Coronavirus Litigation: The Week In Review

By Celeste Bott
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our daily newsletters. Signing up for any of our section newsletters will opt you in to the daily Coronavirus briefing.

Sign up for our Insurance newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!



Law360 (May 21, 2020, 7:52 PM EDT) -- McDonald's workers say unsafe practices at some of the fast food giant's restaurants could endanger public health, students are suing over technical issues with online Advanced Placement exams and the Sixth Circuit held this week that COVID-19-related loans can't be withheld from strip clubs and adult novelty stores. 

While courts across the country are altering procedures, restricting access and postponing certain cases to stem the spread of the novel coronavirus, the pandemic has also prompted a wave of litigation.

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

Employment

The AFL-CIO urged the D.C. Circuit on Monday to make the U.S. Department of Labor issue a rule requiring employers to protect workers from COVID-19, building on demands for heightened workplace safety standards with a new lawsuit.

The agency has shirked its duty to protect workers under the Occupational Safety and Health Act by issuing nonbinding safety recommendations for employers rather than making them implement specific safety measures or face fines, the labor federation said in a petition to the D.C. Circuit. The AFL-CIO wants an expedited order giving the DOL's Occupational Safety and Health Administration 30 days to issue an emergency rule.

Five McDonald's workers and four of their live-in family members say lax safety standards at several of the fast food giant's Chicago-area restaurants during the novel coronavirus pandemic have created a public health risk, according to a lawsuit filed in Illinois state court.

They claim that McDonald's Corp. and several franchisees mismanaged safety protocols in four Chicago restaurants, causing unsafe conditions and a "public nuisance" that could endanger public health. The allegations of unsafe practices include workers being forced to work in close quarters with colleagues and customers who might be asymptomatic carriers, having to reuse dirty masks or gloves if they were provided with such protective gear at all, and being directed to stay mum if workers were absent or suspected of being sick.

And a New York attorney claims he was fired from his counsel position with a metals company after he contracted the novel coronavirus and asked to work remotely in Europe while he recovered, according to a lawsuit filed Tuesday in Pittsburgh federal court.

Attorney Daniel Burbach Jr. alleges that Arconic Corp. violated the Family and Medical Leave Act when it fired him last month after he requested a few days off to move his family to Europe, where he planned to continue working remotely while recovering from COVID-19, according to the complaint.

Consumer Protection

The College Entrance Examination Board's online Advanced Placement exams designed to reach high school students amid the coronavirus pandemic are filled with technical glitches, preventing some students from even taking the tests, according to a class action filed Tuesday in California federal court.

The College Board and the Educational Testing Services, the latter of which creates and administers the AP tests, discriminated against disadvantaged and disabled students, as well as those in remote locations, when they decided to move the testing online without taking into account how all test-takers would be able to access the exams, according to the complaint filed by a group of students and the National Center for Fair & Open Testing.

The suit includes a number of clams — including breach of contract, gross negligence and unjust enrichment — as well as alleged violations of the Americans with Disabilities Act. They want the College Board to score the answers they tried to submit, instead of retaking the tests, and pay more than $500 million in compensatory damages to test-takers.

Securities

An investor in the Indiana-based Elanco Animal Health filed suit against the company on Wednesday for allegedly warning that the COVID-19 pandemic could cause revenue declines, but saying nothing of inventory backlogs caused by a distributor consolidation.

The proposed class action in Indiana federal court takes issue with a 13% share price drop Elanco experienced on May 7 after disclosing that revenue had declined 9% in the first quarter of 2020 "due to a reduction of approximately $60 million in channel inventory driven by factors resulting from the COVID-19 pandemic," as the company said in an announcement that day.

According to investor Sandra Hunter, Elanco hadn't disclosed until that point that, after consolidating its distributors from eight to four earlier in 2020, it had to increase the amount of inventory each distributor held, and when those distributors didn't experience enough demand to sell through their heightened inventory levels, Elanco had to cut its channel inventory.

Insurance

A New York-based culture magazine is seeking the Second Circuit's review of a federal judge's order refusing to force a unit of The Hartford to immediately cover the publication's financial losses because of government-mandated closures during the COVID-19 pandemic.

The publisher of Social Life Magazine filed a brief notice of interlocutory appeal of U.S. District Judge Valerie Caproni's oral decision last week, which denied the magazine's application for a preliminary injunction compelling Hartford unit Sentinel Insurance Co. Ltd. to pay out under the business interruption prong of its property policy.

Social Life, which launched in 2004 and describes itself as the "premier luxury publication for the Hamptons," sued Sentinel in New York federal court on April 28, claiming the insurer wrongfully refused to cover its lost revenues since it shut down operations in mid-March in accordance with statewide restrictions on nonessential businesses. According to court filings, Sentinel took the position that the spread of the novel coronavirus did not cause any "direct physical loss or damage" to Social Life's Manhattan office, as required for coverage to apply.

Mergers & Acquisitions

Forescout Technologies Inc. launched a lawsuit in Delaware state court Wednesday alleging that Advent International violated the terms of its planned $1.9 billion takeover of the cybersecurity firm by pulling out of the deal, and asking the court to compel the private equity firm to complete the transaction.

The lawsuit comes only a couple of days after Forescout revealed how Advent informed it last week that it would not be closing the $33-per-share deal as scheduled. According to Forescout, Advent is claiming it cannot close the deal because of a material adverse effect that occurred at Forescout.

"We have satisfied all conditions to closing under our merger agreement, and a material adverse effect has not occurred," Theresia Gouw, chair of the Forescout board, said in a Wednesday news release announcing the lawsuit. "The only change since the merger agreement was jointly executed in February is the deepening of the COVID-19 pandemic, which has significantly impacted global macroeconomic conditions."

According to Forescout, the merger agreement explicitly states that the risk of any effects from the coronavirus pandemic falls on the shoulders of Advent.

Public Policy

The Sixth Circuit has refused to pause a Michigan federal judge's order blocking the U.S. Small Business Administration from withholding Paycheck Protection Program loans from strip clubs and other sexually oriented businesses, although one panelist sharply dissented.

A three-judge panel majority denied the agency's emergency motion for a stay, saying its ban on loans for strip clubs, adult novelty stores and the businesses that serve them goes against the broad reach of PPP loans under the Coronavirus Aid, Relief and Economic Security Act.

DV Diamond Club of Flint LLC, which operates as Little Darlings, and a slew of other businesses sued the SBA last month, claiming the agency violated the Constitution by implementing regulations barring PPP loans for establishments that have "live performances of a prurient sexual nature."

Hospitality

An Illinois nursing home has been hit with two wrongful death lawsuits over an outbreak of COVID-19 that caused more than 20 deaths among residents and staff, with the facility being accused of failing to take adequate protective measures and "leaving its vulnerable residents defenseless against the community spread of the virus."

While numerous residents began exhibiting symptoms of upper respiratory infections in March, Bria Health Services of Geneva didn't confirm its first case of COVID-19 until April 17, according to the lawsuits.

Families of the deceased residents say the facility "failed to isolate those residents from asymptomatic residents, failed to ensure adequate supplies of PPE were easily accessible to residents and staff, failed to implement continuous screening of residents and staff, including temperature checks and the use of checklists to identify symptomatic individuals, and failed to notify either the Kane County Health Department or the [Illinois Department of Public Health] of symptomatic residents to determine if COVID-19 testing was indicated."

--Additional reporting by Braden Campbell, Vin Gurrieri, Lauren Berg, Dean Seal, Jeff Sistrunk, Benjamin Horney and Kelly Zegers. Editing by Kelly Duncan.

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

View comments

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Beta
Ask a question!