Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (June 10, 2021, 6:38 PM EDT) -- Food delivery apps have been accused of flouting New York City's 20% cap on delivery service fees, the owner of StubHub is trying to block certification of a class of ticket buyers seeking refunds for events canceled during the pandemic, and Amazon wants out of a suit alleging it failed to pay workers for time spent on COVID-19 screenings before work. 

While courts across the country have altered procedures, restricted access and postponed certain cases to stem the spread of the coronavirus, the outbreak has also prompted litigation across the country.

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


Amazon wants a California federal judge to toss a proposed class and collective action alleging that the company did not pay its employees for the COVID-19 screenings they were required to take before their shifts, saying the claims are "meritless" as the screenings were not work-related. Inc. urged U.S. District Judge Dale A. Drozd to drop the suit in its entirety, saying that the screenings should not be compensated as they were not a company policy, but rather mandated by the state of California, according to the motion to dismiss filed in California federal court.

The request comes after former Amazon workers Heather Boone and Roxanne Rivera filed a proposed class and collective action lawsuit in February saying the company required them to arrive at work before the beginning of their shifts to undergo COVID-19 screenings, for which they were not paid. According to the complaint, this violated both federal and state labor law.

And a federal judge has given the go-ahead for former staffers at a Philadelphia community service agency to move forward with claims that they were fired for complaining about unclear sick leave policies after being sent to work from home in after a co-worker tested positive for COVID-19.

U.S. District Judge Timothy Savage rejected arguments from Old Pine Community Center that the five workers, who were fired at the beginning of August, had failed to adequately demonstrate that they'd engaged in protected activity under Philadelphia's paid sick leave ordinance when they signed a letter complaining about the agency's alleged failure to lay out a clear sick leave policy.

The staffers sued in January, claiming that Old Pine, which provides meals and operates a summer camp for low-income city residents, had fired them in violation of the Philadelphia Paid Sick Leave Ordinance.

Food & Beverage

GrubhubDoorDash, Uber Eats, Postmates and Seamless were hit with a proposed class action on Monday alleging they've been "bleeding New York City's restaurants dry" throughout the coronavirus pandemic by imposing delivery service fees that exceed the city's 20% cap.

Manhattan bakery Micheli & Shel LLC filed suit in federal court alleging that the food delivery apps have flouted emergency legislation passed by the New York City Council last May. The rules capped the fees that third-party delivery services could charge to restaurants that were forced to limit their services to takeout and delivery due to COVID-19 closures. 

According to the complaint, New York City's Local Law No. 52, passed in May 2020 and effective as of June 2020, barred the apps from charging more than 15% for delivery and 5% for all additional fees, including processing and marketing. But while the delivery apps restructured their fees to appear in compliance with this new law, the bakery alleged, the companies have simply found new ways to continue charging restaurants above the fee cap in order to score record-breaking profits.


Biotech company CytoDyn Inc. executives were hit with a derivative suit June 4 in Washington federal court accusing the company of inflating its stock price by overhyping a purported COVID-19 treatment while executives dumped millions of shares.

Stockholder David Berndt said in the suit that the company, which is focused on the development of a drug with potential benefits for HIV patients, made an "about-face" and began touting that drug as a COVID-19 treatment, resulting in a significant increase in the company's stock price. While CytoDyn stock traded for less than $1 per share throughout 2019, the price peaked at more than $10 per share in June 2020, Berndt said.

The suit names Chairman of the Board Scott A. Kelly, President and CEO Nader Z. Pourhassan, chief financial officer Michael Mulholland and directors Jordan G. Naydenov, Alan P. Timmins and Samir R. Patel. The Vancouver, Washington-based company is a nominal defendant

Consumer Protection

Ticket reseller Viagogo is opposing a Florida woman's bid to certify a nationwide class of ticket buyers who accuse the company of refusing to refund tickets for events canceled due to the pandemic, telling a Florida federal court Tuesday that it will be burdened by individual issues and the suit's aims may conflict with class members' desires.

The Switzerland-based owner of StubHub is seeking to limit the scope of Lauren Shiflett's case after the Tampa-based district court denied its motions to dismiss her suit or strike its class allegations. Filed last August, Shiflett's suit claims Viagogo's offer to give vouchers worth 125% of consumers' purchases or to apply the ticket to rescheduled events is inadequate and that it is trying to retroactively discontinue a guarantee for full refunds for any canceled events.

In its response to Shiflett's class certification motion, Viagogo argued Tuesday that she is an inadequate class representative because she has "fundamental conflicts" with the proposed class members. Viagogo also contended that Shiflett's class definitions are not adequate or ascertainable because the court will have to ask each customer for their personal preference regarding taking a voucher or retaining their tickets instead of receiving a cash refund.

And a proposed class action filed in Illinois federal court on Saturday alleges that Target misled consumers with claims that its alcohol-based hand sanitizer is capable of killing "99.99% of germs."

Named plaintiff Mike Ross claims in his lawsuit that while the retail giant markets, labels and sells alcohol-based hand sanitizer under its generic label as being able to kill 99.99% of germs, alcohol-based hand sanitizers are incapable of killing some of the most prevalent viruses. Hand sanitizers have recently come under increased scrutiny as Americans have looked to them as a defense against COVID-19.

Public Policy

A Ninth Circuit judge appeared skeptical Monday of a Washington State water park's efforts to revive allegations that Gov. Jay Inslee overreached by closing nonessential businesses during the COVID-19 pandemic, saying the water park wants a "complete do-over" even though it never raised its objections at the trial court.

