Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (February 4, 2021, 8:23 PM EST) -- Tyson Foods has been accused of lying to its investors about a bungled response to the COVID-19 pandemic, Bank of America has escaped a discrimination suit over federal coronavirus relief funds for now and Dave & Buster's is taking New York's governor to court over arcade shutdowns. 

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

Amazon has settled whistleblower claims brought by a former employee who alleged that he was fired for raising concerns that a shift manager at a New Jersey warehouse was flouting COVID-19 safety measures, according to a filing made in a New Jersey federal court Monday.

The matter brought by David J. Bailey, who was tasked with enforcing pandemic protocols as an Amazon.com Inc. learning ambassador, has "resolved as to all parties and all claims," read a letter to the court from Bailey's attorney, Timothy S. Seiler of Karpf Karpf & Cerutti PC. The terms of the resolution were not disclosed in the letter or in previous filings.

A Pennsylvania federal judge has sent back to state court a suit accusing the world's largest meat processing company of causing a worker's COVID-19 death, saying a claim that the company violated federal health guidelines wasn't enough to keep the suit in federal court.

U.S. District Judge John R. Padova has ended Brazil-based JBS SA's efforts to keep in federal court a suit accusing its Pennsylvania-based subsidiary JBS Souderton Inc. — which operated the Montgomery County, Pennsylvania, meatpacking plant — of causing the death of worker Enock Benjamin due to alleged violations of U.S. Occupational Safety and Health Administration recommendations.

Benjamin came down with a cough and took time off from work starting March 27, and died in his home April 3. The suit, filed in May by Benjamin's son Ferdinand Benjamin and removed to federal court the following month, alleges JBS ignored OSHA guidelines instructing businesses to have sick workers stay at home and to issue personal protective equipment to keep workers safe while on the job.

Sam's Club has been hit with a workplace bias suit by a worker who claimed she endured multiple forms of discrimination that left her "dejected and humiliated" and ultimately fired and battling COVID-19 without health benefits.

In a complaint removed to New Jersey federal court, Nadia Salem, 55, alleged the Walmart-owned warehouse store failed to accommodate her religion and disability, passed her over for promotions in favor of younger, less-experienced workers and falsely accused her of misusing her employee discount. Salem claimed she was targeted for her age and being Muslim.

During the final month of her nearly 12-year career at the company's Secaucus, New Jersey, location, Salem alleged she was reprimanded for wearing a mask to protect herself from the coronavirus. Then she was fired for bogus reasons, according to the complaint, only to learn later that she'd contracted the virus and her insurance had been canceled.

Five former employees of a Philadelphia community center told a Pennsylvania state court they were fired in retaliation for raising concerns about the center's pandemic response, including its mask use, social distancing measures and quick reopening after another staff member tested positive for COVID-19 in the summer.

Jeanette Bellinger, Jared de Uriarte, Khalif Martins, Gabrielle Rumney and Isabelle Russell said they were among the signers of a letter to the board of managers at the Old Pine Community Center complaining they were given only a week after a supervisor tested positive for the virus before the center was expected to reopen in late July — not enough time to safely quarantine or even get the results back from their own COVID-19 tests. Although the letter resulted in the center staying closed a little longer, the five staff members said they were fired Aug. 3.

Also in Pennsylvania, a Pittsburgh-area consulting firm allegedly fired a worker for following his doctor's recommendation to self-quarantine after a family member was exposed to COVID-19, according to a lawsuit filed in federal court on Tuesday.

Stephen Dusenberry says he tested negative for the coronavirus in November after a member of his household was exposed at the school where she worked, but his doctor still recommended he stay home for at least nine days to be sure. When his employer, Liberty Risk Consulting LLC, insisted he come back to the office sooner, he refused and was fired, the suit says.

Public Policy

New York Gov. Andrew Cuomo made an arbitrary and unconstitutional decision when he allowed casinos and bowling alleys to start reopening during the COVID-19 pandemic but denied that same allowance to arcades, Dave & Buster's said in a lawsuit lodged Wednesday in New York federal court.

