Analysis

The Coming Wave Of COVID-19 Class Actions

By Xiumei Dong
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Law360 (April 21, 2020, 7:11 PM EDT) -- As the COVID-19 pandemic continues to unfold across America, law firms representing both plaintiffs and defendants are gearing up for what they anticipate will be a wave of class action litigation over everything from commercial and employment disputes to allegations of consumer fraud.

Even though the exact impact of the pandemic on complex litigation remains unclear, attorneys have already seen a slew of coronavirus-related cases filed over a range of claims, including exposure to the virus itself and alleged finance and securities frauds stemming from companies' failure to provide COVID-19 disclosures.

Because of the highly infectious nature of the coronavirus, class actions may be the best vehicle for bringing such claims, because they allow people who are impacted to band together and take on a big corporation or defendant. But that doesn't mean those lawsuits will be successful, experts say.

"Certainly, anything tied to getting sick from COVID-19 just strikes me as being both very serious exposure and also potentially very weak cases simply because so many folks are going to be getting ill," said Jonathan Shapiro, a litigation partner of Baker Botts LLP in San Francisco. "Proving how you got ill is sadly, is potentially tragically, going to be a very difficult thing to do."

Taking up the challenge, San Francisco plaintiffs firm Lieff Cabraser Heimann & Bernstein LLP filed a proposed class action in California federal court in early April against Carnival Corp. on behalf of a group of cruise passengers. The case accuses subsidiary Princess Cruises of negligence in its response to the COVID-19 outbreak on the Grand Princess ocean liner.

The lawsuit alleges the company allowed vacationers to board the Grand Princess despite knowing passengers from the previous voyage were suffering from COVID-19 symptoms, resulting in more 2,000 passengers getting exposed to the virus.

Adam Levitt, a partner at Chicago-based plaintiffs firm DiCello Levitt Gutzler LLP, told Law360, "We've never been busier."

"It's almost odd how quickly the days and weeks have been passing with my partners, my associates and I working literally 12 to 14 hours days on our cases," he said.

On Tuesday, Levitt's firm filed a proposed class action against Liberty University on behalf of a student over the school's response to the coronavirus crisis, seeking refunds of thousands of dollars of tuition paid for the spring semester.

The unidentified student accuses the school and its president, Jerry Falwell Jr., a vocal supporter of President Donald Trump, of downplaying the coronavirus threat and refusing to return students' "room and board and other campus fees" after moving classes online.

Last month, the firm filed a proposed class action against the Arizona Board of Regents, alleging that the University of Arizona, Arizona State University and Northern Arizona University have refused to refund students' room and board charges after the campuses were closed because of the COVID-19 outbreak.

"That is money that belongs to students and their parents, some of whom could really use this money right now," Levitt said. "It could be the difference in some instances between eating and not eating, paying rent and not paying rent, having funds for whatever personal or familial necessities that you have."

As the fallout from the virus deepens, Levitt said he expects "a robust number" of class actions to result. However, because courts across the country are temporarily suspending in-person proceedings, that has created some challenges for lawyers who are now dealing with an increased number of cases, he added.

Levitt said plaintiffs law firms tend to work on a pipeline of cases so they can move forward and resolve cases, either by trial or settlement, on a regular basis.

"So when things like this upend the schedule, it could, in many ways, push off the resolution of cases," he said.

For example, Levitt said, cases that were set to resolve in the fourth quarter of 2020 likely won't wrap up now until the second quarter of 2021.

Defense attorneys also said that they are grappling with more proposed class actions, facing difficult decisions with limited resources amid the COVID-19 fallout.

"You can't help but feel it as a litigator, with the courts being either closed or running at a reduced level, it's certainly created a slowdown in the practice," said Stephen Baldini, head of Akin Gump Strauss Hauer & Feld LLP's litigation practice.

Shapiro, who serves as Baker Botts' California litigation chair, advises law firms to look for opportunities to resolve cases in the most effective way possible.

"In my mind, there's no shortage of legal talent both to bring these cases and to defend the cases," Shapiro said. "The question is how to do it in a smart way because the great majority of these lawsuits that we're expecting are not going to be enterprise threat cases."

"Not every one of these cases should be defended on an A-plus, whatever-it-takes basis, because that would be cost irrational," he added.

Among the growing list of cases, Baldini anticipates an uptick of consumer class actions stemming from alleged price gouging, antitrust violations such as competitors agreeing on minimum prices and consumer fraud claims.

"Some of the things that we would anticipate coming down the road and in some instances, particularly on the consumer side, things that we have already seen pop up," Baldini said.

Several consumer class actions are already pending.

Shortly after the coronavirus outbreak, a purchaser in Florida filed a proposed class action accusing Amazon.com of charging "grossly unconscionable" prices for toilet paper and hand sanitizer.

Some consumers also filed proposed class actions related to their inability to either use or obtain a refund for purchases such as gym memberships, student housing or festival tickets following the implementation of government restrictions.

"We are without question actively advising clients with respect to current and contemplated lawsuits," Baldini said.

In addition to consumer matters, businesses are also coping with layoffs, financial losses and physical injuries, which can all give rise to class actions. These are all keeping both plaintiffs and defense lawyers on their toes, said Ugo Colella, co-founder of Colella Zefutie LLC, a boutique law firm focused on business and commercial law.

"The most important thing to take away from this is the cardinal rule of litigation, which is, it's uncertain," Colella said. "So who knows what's going to come down the pipeline with respect to COVID-19 litigation?"

--Editing by Jill Coffey.


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

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