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Coronavirus Litigation: The Week In Review

By Celeste Bott · February 18, 2021, 7:32 PM EST

Biotechnology firm Inovio Pharmaceuticals Inc. must face trimmed claims alleging it misled the public about a coronavirus vaccine, New York's attorney general says Amazon has failed to protect its workers from the spread of the virus, and United Airlines can't completely escape a suit accusing it of denying passengers refunds for flights canceled amid the pandemic.

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.

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

Public Policy 

California Gov. Gavin Newsom and other state leaders urged a federal judge Wednesday to toss a suit challenging coronavirus regulations that temporarily closed barbershops and other cosmetology businesses, arguing they are protected under sovereign immunity and the restrictions are legal exertions of power during a health emergency.

The state leaders said the proposed class action must be dismissed because sovereign immunity bars all of the claims brought by Tatoma Inc. — including the state law claims, takings clause claims and claims for damages — that would also all fail as a matter of law.

Tatoma operates Atelier Aucoin Salon in La Jolla, California, and filed the suit in January against the governor, Attorney General Xavier Becerra and Kristy Underwood, executive officer of the State Board of Barbering and Cosmetology, alleging state-issued shutdown orders for barbers, hair salons and other cosmetology-based businesses violate the Fifth and 14th amendments, as well as various state laws.

And a Pennsylvania judge declined Wednesday to stay an order closing a Pittsburgh-area restaurant that had refused to follow state mask mandates and occupancy limits, saying he didn't think the diner was likely to succeed with an appeal arguing that the pandemic mitigation orders were unconstitutional.

Judge John T. McVay Jr. of the Allegheny County Court of Common Pleas reiterated his earlier opinion that state orders requiring masks passed constitutional muster under both the 115-year-old U.S. Supreme Court precedent of Jacobson v. Massachusetts  and the rational-basis tests that followed Jacobson, since the state and the county Health Department had rational, public-health-based reasons for requiring face coverings to reduce the spread of COVID-19.

The Crack'd Egg restaurant hadn't shown that it would be immediately harmed by failure to grant a stay because it had chosen to shut down rather than comply with the rules, he said.

Judge McVay ruled from the bench after video arguments Wednesday, clearing the way for the Cracked Egg LLC, the Brentwood restaurant's parent company, to take its appeal to the Commonwealth Court of Pennsylvania.

Employment

New York Attorney General Letitia James served a lawsuit against Amazon on Wednesday over the company's alleged failure to provide proper pandemic health and safety measures for employees at two New York City facilities, prompting the e-commerce giant to quickly remove the case to federal court.

James alleges in the suit, which was filed Tuesday, that throughout the coronavirus pandemic, Amazon has "repeatedly and persistently" failed to institute reasonable and adequate measures to protect its workers from the spread of the virus at a fulfillment center on Staten Island and a distribution center in Queens.

James says the company has garnered more than $130 billion in profits from online sales during the pandemic at the expense of workers who have experienced a significant risk of COVID-19 infection while on the job. Those profits represent 35% growth from Amazon's prepandemic earnings and a 10% higher growth rate than in previous years, according to the complaint.

Also in New York, a transgender man denied a medical assistant job at a COVID-19 testing site has sued an urgent care provider in state court, saying he was turned away because of his gender identity despite having more experience than people who were hired.

In a complaint filed in New York state court, Domonique Santiago said MedRite Testing LLC denied him work even though the company had a shortage of medical assistants and he was willing to accept $2 per hour less in pay than the going rate.

Santiago alleged MedRite violated New York City and state laws against sex discrimination.

And a building company shorted an employee of overtime wages and fired him for "missing too much work" after contracting COVID-19, according to a complaint filed in Texas federal court.

Alfredo Alvarez has filed a putative collective action against Colt Builders Corp., a commercial framing company, alleging it misclassified him and other construction site superintendents to deny them overtime pay. Despite being entitled to emergency paid sick leave under the Families First Coronavirus Response Act, Alvarez also claims he was fired for taking medical leave following a COVID-19 diagnosis.