The arcade and restaurant chain challenged Cuomo's continued shutdown, saying the specific shutdown of arcades threatens the company's place in the market and the long-term economic viability of its locations in New York. Despite safely operating in other states and offering to comply with any reasonable public health guidelines New York might prescribe, Dave & Buster's said it is stuck closed while casinos, movie theaters, bowling alleys, gyms and other recreational and entertainment venues are allowed to reopen.

Lodging owners and related entities in the Mammoth Mountain Ski Area have urged a California federal court to prevent Gov. Gavin Newsom and other government officials from enforcing a slew of COVID-19-related orders, saying the measures violate their rights under the U.S. Constitution.

Short-term lodging owners Cindy and Timothy Abshire and Alan and Monica Butts, along with lodging manager Nomadness Corp. and the Mammoth Lakes Business Coalition, on Monday sued Newsom, California Attorney General Xavier Becerra, state and Mono County public health officers and Mammoth Lakes town officials, claiming they have violated the Fifth and Fourteenth Amendments and the Commerce Clause.

California government representatives' coronavirus orders issued since March 20 are based on arbitrary and irrational classifications in violation of the right to equal protection guaranteed by the Fourteenth Amendment, according to the lodging owners.

Most students in a Pittsburgh-area school district will keep learning remotely while the district fights with its bus contractor over how much it had to pay for months when most students were taught from home, but the contractor will resume transporting students with special needs under an interim agreement reached in Pennsylvania state court Tuesday.

After an acrimonious hearing on an emergency injunction petition from the South Allegheny School District, Sun Coach Lines agreed to resume busing some students if the district paid a daily rate, and the two sides would go back to mediation in an attempt to resolve whether the district was obligated to pay its "bulk rate" contract in full for the months when the pandemic led it to keep students at home. The district agreed to pay $315.21 per bus per day — the same daily rate paid by the Pittsburgh Public School District — while the parties went back to the table for the underlying lawsuit.

Also in Pennsylvania, a proposed class action lawsuit over waivers the state granted for some businesses to stay open during the early stages of the COVID-19 pandemic should be dismissed because the waiver program has been scrapped, attorneys for Gov. Tom Wolf told a federal court.

The governor's March 19 order closing all but "non-life sustaining" businesses, which also provided waivers for certain businesses that could argue that their services were still needed, had been phased out and would not return, the state said in a motion for summary judgment. The federal court therefore no longer had jurisdiction over the equal-protection lawsuit brought by Philadelphia-area pool sales and maintenance company Paradise Concepts, the government said.

A group of Georgia business owners and residents sued Gov. Brian Kemp in a state court Tuesday, claiming his COVID-19 restrictions since March are unconstitutional and illegal because they force a minimal level of commerce and deprive people of their right to see loved ones holed up in retirement homes.

The 11 individual plaintiffs and a Georgia nonprofit that advocates constitutional rights brought claims of dormant commerce, equal protection and other alleged violations of various constitutional amendments against the governor.

A Miami-area strip club urged a Florida federal judge on Tuesday to advance its challenge to the county's COVID-19-related emergency curfew, arguing that the court must take a close look at whether the regulation passes constitutional muster.

In a Zoom hearing on the county's motion to dismiss, counsel for 7020 Entertainment LLC, owner of the KOD Miami club, and three employees argued that the court should apply a strict scrutiny standard in reviewing the curfew, which requires the club to close from midnight to 6 a.m., and asserted that the measure will not stand up to requirements that it represents the "least intrusive means" of achieving the county government's interest in curbing the spread of the coronavirus.

And Washington has asked the Ninth Circuit to toss a waterpark's appeal in its case that Gov. Jay Inslee overreached by closing nonessential businesses during the COVID-19 pandemic, arguing that the governor took emergency action to safeguard public health. 

