.

Workers in various roles at the JFK8 warehouse filed suit in June seeking a court order making Amazon do a better job protecting workers from COVID-19, including by giving workers more time to complete their tasks and immediate access to paid time off they hadn't yet accrued.

A nursing assistant was illegally fired by a Pittsburgh nursing home because she missed work to self-isolate after she was exposed to COVID-19, according to a lawsuit filed in Pennsylvania state court.

Za'Tayah Ballard, who worked at the Highland Park Care Center, alleges that an administrator at the skilled nursing facility fired her after she asked to quarantine at home for two weeks to avoid transmitting the virus to the facility's geriatric residents.

NBCUniversal has been hit with a race bias suit in New York federal court by a teleprompter operator who said she was given the boot during the early months of the coronavirus pandemic because she's Asian.

Amy Sinavsky, an Asian American who said her five-year tenure with the company came to an abrupt end when she was fired in May, told the court Monday that she was the only full-time technical operator who wasn't given equipment to work from home between March and April, while NBC was transitioning to remote operations. She also said she was the only Asian employee in the department.

She said NBC dodged her repeated requests for the equipment while continuing to dole out at-home systems to other department employees, including many she said had less experience than her. She said NBC terminated her in May because she didn't have the requisite tools to work from home.

And the Providence Teachers Union has lodged a suit looking to shut down in-person learning at a Rhode Island middle school, alleging the school is violating state policies meant to keep students and staff safe during the coronavirus pandemic and needs to close until it complies.

In a press release Monday, the union announced its case against Rhode Island Commissioner of Education Angelica Infante-Green, Providence Public School District Superintendent Harrison Peters and the Providence School Board. The suit is seeking to temporarily close Nathanael Greene Middle School.

The complaint said there are classrooms in the middle school where students are only 2 feet apart from one another and that there has been a "clear breakdown in contact tracing." Additionally, the suit alleged that nearly half the school's staff is on quarantine leave, causing the school to commingle its so-called consistent or stable groups, which are only supposed to interact within themselves under the state's school reopening guidelines.

Consumer Protection

A Texas federal judge said Monday that American Airlines must face a proposed breach-of-contract class action over its refusal to refund customers for flights that were canceled amid the COVID-19 pandemic, but ordered arbitration for two individual customers who bought their tickets through online travel agencies.

In a mixed ruling Monday, U.S. District Judge Reed O'Connor denied American's motion to dismiss lead plaintiff Lee Ward's claims, but granted the airline's motion to compel arbitration of claims from two other plaintiffs — James Saunders and William Holloway — whose ticket purchases through Hotwire and Expedia were subject to an enforceable arbitration agreement.

Although American is not a party to the Hotwire or Expedia terms of use, American is a third-party beneficiary that's entitled to enforce the arbitration clauses with signatories Saunders and Holloway, the judge said.

Meanwhile, Ward's claims can go forward. He plausibly alleged that American breached its conditions of carriage by refusing to refund customers for flights canceled due to the COVID-19 outbreak and only offering customers vouchers or travel credits for future travel, according to the decision.

Insurance

Two Illinois policyholders said Geico Casualty Co. overcharged for their auto insurance premiums as vehicle use dropped during the COVID-19 shutdowns, alleging that the insurer offered an "inadequate" credit to "penalize" policyholders who don't renew policies.

Geico was hit with the proposed class action in Illinois state court in late July before it was served on the complaint in early October. The carrier removed the case to federal court last Friday. Geico said the suit should be tossed on various grounds and it is planning to file a dismissal motion in its removal notice. Geico auto policyholders Roxanne Thomas and James Thomas allege the insurer charging "grossly excessive" premiums as fewer people drive during state-mandated closures that began in the spring.

Mt. Hawley Insurance Co. has sued a Nashville bar run by country singer Dierks Bentley in Tennessee federal court, seeking a declaration that it's off the hook for the pub's COVID-19-related losses and that a pollution exclusion plainly bars coverage.

