COVID-19 Litigation Filings Hit Small Summer Slump

By Anna Sanders
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Law360 (October 14, 2020, 7:25 PM EDT) -- Summer saw a plateauing and later drop-off in coronavirus litigation after an initial flurry of cases filed in federal court during the early months of the pandemic, though experts wonder if this will be a permanent downturn or simply a pause before another wave hits.

Between January and August, 3,362 cases were filed in federal district court that were either directly tied to the pandemic and the related business and policy changes, or exacerbated by them, with most tied to insurance, contracts or employment law, according to an analysis from Lex Machina.

But after a sharp rise in litigation this spring, August saw just 660 new cases, the fewest COVID-19-related filings in a single month since a high of 802 in May, Lex Machina found. 

This may be a typical summer "slowdown" in court activity and litigation that corresponds with vacations in warmer months, according to Lex Machina data relations manager and legal data expert Rachel Bailey.

"COVID has affected everything, so it's hard to say how much of that regular slowdown is attributable here," Bailey said. "There might also be a drop in filings as the initial wave of coronavirus cases make their way through the system."

Potential plaintiffs may be waiting to see how judges rule on a case before filing their own related lawsuit.

"Once cases get through the court, then that will determine if there's a flood of similar filings either in the district or about a certain issue, or if people refile under a different claim," Bailey said. "That's what we're really watching to see."

Through August, the practice areas with the most coronavirus cases were insurance and contracts.

Of 692 insurance cases spurred by coronavirus, 640 included business interruption claims, Lex Machina found.

While restrictions imposed during the early months of the pandemic prompted a rush of insurance-related filings, that isn't likely to happen again — even if a resurgence of infections causes more shutdowns in the coming months, according to Charles W. Browning, a partner and co-leader of Plunkett Cooney's insurance law practice group.

"Any business that had to shut down or reduce its capacity, they were looking for some way outside of the government assistance programs to recoup that … but carriers have pushed back, and right now the carriers are winning," said Browning. "Courts across the country have been concluding that there is no virus coverage in standard-type policies."

A fifth of all COVID-19 litigation filed during the first eight months of the year involved insurance, and another fifth were contract cases, according to Lex Machina's numbers. There were 688 cases filed related to contracts and coronavirus by the end of August.

"This first wave of cases filed has a lot to do with the shutdowns themselves, but as businesses are opening up, we are seeing different sorts of cases emerge," Bailey said. "The employment cases are growing because individuals are filing those, and those have to do with people who are getting COVID, which is unfortunately still happening, and individuals learning about their rights."

As of the end of August, 209 employment cases have been filed in federal court over coronavirus-related issues. But those cases are "steadily growing, and we expect them to continue as COVID-19 infections continue to strain the employer/employee relationship," Bailey wrote in an Oct. 6 analysis of the numbers.

"The fact that employment-related cases have been increasing during traditionally slower periods of the year suggests that we are only seeing the tip of the iceberg with respect to employment-related COVID-19 litigation," said Jessica Causgrove, a partner at Fisher Phillips, and Scott Fanning, an associate at the same national labor and employment law firm, in an email to Law360.

Yet the full scope of coronavirus employment litigation isn't reflected in federal district court filings analyzed by Lex Machina. Many employment laws require claims to be submitted to administrative agencies before they're filed in federal court, and other cases will go through state courts.

"Many of the charges pending with administrative agencies will turn into lawsuits," Causgrove and Fanning said. "Also, employees continue to exhaust available leave to manage child-care arrangements, [and] with many schools closed for in-person learning and issues arising from the coming cold and flu season, both employers and employees will face difficult choices."

And new litigation will crop up as prospective plaintiffs learn about their rights under the Coronavirus Aid, Relief and Economic Security Act, which was signed into law in March.

The CARES Act generated numerous lawsuits alleging breach of contract and other business torts, according to the analysis by Lex Machina. Some sought to secure loans under the law's Paycheck Protection Program, while other businesses sued banks to force them to follow the first-come, first-served rule for those loans.

"If people are still seeing problems with the act, it then takes a while to file," Bailey said.
Some cases may belong to more than one practice area and are counted more than once, according to Lex Machina. And another 1,643 federal cases were filed outside of the practice areas it highlighted, including many involving constitutional and civil rights claims.

--Editing by Philip Shea.

Law360 is owned by LexisNexis Legal & Professional, a RELX Group company, which owns Lex Machina.

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