A federal judge properly dismissed waterpark Slidewaters LLC's claims that Inslee and the Washington Department of Labor and Industries didn't have the right under state law or the U.S. Constitution to issue temporary emergency rules during the pandemic, the state said Friday in its appellate brief. The Ninth Circuit also should toss Slidewaters' "idiosyncratic" plans to stay open in defiance of public health measures developed by experts, the state said.

Immigration

The D.C. Circuit has lifted a lower court's order barring the U.S. government from turning back unaccompanied migrant children from the border under a COVID-19 public health directive as it reviews the expulsion policy.

In a brief two-page order, a three-judge panel lifted the injunction at the December 2020 request of the Trump administration, saying the administration had "satisfied the stringent requirements for a stay pending appeal."

It is unknown whether the recently installed Biden administration will enforce the policy, which was issued by the Centers for Disease Control and Prevention through a rarely used public health law known as Title 42. Under the CDC order, which was set when COVID-19 cases first began to spike in the country, the U.S. Department of Homeland Security was able to expel thousands from the border, including asylum seekers and unaccompanied migrant children, without first processing their asylum claims.

And migrants detained in Florida have urged a federal judge to allow them to pursue allegations that U.S. Immigration and Customs Enforcement left them vulnerable to COVID-19, saying their dim prospect of vaccination was "glaring evidence" that the agency was indifferent to their health.

ICE has yet to establish how it will vaccinate migrants held in three southern Florida detention centers, the detainees said Tuesday, arguing that the lack of distribution plans exposed the agency's "deliberate indifference" to detainee health and undermined ICE's claims otherwise.

Food & Beverage

A Georgia restaurant worker has brought a proposed class action complaint against the corporate owner of Hardee's and Carl's Jr. franchises in a Georgia federal court Tuesday, claiming she was routinely underpaid and overworked as an assistant manager.

Shonda Townsend said since the onset of the COVID-19 pandemic, Capstone Restaurant Group LLC has "chronically understaffed" its fast-food locations but required them to stay open 24/7 to accommodate increased demand for takeout.

Townsend said she and other workers were regularly required to work more than 60 hours a week without the proper overtime pay and were constantly shuffled between restaurant locations at their own expense to cover staff shortfalls.

A coalition of California wineries and restaurants has voluntarily dismissed its recently filed suit in state court against Gov. Gavin Newsom and public health officials after they eased outdoor dining restrictions due to COVID-19, saying the group may sue again if the governor reinstitutes stay-at-home orders.

The Wine Country Coalition for Safe Reopening, a group formed in 2020 and comprised of about 60 Napa and Sonoma county restaurants, wineries and related businesses, said it has withdrawn without prejudice its Jan. 19 suit against Newsom and state Department of Public Health Director Tomás J. Aragón following their Jan. 25 lifting of all regional stay-at-home orders due to the pandemic.

Newsom's orders had banned all outdoor dining and wine tasting in the Bay Area, including Napa and Sonoma, where most of the coalition's members are based. The members said the orders unfairly hurt restaurants and wineries that had collectively invested millions of dollars to comply with prior state regulations and operate outdoors safely.

And a Pittsburgh-area restaurant defying Pennsylvania's orders to require face masks and limit occupancy during the coronavirus pandemic must start following the rules or shut down after a state court judge granted the Allegheny County Health Department an injunction on Wednesday.

Allegheny County Court of Common Pleas Judge John McVay said the orders — mandating masks for restaurant staff and customers who aren't eating — passed constitutional muster against the background of the COVID-19 pandemic. The potential harm to public health that The Crack'd Egg would cause by remaining open without masks or social distancing outweighed the harm the business might face by following the state's orders, the judge said.

Retail & E-Commerce

A group of retailers has urged a Pennsylvania federal court to dismiss a proposed class action over whether they improperly collected sales tax on face masks amid the pandemic, arguing the customers could not support their unfair trade practices claims for the state-mandated tax.