The carrier asked the court to hold that the bar failed to allege physical damage on or near its property, and the policy's pollution and "ordinance of law" exclusions precluded all losses in relation to the pandemic and government-mandated closures, according to the suit filed Oct. 29.

In Texas, a federal judge rejected a Hartford unit's bid to toss a barbershop's class suit seeking COVID-19 loss coverage, holding that at least some coverage might be available under a limited virus coverage endorsement.

U.S. District Judge James R. Nowlin said Wednesday that a provision in Twin City Fire Insurance Co.'s virus endorsement plainly allows 30 days of business interruption coverage for property loss or damage caused by a virus. But the endorsement does preclude virus-related loss recovery other than the potential limited 30-day coverage, he added. The judge did not buy Twin City's argument that the virus endorsement excludes all virus losses regardless of any concurrent events resulting in "any sequence of the loss."

And a Mississippi federal judge on Wednesday dismissed a hamburger restaurant's putative class action alleging Travelers Casualty Insurance Co. of America has wrongfully denied policyholders' claims for business losses due to COVID-19 shutdown orders, finding that the eatery has not claimed the requisite "direct physical loss of or damage to" its property.

U.S. District Judge Keith Starrett granted Travelers' motion to dismiss the proposed class action brought by Hattiesburg, Mississippi-based Real Hospitality LLC, which does business as Ed's Burger Joint. Following the reasoning of numerous other courts that have thrown out similar suits against insurers, the judge held that the threshold requirement for the lost business income coverage in Real Hospitality's "all risk" property policy with Travelers — direct physical loss of or damage to an insured property — requires either tangible damage or the "permanent dispossession" of the property.

In Illinois, a federal judge has thrown out a suit brought by State Auto Property and Casualty Insurance Co. aiming to avoid covering claims from a group of Denny's and Ruby Tuesday owners for business interruption insurance stemming from COVID-19, saying the insurer's suit covers the exact same legal ground as the restaurants' own suit in state court.

In a two-page order Tuesday, U.S. District Judge John Robert Blakey sided with the restaurateurs, led by Classic Dining Group LLC, saying the court would be indulging in "gratuitous interference" by keeping the federal case alive and dismissing the suit without prejudice.

Affiliated FM Insurance Co. on Monday told a Nevada federal court that a contamination exclusion in Treasure Island LLC's policy bars coverage for the bulk of its claim for coronavirus-related losses, saying the Las Vegas casino and resort should only be able to pursue up to $200,000 under a "communicable disease" provision.

Treasure Island is seeking millions in coverage under its "all risk" policy with Affiliated FM for losses it says it suffered when it was forced to temporarily close due to a statewide stay-at-home order amid the COVID-19 pandemic. But in a motion for judgment on the pleadings, the insurance company contended the majority of the casino's claimed losses fall under an exclusion for costs related to "contamination," which is defined in the policy to include any "virus, disease-causing or illness-causing agent." According to Affiliated FM, that definition "clearly encompasses" the novel coronavirus.

A group of Minor League Baseball teams is striking back against a bid by Arch Insurance Co. to throw out their claims that they were wrongly denied business interruption coverage after their season was canceled, saying a growing body of case law supports the notion that COVID-19 can cause physical loss.

In a response brief filed Monday, the owners of Washington's Everett AquaSox and North Carolina's Asheville Tourists said Arch's motion ignores a number of recent cases that have rejected bids to dismiss similar suits with findings that COVID-19 can trigger coverage for physical loss and damage.

And a group that owns 10 Atlanta-area restaurants hit Zurich American Insurance Co. with a $6.5 million suit Tuesday in a Georgia state court, saying the insurance company should cover its losses caused by the coronavirus pandemic.

Restaurant Management Group is the latest in a raft of restaurant groups nationwide suing their insurers for not paying out for pandemic-related losses. Some, like the fast food chain In-N-Out, Wendy's and TGI Friday's, are also insured by Zurich.

Securities

A legal team comprising attorneys from Bernstein Litowitz Berger & Grossmann LLP and Kessler Topaz Meltzer & Check LLP will represent a proposed class of investors alleging cruise line Carnival Corp. misrepresented its management of burgeoning threats posed by the coronavirus.

