Coronavirus Litigation: The Week In Review

By Morgan Conley
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Law360 (July 30, 2020, 8:36 PM EDT) -- The Trump administration can't launch its controversial immigrant wealth test while the country continues to grapple with the coronavirus pandemic, Simpson Thacher & Bartlett LLP hit its New York office landlord with an $8 million suit demanding a rent abatement due to COVID-19, and a Los Angeles health food store agreed to pay $20,000 to resolve claims it peddled radish paste as a product that protects against coronavirus.

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

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

Immigration

A New York federal judge blocked the Trump administration from implementing its controversial wealth test for immigrants in the midst of the national health emergency stemming from the coronavirus pandemic.

U.S. District Judge George Daniels said the states and nonprofits challenging the so-called public charge rule, which would allow the government to deny green cards to immigrants found likely to need public benefits, had provided "ample evidence" that the policy deters immigrants from seeking COVID-19 testing and could threaten efforts to curb the spread of the disease.

A Massachusetts federal judge sided with a Haitian college student who was denied Coronavirus Aid, Relief, and Economic Security Act relief, ordering the U.S. Department of Education and Bunker Hill Community College not to deny her emergency funds based on her immigration status.

A California federal court held U.S. Immigration and Customs in contempt, finding that the agency violated its April orders by redetaining a Vietnamese immigrant who has chronic asthma and is at risk for having complications from the coronavirus.

Legal Industry

Simpson Thacher & Bartlett LLP filed an $8 million suit against its New York City landlord, claiming that the firm was entitled to rent abatement due to the COVID-19 pandemic and that the landlord had ignored the terms of the lease.

The firm said in the suit filed in New York state court against the corporate entity VBGO 425 Lexington LLC that the lease for its longtime office space at 425 Lexington Avenue in Manhattan included a provision for "force majeure" events and that the closures caused by the COVID-19 pandemic met this criteria.

A federal judge in Manhattan tossed a lawsuit seeking to block New York's state court administrators from going forward with a recent return to in-person criminal proceedings in New York City, saying it wasn't the place of the federal judiciary to interfere in a state-level issue.

U.S. District Judge Andrew L. Carter Jr. said Supreme Court and Second Circuit precedent direct that federal courts cannot meddle in affairs that are rightly up to states to decide.

Insurance

A New York hospital system on the front lines in the fight against COVID-19 sued a unit of Chubb Insurance, saying the insurer strung the health care provider along for two months before wrongfully denying its claim for the cost of dealing with the virus.

In a complaint filed in New York state court, Northwell Health Inc., which manages 23 hospitals in New York City and the surrounding area, says Illinois Union Insurance Co. is misrepresenting the terms of its policy by denying coverage.

Northwell argues that as the state's largest health provider, it was at the forefront of the fight against COVID-19 as New York quickly became the nation's epicenter for the pandemic, and has incurred heavy costs both as a result of adapting to the disease and from the shutdown of non-COVID-19-related services such as elective surgeries.

Nearly 30 northeastern Pennsylvania businesses with lawsuits against Erie Insurance Exchange over coverage of their COVID-19 losses said they don't want their cases grouped with others in a Pittsburgh state court because of differences in their policies and the circumstances surrounding their closures.

Hospitality

Two Michelin-starred restaurant groups slapped a Travelers Companies Inc. insurance unit with lawsuits in the past week, seeking declarations that their over $10 million policies should cover their financial losses due to COVID-19.

Fabio Trabocchi Group, trading as Fiola, and RW Restaurant Group told a Maryland federal court and a D.C. federal court in separate suits that The Charter Oak Fire Insurance Co. wrongfully denied coverage for their losses from state-mandated closures.

State Auto Property and Casualty Insurance Co. asked an Illinois federal judge to declare it has no duty to cover the losses suffered by 31 franchise Denny's and Ruby Tuesday restaurants operating in Illinois, Indiana and Wisconsin under state-mandated coronavirus closures, arguing the losses aren't covered in the relevant policies.

A group of Lloyd's underwriters asked to send two pizza companies' COVID-19 coverage suit to Florida, telling a New York federal court the companies are based in the Sunshine State as are the agents who sold them their commercial property insurance policies. Lloyd's said the lead plaintiffs in the proposed class action, Gio Pizzeria & Bar Hospitality LLC of Coral Springs and Gio Pizzeria Boca of Boca Raton, are merely engaging in forum shopping.

A California federal judge denied a Los Angeles restaurant owner's bid to remand its COVID-19 coverage case against Travelers Property Casualty Company of America to state court, finding the business, Mark's Engine Company No. 28 Restaurant LLC, "fraudulently joined" LA Mayor Eric Garcetti to avert federal jurisdiction.

Employment

A Brooklyn federal judge ordered the New York Labor Department to immediately process Uber and Lyft drivers' emergency unemployment requests that were improperly delayed during the coronavirus pandemic, saying the ride-hailing companies' "gamesmanship" led the agency around "by the leash."

In granting the drivers' bid for a preliminary injunction, U.S. District Judge LaShann DeArcy Hall said they were undoubtedly harmed by waiting months for unemployment insurance because the labor department treats workers in the for-hire vehicle industry as independent contractors rather than employees.