During a hearing before a three-judge panel, Slidewaters LLC's counsel, Sydney Paige Phillips of the Freedom Foundation, argued that the district judge erred by converting the water park's preliminary injunction request into a permanent injunction bid, and that the judge's order denying the motion was "hasty and ambiguous" and didn't give the park enough time. But U.S. Circuit Judge Richard Clifton repeatedly pointed out that the water park didn't raise its objections to the trial court's decision before the lower court.

And a New York federal judge on Wednesday tossed green groups' lawsuit alleging that the U.S. Environmental Protection Agency violated the Endangered Species Act by issuing a policy temporarily suspending some compliance obligations during the coronavirus pandemic.

U.S. District Judge Jed Rakoff said the Center for Biological Diversity, Riverkeeper and Waterkeeper don't have standing to pursue their claims because they couldn't prove there was a risk of real harm to species by the EPA's policy.

According to the groups' August complaint, the EPA failed to 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.


A Pennsylvania federal judge on Monday tossed claims that retailers, including WalmartHome Depot and Big Lots, illegally collected sales tax on nonmedical protective face masks amid the pandemic, ruling that charging sales tax doesn't amount to deceptive or unfair trade practices under Keystone State law.

U.S. District Judge Marilyn J. Horan granted the dismissal sought by the retailers, finding the Pennsylvania Unfair Trade Practices and Consumer Protection Law doesn't apply in this case because charging sales tax — a tax required by state law — does not fit the definition of "trade or commerce" under the law.

And the Wisconsin Legislature moved to intervene June 4 in a case several state attorneys general have filed aiming to invalidate a provision in the recent federal coronavirus aid package that prohibits states from using federal funds for state tax cuts.

The Wisconsin Legislature told an Alabama federal court that it should be allowed to intervene in the case brought by several Republican attorneys general over the provision in the recently enacted American Rescue Plan Act because it has the same goal. The attorneys general have asked an Alabama federal court for declaratory relief, arguing that it would be unconstitutional for the federal government to broadly interpret restrictions on federal dollars stemming from the law.

And in a similar case challenging the provision, Ohio asserted Monday that it has standing to do so, rebutting the U.S. Department of the Treasury's arguments that the state's acceptance of federal funds mooted its claims.

In a reply brief, Ohio said that although it certified that it would abide by the conditions of accepting funds under the American Rescue Plan Act — including a requirement to return aid used to offset net revenue reductions — it could still challenge the law.


Several sports teams, companies and eateries are fighting insurers' bids to dismiss their COVID-19 business interruption lawsuits this week. 

The owners of Madison Square Garden and related entertainment entities on June 3 pushed back against their insurers' bid to toss a New York suit over losses from the presence of the coronavirus at their properties, arguing that one of the insurers acknowledged ambiguity in the meaning of "physical loss or damage."

So are the Los Angeles Lakers, who the same day told a federal judge that the team's insurer is misrepresenting its legal arguments in a bid to get a suit over coronavirus business-interruption coverage tossed. The team said it properly alleged direct physical loss or damage to the Staples Center and argued that a motion to dismiss the contract suit by Federal Insurance Co., a Chubb subsidiary, repeatedly misstated the team's claims.

In-N-Out is fighting Zurich American Insurance Co. to keep its pandemic coverage suit alive, telling a California federal court June 4 that the insurer's dismissal bid relies too heavily on suits that don't allege the presence of the coronavirus in an insured property.

The owner of fashion giants Versace, Jimmy Choo and Michael Kors is also pushing back against its insurers' attempt to toss its coronavirus pandemic coverage suit, saying June 3 that they insurers are trying to force a requirement of physical alteration to properties that isn't in the policies.

A group of Anytime Fitness franchise owners hit back against Markel Insurance Co.'s bid to toss a proposed class action over pandemic-related losses, arguing that the insurer's virus exclusion was ambiguous and that government shutdown orders caused their losses. The gym owners told a Virginia federal court Monday that Markel can't show that the presence of the coronavirus caused their losses, instead blaming the various government orders across the country.

And the Philadelphia Eagles organization told a federal court June 3 to ignore its insurer's bid to toss a business interruption suit, saying its stadium and training facility weren't functional due to the risks that the coronavirus posed to "physical airspace and surfaces" each time any person entered the properties.

A Providence strip club can proceed with its COVID-19 business interruption suit, a Rhode Island state judge ruled June 3, saying the owner has sufficiently shown it is entitled to civil authority coverage despite the policy's virus exclusion. Judge Brian P. Stern gave green light to Club Desire's suit against Scottsdale Insurance Co., saying the business has demonstrated that it lost function as an adult entertainment venue due to government closure orders.

Goodwill's affiliated nonprofit in Oklahoma asked the Tenth Circuit Tuesday to revive its pandemic coverage suit and to certify questions to the state Supreme Court on whether policy provisions covering direct physical loss or damage to property require physical alteration for coverage to apply.

And the operators of 23 U.S. strip clubs on Monday urged the Ninth Circuit to revive their suit seeking to force a Lloyd's of London syndicate to cover their claimed business losses stemming from government-issued COVID-19 closure orders, saying physical damage isn't required to trigger physical loss in the policy.

Also this week, several lawsuits seeking coverage for coronavirus-related business losses were thrown out, including one brought by a Comfort Suites franchisee against American Select Insurance Co., one brought by the owner of New York City's Blue Moon Hotel against Travelers Indemnity Insurance Co. of America, and another by a Kentucky gym pursuing reimbursement from West Bend Mutual Insurance Co.

--Additional reporting by Daphne Zhang, Shawn Rice, Max Jaeger, Eli Flesch, Lauren Berg, Rachel Scharf, Dorothy Atkins, Sarah Jarvis, Matt Fair, Irene Spezzamonte, Asha Glover, Juan Carlos Rodriguez, Emilie Ruscoe, Nathan Hale, Paul Williams and Andrew Westney. Editing by Alanna Weissman.

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