The customers' lawsuit, focused on claims that face masks should not be subject to the state sales tax that was collected by nine retailers, should be tossed because collecting the tax was not a "commercial transaction" subject to the Pennsylvania Unfair Trade Practices and Consumer Protection Law, and customers who did not object to the taxes collected at the time of purchase could seek refunds directly from the state, according to the brief the retailers filed Monday with their motion to dismiss the case.

The retailers, comprising Walmart, The Home DepotBig LotsDollar GeneralGiant Eagle, Jo-Ann Crafts, Ollie's Bargain Outlet and Ulta Beauty, asked the Pittsburgh court to dismiss the suit. 

Securities

An AstraZeneca investor has filed a putative class action in New York federal court accusing the biopharmaceutical giant of withholding information about its COVID-19 vaccine candidate, misleading the public about the progress and adequacy of its clinical trial.

Investor Vladimir Zhukov alleged the company and its executives committed securities fraud when they hid the clinical trial's missteps that would make the vaccine unlikely to be approved in the U.S.

For example, the complaint claims that AstraZeneca and its executives hid that the trial had a critical manufacturing error that resulted in a large number of trial participants receiving half the dosage. Other allegations include that AstraZeneca didn't include a substantial number of patients over 55 years old, despite that population being vulnerable to COVID-19 and a high priority target market for the vaccine.

And Tyson Foods Inc. failed to protect its meat plant workers from the COVID-19 pandemic and then lied to investors about its bungled response, which ultimately led to complete shutdowns of some facilities and significantly lowered production, a shareholder told a New York federal court Tuesday.

Tyson is already battling a slew of litigation over coronavirus outbreaks at its plants during the last year, including several wrongful death suits brought by the families of workers who died after contracting the virus. At one Iowa facility, top Tyson officials were suspended after they were accused of organizing a betting pool on how many employees would get sick.

The company knew, or should've known, that COVID-19 was poised to ravage its facilities and still didn't implement sufficient safety protocols, investor Mingxue Guo said in Tuesday's proposed class action. As a result of its failures, the virus tore through its meat plants, many of which had to temporarily shut down, the investor said. But all the while, Tyson and its top brass misled its investors about the true financial hit the company would take, according to the complaint.

Personal Injury & Medical Malpractice

A New York state court judge Wednesday ordered health officials to rapidly release COVID-19 nursing home death data — statistics at the heart of a political maelstrom just days after the state attorney general blasted the department for undercounting deaths by an estimated 55%.

New York State Supreme Court Justice Kimberly A. O'Connor said the state had five business days to hand over the data, ruling in favor of nonprofit think tank Empire Center for Public Policy as she found officials at the New York State Department of Health had violated the state's Freedom of Information Law by repeatedly rebuffing the request for six months, only supplying last-minute excuses.

The judge also awarded attorney fees — likely to total between $5,000 and $10,000, the Empire Center's attorney told Law360 — after deciding DOH subjected the organization to "unreasonable delays and denials of access."

Banking

Bank of America NA and its wealth management division Merrill Lynch & Co. Inc. on Monday escaped a lawsuit for now over their shutdown of an account holding federal coronavirus relief funds, with a federal judge ruling that the account controllers didn't back up their claims that the closures were fueled by racism.

U.S. District Judge Susan D. Wigenton handed a defeat to Rafael and Chelsea Martinez, a father and daughter duo who operate Republic Group LLC and other organizations that serve minority- and women-owned businesses. The Martinezes, who have 30 days to amend parts of their complaint, alleged that BofA was targeting those protected classes when it stopped honoring checks issued to Republic Group clients as part of the Paycheck Protection Program.

The Martinezes bore the burden of showing that they're members of a racial minority, that the defendants intended to discriminate based on race and that the discrimination involved the right to make and enforce contracts, but fell short in some respects, according to the decision.

Insurance

Factory Mutual Insurance Co. has urged a New Jersey federal judge to find that Ralph Lauren Corp. is not entitled to coverage for pandemic-related losses under its $700 million property insurance policy, saying the fashion giant has failed to allege it suffered any covered loss or damage to property.