California Lyft drivers told the Ninth Circuit that the company's obstinate refusal to offer paid sick leave during the coronavirus pandemic has damaging consequences for the workforce, which justifies granting the drivers employee status through an injunction. The drivers seek to reverse a district court's April decision denying their emergency motion for a preliminary injunction that would've immediately forced Lyft Inc. to reclassify its drivers as employees and grant them paid sick leave.

The Occupational Safety and Health Administration accused workers at Pennsylvania meatpacking plant Maid-Rite Specialty Foods of trying to "hijack" its inspection process through a lawsuit aimed at forcing the facility to implement basic COVID-19 precautions. The agency said in a motion to dismiss that a group of unnamed workers were improperly trying to force the government's hand despite inspections finding no imminent danger existed at the Scranton-area facility.

The City University of New York told a Manhattan federal judge the CARES Act doesn't create a path for worker lawsuits claiming that a university misused coronavirus aid, urging the court not to force it to rehire 2,800 professors and other workers whose contracts ended in June.

New Jersey

A New Jersey judge held a Bellmawr gym in contempt for staying open during the COVID-19 shutdown mandate and the operators were subsequently arrested days later, marking the latest chapter in the business' high-profile fight with Gov. Phil Murphy over the constitutionality of pandemic closure measures.

Atilis Gym co-owners Ian Smith, 33, and Frank Trumbetti, 51, each received a disorderly persons summons for one count each of contempt, obstruction and violation of the New Jersey Disaster Control Act, according to a statement from the Camden County Prosecutor's Office. The arrests come just three days after the gym was hit with a contempt order after the owners publicly announced their intention to continue to defy the coronavirus mandates.

Garden State Republicans asked the New Jersey Supreme Court to strike down as unconstitutional a state law permitting up to $9.9 billion in borrowing without voter approval to address financial problems arising from the COVID-19 pandemic, claiming the statute unlawfully enables the state to use debt to cover its general expenses.

Native American

The Shawnee Tribe's suit claiming the government used inaccurate population data to award it minimal coronavirus relief funds was moved from an Oklahoma federal court to Washington, D.C. The court granted the U.S. Department of the Treasury's bid to move the tribe's suit, finding the first-to-file rule merits moving the case to a venue where similar cases are pending.

Texas

Two ranch owners and a consumer advocacy group accused the Railroad Commission of Texas of overstepping its authority by relaxing rules for oil and gas operators "under the guise" of providing some relief from the financial toll of the coronavirus pandemic. A Travis County District Court was asked to block the orders from the agency, which regulates oil and gas in Texas, alleging they unlawfully suspended environmental protections for oil and gas operators in the state.

Research firm Gartner Inc. urged a Texas federal judge to ax U.S. Specialty Insurance Co.'s suit seeking to stop Gartner from getting additional coverage over its $150 million limit for canceled events amid the COVID-19 pandemic, saying its policy was issued in Massachusetts and is governed by New York law, not Texas law.

Class Actions

The mother of a Rutgers University student dropped a proposed class action seeking reimbursement for tuition paid for courses that were reduced to online instruction due to the COVID-19 pandemic, a move that comes about a week after the school announced a tuition freeze and fee reductions.

A United Airlines Inc. worker urged an Illinois federal court to allow his proposed class action to move forward, arguing that the airline's $5 billion coronavirus bailout was supposed to go toward payroll and that workers can pursue third-party claims that United Airlines violated the relief deal by directing staff to take 20 days of unpaid leave.

Six law firms, including Labaton Sucharow LLP, Levi & Korsinsky LLP and Pomerantz LLP, are vying to lead a proposed investor class action in Florida federal court that alleges Carnival Corp. hid COVID-19 infections on its ships and spread the virus at ports around the world, causing its stock price to drop twice.

California State University schools asked a federal judge to toss a proposed class action alleging it withheld campus fee refunds in the wake of COVID-19-related campus closures, arguing that the case didn't belong in court.

British Airways PLC has asked a New York federal court to let it out of a proposed class action brought by a handful of passengers over ticket refunds for flights affected by COVID-19, saying one of the passengers must arbitrate his claims and the others have nothing to sue over.

Consumer Protection

Hand sanitizer maker Vi-Jon Inc. was hit with a proposed class action in California federal court by customers who allege the company's claim that its products can kill 99.99% of germs is false as there are a number of disease-causing microbes it can't harm.

The Los Angeles City Attorney's Office reached a deal with a health food store to resolve claims it has been peddling radish paste as a product for protection against the novel coronavirus, the office announced, saying the shop will pay a $20,000 civil penalty.

A spurned customer of Pittsburgh-based Giant Eagle told a federal court the grocer can't use the public health threat of the COVID-19 pandemic to turn away customers with disabilities that render them unable to wear masks, because the Americans with Disabilities Act only provides exemptions for individuals who pose a threat.

--Additional reporting by Mike LaSusa, Suzanne Monyak, Mike Curley, Emma Cueto, Daphne Zhang, Kevin Stawicki, Jeannie O'Sullivan, Emma Whitford, Jennifer Doherty, Sarah Martinson, Lauraann Wood, Joyce Hanson, Matt Fair, Jon Steingart, Linda Chiem, Bill Wichert, Jeannie O'Sullivan, Alyssa Aquino, Rachel O'Brien, Julia Arciga, Lauren Berg and Matthew Santoni. Editing by Breda Lund.

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

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