Commercial Contracts

An Illinois federal judge says that United Airlines can't use the force majeure clause in its contracts to entirely evade claims that it improperly denied passengers full refunds for flights that were canceled amid the pandemic, saying most of the passengers' claims can move forward.

U.S. District Judge Thomas Durkin partially denied United's motion to dismiss claims in a consolidated proposed class action from Jacob Rudolph, Mark Hansen and Jason Buffer, saying not all of the passengers' canceled flights qualify as a force majeure event in its contract of carriage that would free United from having to give them refunds. United has said it was only obligated to extend a travel credit to affected passengers, which it did.

According to the airline, force majeure events refer to unique occurrences that physically prohibit United from operating flights — acts of God, governmental regulations, strikes and damaged aircrafts, among other things — because doing so would expose passengers to a substantial risk of bodily harm — "riots, terrorist activities, civil commotions, embargoes, wars, hostilities, disturbances, or unsettled international conditions" — or present an "emergency situation requiring immediate care or protection for a person or property." Ticketed passengers are entitled to a travel credit if United cancels a flight due to a force majeure event, but not a refund. 

Judge Durkin declined to embrace United's broad interpretation of a force majeure event, saying it could mean that any change that was unforeseen or beyond United's control would disqualify affected passengers from receiving refunds.

And molecular laboratory TruGenX launched a $1.5 million complaint Thursday accusing supplier Thermo Fisher Scientific Inc. of selling it faulty equipment that led to false and invalid COVID-19 test results during the height of the pandemic.

Thermo Fisher repeatedly promised to investigate and resolve the issues for months to no avail, only to keep charging TruGenX and ultimately blame the company for the unsolved problems when it tried to get reimbursed for the products, according to the New Jersey federal court complaint.

The Lyndhurst, New Jersey-based TruGenX claims the Waltham, Massachusetts-based Thermo Fisher knew or had reason to know about the product defects given that they sparked a regulatory alert, a manufacturer recall and an internal investigation.

The company "has incurred significant costs" related to the defective equipment and allegedly fraudulent misrepresentations, resulting in severe impacts to its "testing capabilities, business relationships with referring providers, and ability to report valid results to the both referring providers and the appropriate public health authorities," the complaint said.

Insurance

A Missouri federal judge on Tuesday agreed with Owners Insurance Co. that a sporting goods business hasn't shown that pandemic stay-at-home orders caused the business physical damage, but refused to toss claims that the presence of COVID-19 rendered the business' property unsafe or unusable.

U.S. District Judge Stephen R. Bough partially granted Owners Insurance's motion to dismiss a coverage suit brought by Play It Again Sports, tossing a claim seeking a declaration that the policy was triggered by physical loss of and damage to the sporting goods company's property due to stay-at-home orders.

But Judge Bough did find that Play It Again Sports had adequately alleged that COVID-19 was present on its premises, that the virus' presence rendered the business' property unsafe and unusable and that, as a result, the business suffered the physical loss of or damage to its property, according to the order.

On Wednesday, a  Minnesota federal judge tossed a hotel, restaurant and event center company's lawsuit seeking business interruption coverage from Continental Casualty Co. in the wake of the coronavirus pandemic, finding that there were insufficient allegations of property contamination.

U.S. District Judge Paul A. Magnuson granted Continental's motion to dismiss Torgerson Properties Inc.'s suit alleging that it suffered a physical loss of its property from virus contamination that led to customers and employees being deprived access to the hotels and restaurants, saying there is no allegation of specific contamination.

Torgerson — which owns 40 hotels, restaurants and event spaces in Minnesota and Florida, including franchises of Best Western, Hilton, Holiday Inn and Marriott — first filed suit against Continental in state court before it was moved to the federal realm in October, according to court records. The hotel and restaurant company alleged that its insurer should cover its business interruption losses in the wake of the pandemic, but Continental said in its motion in November that the policy doesn't cover loss of property use that comes as a result of government orders.

