Analysis

Congress Set For Fight Over COVID-19 Business Immunity

By Y. Peter Kang
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Law360 (May 11, 2020, 8:40 PM EDT) -- As Congress readies to do battle over whether to shield businesses from civil lawsuits in connection with worker and customer COVID-19 infections, defense attorneys said such protections are essential to encouraging business owners and jump-starting an anemic economy hammered by state and local lockdowns.

Senate Majority Leader Mitch McConnell, R-Ky., has said that a broad liability shield for companies will be a top Republican priority and a "red line" issue for the next coronavirus relief bill. The Senate Judiciary Committee will hold a hearing on the topic Tuesday.

"The litigation epidemic has already begun," McConnell said during a May 5 press conference. "We are working on a narrowly crafted liability protection to target health care workers and others who've been on the front lines here with something brand new that people were unclear of how to deal with."

While details of the proposal have not yet been made available, defense attorneys said such protections are necessary for businesses that have recently reopened or are poised to reopen in various states. So far, there have been more than 1,000 coronavirus-related lawsuits filed across the country, according to William Beausoleil, a commercial litigation partner with Hughes Hubbard & Reed LLP in New York City.

"We expect those numbers to grow exponentially," he said. "Virtually every business opening in this environment knows it can be sued."

Last month, Walmart was hit with the first lawsuit in Illinois related to the death of a worker from COVID-19, with family members accusing the retail giant of having lax safety and cleanliness standards that caused employees to contract the disease.

Beausoleil said companies aren't vying for blanket immunity from such suits, "which could allow bad behavior to go unpunished," but are simply asking for a "safe harbor" incentive to reopen without the fear of litigation.

"If companies do everything right and follow all the guidelines, they ought to be able to open with some reasonable assurance that they are not going to be sued for every coronavirus case that can be connected to their businesses," he said.

Peter Gould, a Squire Patton Boggs LLP partner specializing in crisis management, said businesses are going to be reluctant to reopen unless there is more certainty regarding legal exposure.

"Even if they are acting with the best intentions and good faith, is that risk [of reopening] outweighed by the risk of litigation?" he said. "The fact that a case or claim might not be viable may not be enough because they are still potentially facing these claims, and dealing with them will be a cost of doing business."

Gould's colleague, Traci Martinez, a civil litigation and employment partner, said her employer clients operating in multiple states are looking for a uniform federal standard, given the various and sometimes contrasting state guidelines over business reopenings.

"It would be really helpful to have some guidance come down that can represent their entire employee population and their consumer base," she said. "Most employers like to put a policy in place that can cover employees across the U.S."

But plaintiffs attorneys are criticizing the push for coronavirus-related business immunity, saying if a company knows it can't be sued, it won't be motivated to take the necessary precautions to prevent community spread of COVID-19.

"If you are granted immunity, why would a business go through the trouble of taking the extra steps, buying the equipment that might be useful, buying the sanitizers, the masks?" said Alan Feldman, a personal injury attorney with Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP in Philadelphia. "Why take those measures if you are home free and can't be held accountable? I just think it's a dreadful idea to give immunity to businesses, on every level."

However, Catherine Barbieri, co-chair of Fox Rothschild LLP's labor and employment department, said it has been in her employer clients' best interests to put the proper safety procedures in place in order to prevent workers from getting sick.

"There is every incentive to create an environment to keep workers working," she said. "Employers, in my experience, have been complying and doing everything they can to ensure employee safety. The argument that they would be incentivized to not comply is just not borne out of my experience."

Congressional Democrats are expected to fight to block McConnell's efforts, with a spokesman for House Speaker Nancy Pelosi, D-Calif., saying late last month, "The House has no interest in diminishing protections for employees and customers."

Also entering the fray is the American Association of Justice, an advocacy group for plaintiffs attorneys, which recently commissioned a study that found a majority of Americans were against the idea of corporate liability immunity.

Linda Lipsen, CEO of the AAJ, said McConnell has perennially sought liability shields for corporate America since he became a senator more than three decades ago.

"This move by Sen. McConnell is counterproductive because it's punishing individuals for no fault of their own and is punishing all of us who are trying to stop the spread," Lipsen said on a May 6 call with reporters.

The U.S. Chamber of Commerce, a pro-business lobbying group, conducted its own May 5 survey showing a majority of Americans supported protecting employers from coronavirus suits.

Leslie M. Kroeger, a Cohen Milstein Sellers & Toll PLLC partner and president of the Florida Justice Association, said the push for civil immunity for businesses is largely a result of the insurance industry's efforts to enact tort reform legislation.

"It's just another tort reform attempt from the insurance industry," she said. "To take advantage of a pandemic … and make sure the insurance companies don't pay out is just horrible."

But Guy Gruppie, co-chair of the emerging risks practice group for Murchison & Cumming LLP in Los Angeles, said plaintiffs attorneys are "obviously very capable," so there must be reasonable protections put in place to protect reopening businesses from COVID-19 suits.

"At the same time, there has got to be appropriate protections for workers," he said. "It all comes down to balance and being reasonable and being fair, and I do think it's within the power of Congress to come up with a plan that reasonably protects everybody."

--Additional reporting by Andrew Kragie. Editing by Philip Shea and Jill Coffey.

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

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