In a cross-motion for partial judgment on the pleadings, Factory Mutual said Ralph Lauren has not sufficiently pled that its losses are covered under any of seven policy provisions that are dependent on the existence of "direct physical loss of or damage to" the clothing company's properties or, in the case of the "civil authority" provision, another location within five miles of one of Ralph Lauren's.

Ralph Lauren has argued that the direct physical loss or damage requirement was satisfied by its loss of the ability to use its properties due to the presence of the novel coronavirus. According to the company, the virus has presumably been present at its properties at some point because of the global nature of the pandemic. But Factory Mutual said Ralph Lauren's "conclusory" statement that the virus was present at its properties is insufficient; instead, the insurer argued, the clothing company must provide specific evidence that COVID-19 was detected at the properties.

And attorneys for policyholders in eight COVID-19 coverage disputes have asked the Third Circuit to consolidate their appeals for argument, saying one combined proceeding will more efficiently resolve unaddressed issues of Pennsylvania law.

The policyholders' counsel argued Monday that consolidation will free the court from receiving redundant briefings regarding key coverage issues under Pennsylvania law. The insureds have also requested the Third Circuit to ask the Pennsylvania Supreme Court to certify whether the pandemic causes "physical loss" covered in insurance policies.

Goodwill Industries has plausibly alleged that COVID-19 caused direct physical loss and damages to its property, a California state judge has ruled, rejecting Philadelphia Indemnity Insurance Co.'s arguments that the coverage suit should be tossed.

According to Goodwill, the insurer should've covered its claims stemming from losses it said it incurred as a result of COVID-19's spread through Orange County and the government's subsequent closure orders.

Philadelphia Indemnity had argued that Goodwill's complaint was legally insufficient, lodging a demurrer in which it took issue with the nonprofit's contention that it suffered a "direct physical loss" under the provisions of its insurance policy. But Superior Court Judge Peter Wilson on Thursday agreed with Goodwill that "direct physical loss" doesn't require physical, tangible alteration of the property.

Also in California, a federal judge dismissed a San Diego-area cafe's lawsuit seeking coverage from the Hanover Insurance Group for lost business because of state- and city-mandated restrictions amid the COVID-19 pandemic, finding Wednesday the restaurant did not experience a direct physical loss.

U.S. District Judge Anthony J. Battaglia granted the insurer's motion for judgment on the pleadings, nixing the July coverage suit from Wellness Eatery, which operates Parakeet Café in three locations. The judge, like numerous other courts, ruled that a government-ordered temporary closure does not constitute a direct loss of property.

And a Florida restaurant owner has urged the Eleventh Circuit to revive its proposed class action seeking COVID-19-related loss coverage, asking the court to certify insurance questions to the state's high court and arguing that the district court failed to follow Florida's binding case law.

In a 78-page brief filed Tuesday, SA Palm Beach LLC claimed that it has adequately alleged a "direct physical loss" after its property suffered a loss of use caused by state closure orders related to the pandemic, asking the Eleventh Circuit to reverse the lower court's judgment ruling in favor of its insurer, Lloyd's of London.

The owner operates a restaurant in Palm Beach called Sant Ambroeus Palm Beach and sued Lloyd's last April alleging that the insurer wrongfully denied coverage and breached the insurance contract. The district court tossed the suit last December, siding with Lloyd's that SA's property did not sustain any physical damage, a precondition for coverage.

--Additional reporting by Matthew Santoni, Y. Peter Kang, Jeannie O'Sullivan, Jeff Sistrunk, Alyssa Aquino, Hailey Konnath, Rachel O'Brien, Joyce Hanson, Brett Barrouquere, Dave Simpson, Lauren Berg, Frank G. Runyeon, Rosie Manins, Daphne Zhang and Nathan Hale. Editing by Jay Jackson Jr.

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

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