And two Philadelphia federal judges have issued differing opinions on a pair of lawsuits seeking insurance coverage for businesses' losses during the pandemic, with one ruling a policy's "virus exclusion" bars coverage and the other deferring the issue to state courts.

In one of two separate opinions, U.S. District Judge Gerald McHugh wrote that the "virus exclusion" in the AMCO Insurance Co. policy issued to Philadelphia deli Fuel Recharge Yourself Inc. prevented coverage of the business's claims for income lost to the coronavirus pandemic.

Meanwhile, U.S. District Judge Gene Pratter declined jurisdiction over a similar case brought by suburban Philadelphia clothing boutique Julie's Bottega against Selective Insurance Inc., ruling that it was still unclear how state courts interpreted Pennsylvania law on whether the pandemic caused "direct physical loss" and so she would let the case be refiled in state court.

Securities

Biotechnology firm Inovio Pharmaceuticals Inc. and a cohort of company executives must face slightly trimmed class action claims alleging they misled the public about a coronavirus vaccine they purport to have in the works, a Pennsylvania federal judge ruled Tuesday.

In a 26-page order, U.S. District Judge Gerald J. Pappert partially granted Inovio's motion to dismiss, scrapping some of the claims based on two statements the company and some of its executives made last year, but keeping the majority of the investors' claims intact.

The consolidated suit, which launched March 12 and was most recently amended in September, names as defendants Inovio, its chief executive J. Joseph Kim, its chief financial officer Peter D. Kies and its vice president of biological manufacturing and clinical supply management Robert J. Juba Jr.

In the suit, investors led by Manuel Williams allege that between Feb. 14 and Aug. 10, as the pandemic escalated across the nation, the company made intentionally confusing statements about its work on a COVID-19 vaccine in an attempt to push up its trading price.

And Robbins Geller Rudman & Dowd LLP will represent a proposed class of investors in Sorrento Therapeutics Inc. in a federal suit in San Diego alleging that the company misled the public after its CEO characterized some of its COVID-19 research as a "cure."

In a Feb. 12 order, U.S. District Judge Anthony J. Battaglia granted Robbins Geller client Andrew Zenoff's lead counsel bid and at the same time consolidated two suits making similar allegations against the biotech company.

With the lead counsel appointment, Zenoff and his legal team beat out five other groups that had sought to lead the litigation. Three of the movants decided not to oppose appointment of litigants with a greater financial interest in the matter and Judge Battaglia found that the two other would-be plaintiffs didn't meet federal requirements for representing the proposed class.

Legal Ethics & Malpractice

A San Francisco woman stole the identity of licensed attorneys and appeared in court on behalf of people facing serious criminal charges, while also submitting fake documents to take advantage of the Paycheck Protection Program set up in the wake of the pandemic, federal prosecutors said Feb. 12.

Miranda Devlin, 37, impersonated multiple California attorneys by using their names and license numbers to act as a defense attorney on behalf of two people facing serious criminal charges in Marin County, according to a U.S. Department of Justice statement.

It was in the course of investigating Devlin's alleged attorney impersonations that investigators found out she had recently defrauded the Small Business Administration by submitting a loan application to the Paycheck Protection Program in the name of a shell business, according to prosecutors.

The PPP came out of the CARES Act, which was enacted in March and authorized forgivable loans to small businesses to promote job retention and cover certain other expenses during the coronavirus pandemic. A PPP loan must be used for payroll costs, interest on mortgages, rent and utilities, according to the statement, and applications for such loans must meet certain requirements and be made under oath.

--Additional reporting by Craig Clough, Lauren Berg, Matthew Santoni, Sarah Jarvis, Emilie Ruscoe, Linda Chiem, Alexis Shanes, Jeannie O'Sullivan and Daniela Porat. Editing by Orlando Lorenzo.

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