U.S. District Judge K. Michael Moore appointed as co-lead plaintiffs a pair of institutional investors — the New England Carpenters Pension and Guaranteed Annuity Funds and the Massachusetts Laborers' Pension and Annuity Funds — and signed off on the pension funds' two-firm counsel team, finding that "appointing the funds as lead plaintiffs, and Bernstein Litowitz and Kessler Topaz as lead counsel is warranted."

Together, the funds allege they lost roughly $5.7 million in connection with Carnival's alleged securities fraud.

And Inovio Pharmaceuticals Inc. asked a Pennsylvania federal judge Thursday to sink a proposed class action alleging it inflated its stock price by confusing the public with claims about a "three-hour" development timeline for a COVID-19 vaccine, saying the claims offer no explanation as to how the purported distinction between "designing" and "constructing" a vaccine could have misled investors.

Banking

Wells Fargo will no longer place mortgages into a COVID-19-related forbearance plan without permission from homeowners as part of an ongoing proposed class action alleging the bank pushed customers into such plans without notice, according to an order in Virginia federal court.

In the agreement signed Oct. 30 and filed Monday, Wells Fargo & Co. and Wells Fargo Bank NA agreed not to create a COVID-19 forbearance plan or extend an existing plan unless a customer requests one.

The agreement between the two sides, which was signed by U.S. District Judge Michael F. Urbanski, resolves a September injunction bid by the proposed class of homeowners alleging Wells Fargo unilaterally placed their mortgages into forbearance in violation of the Coronavirus Aid, Relief and Economic Security Act, among other laws.

In the short order, the parties also agreed that the agreement doesn't concede any disputed issue between them.

Immigration

The U.S. Chamber of Commerce and technology giants told a California federal judge Saturday they are "gravely concerned" the Trump administration is flouting an injunction against the president's ban on new work visas under coronavirus-related restrictions, saying visa requests appear to be falling into an "administrative black hole."

Business groups that succeeded in blocking President Donald Trump's June proclamation told U.S. District Judge Jeffrey White that they have evidence that the federal government is not complying with the court's October preliminary injunction, stating that at least five U.S. consulates appear to be refusing to process or intentionally delaying the processing of nonimmigrant work visas. The groups asked the court to clarify its injunction to remove any doubt regarding the government's obligations, to order limited discovery into the government's compliance and to consider sanctioning the government.

The groups say the U.S. Department of State delayed issuing guidance to the consulates for more than a week after the preliminary injunction came down and then failed to instruct them to comply with the order. Evidence suggests that consulates and embassies in Brazil, France, India, Italy and the Philippines are not processing individuals within the scope of the injunction or are failing to do so in a timely manner, the groups told the court.

And Immigrant advocacy groups have filed a Freedom of Information Act lawsuit in Illinois federal court demanding info about the CDC's public health order barring migrants, including children and asylum-seekers, from making claims for protection in the U.S. over concerns of spreading COVID-19.

The Center for the Human Rights of Children and the American Immigration Council filed the suit against the U.S. Department of Homeland Security and U.S. Customs and Border Protection. They claim they filed a FOIA request in August seeking information including how the March order is being implemented and how many migrants and children it has impacted, but did not receive a proper response within the required time frame.

The policy appears to violate statutory obligations to unaccompanied minors, including under the Trafficking Victims Protection Reauthorization Act, and the federal government has not sufficiently explained how the CDC's "purported authority" under a public health law known as Title 42 overrides those legal obligations, according to the suit.

--Additional reporting by Alexis Shanes, Daphne Zhang, Emilie Ruscoe, Hannah Albarazi, Braden Campbell, Kevin Stawicki, Khorri Atkinson, Craig Clough, Emily Sides, Matt Fair, Dean Seal, Michelle Casady, Jeff Sistrunk, Mike Curley, Diamond Naga Siu, Katie Buehler, Linda Chiem, McCord Pagan, Anne Cullen and Danielle Nichole Smith. Editing by Breda Lund.

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!