Coronavirus Litigation: The Week In Review

By Celeste Bott
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Law360 (August 6, 2020, 4:34 PM EDT) -- Universities are pushing back on students' claims that they are entitled to refunds due to the inadequacy of remote learning, a New York federal judge struck down some federal limits to paid coronavirus leave, and Microsoft has been accused of breaching a lease when it opted not to reopen a store closed down due to the pandemic. 

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 new litigation across the country.

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

Health Care

Adventist Health System rebutted a Los Angeles asset management company and its CEO's assertion that it cannot sue them in Florida over a soured $57.5 million deal to buy protective face masks, saying Monday that its allegations of a $2 million fraud conspiracy give an Orlando federal court authority over them.

Altamonte Springs, Florida-based AdventHealth argued in its response to a motion to dismiss from Tomax Capital Management Inc. and its leader, Yehoram Tom Efrati, that it is only required to plead the elements of a conspiracy and allege that at least one of the defendants committed the underlying fraud to establish that the Florida federal court has jurisdiction over all of them.

The health care system, which has hospitals in nine states, alleged in its May 28 complaint that Tomax and Efrati conspired with California attorney Michael H. Weiss and his firm to keep $2 million in escrow funds despite Tomax's failure to deliver on an April 8 contract to provide 10 million 3M N95 ventilator masks to protect its workers during the pandemic.

A medical lab and a clinical infection control company filed suit in Maryland federal court against their former business partners in a venture to provide respiratory and COVID-19 testing for nursing homes, saying the former partners held test results hostage to steal away business.

AMSOnSite Inc. and its laboratory company, Coastal Laboratories Inc., said their former business partners attempted to strong-arm them out of their COVID-19 testing business and steal their nursing home clients by locking them out of the test results, according to the July 31 complaint.

Public Policy

A New York federal judge on Monday wiped out parts of the U.S. Department of Labor's rule restricting who can take paid coronavirus leave under a March virus relief law, siding with the New York attorney general and dealing a blow to the Trump administration.

The DOL exceeded its authority by blocking workers from taking leave under the Families First Coronavirus Response Act if their employers don't have work for them to perform, and cut off too many workers with its definition of "health care providers," whom the law explicitly excludes, U.S. District Judge Paul Oetken said. He also partially vacated provisions limiting "intermittent" leave and requiring workers to document their reasons for taking time off.

Cinema owners and related trade groups blasted New Jersey Gov. Phil Murphy's COVID-19 shutdown mandate in federal court Wednesday, arguing it unfairly harms movie theaters while giving preferential treatment to religious worship that poses just as much risk to spread the virus.

During an oral argument via Zoom, the National Association of Theatre Owners urged the New Jersey federal court to lift the state-mandated shutdown of movie houses, one of the nonessential business sectors that has yet to be included in the Garden State's phased reopening plan.

Also in New Jersey, the state's top court questioned Wednesday how up to $9.9 billion in borrowed funds may be spent under a state law meant to address financial problems arising from the COVID-19 pandemic, challenging whether it could go as far afield as funding a new sports arena.

In the Garden State Republicans' lawsuit against Murphy, a Democrat, the state's highest court grilled the governor's counsel, Assistant Attorney General Jean Reilly, about the reach of that spending as the justices weighed the constitutionality of the New Jersey COVID-19 Emergency Bond Act, which authorizes the borrowing without voter approval.

And a federal judge has ruled the Democratic Party of Pennsylvania, the NAACP and other voting rights groups can step in and seek dismissal of a lawsuit brought by President Donald Trump's reelection campaign challenging Pennsylvania's mail-in voting procedures.

In an order issued Monday, U.S. District Judge J. Nicholas Ranjan granted motions to intervene from the Pennsylvania Democratic Party, various Democratic candidates and legislators, the NAACP, Common Cause Pennsylvania, the League of Women Voters, Citizens for Pennsylvania's Future, the Sierra Club, the Pennsylvania Alliance for Retired Americans and numerous individual voters.

And Massachusetts Republican Gov. Charlie Baker applied the wrong law and illegally picked "winners and losers" when he shut down certain businesses during the COVID-19 pandemic, the state's top court was told Tuesday by a group seeking to invalidate the emergency orders.

The New Civil Liberties Alliance — suing on behalf of two hair salons, a tanning salon and boxing gym, two restaurants, two houses of worship, the headmaster of a religious school and an entertainment and conference center — told the Supreme Judicial Court that the crisis "does not empower the governor to make law or dispense with law as he sees fit."

In Illinois, a federal judge has denied a bid by an Illinois village, restaurant owner and two residents to block Gov. J.B. Pritzker's executive orders to stem the spread of the coronavirus, saying an injunction would do "extraordinary damage" to the state.

U.S. District Judge Andrea Wood said in her opinion Saturday the requirements laid out in the Illinois governor's orders — which limit groups of people from gathering, especially in indoor spaces — have been endorsed by experts as effective means of slowing the spread of COVID-19, adding that "there can be no doubt" the measures are rationally related to a legitimate state interest.

Benefits

California drivers challenging Lyft's refusal to classify them as employees and provide paid sick leave have gotten support at the Ninth Circuit from worker advocacy groups, who have told the court that the company was endangering its workers and the public during the pandemic.

In their July 30 amicus briefs, the National Employment Law Project, Partnership for Working Families and Legal Aid at Work urged the Ninth Circuit to direct the district court to enter a preliminary injunction reclassifying Lyft Inc. drivers and granting them paid sick leave.

The groups contended that U.S. District Judge Vince Chhabria's April ruling denying John Rogers, Amir Ebadat and Hany Farag's request for the injunction let Lyft "use its arbitration requirement to escape its legal obligation to provide its employees with paid sick days."

Real Estate

Pennsylvania's Supreme Court has declined to hear landlords' challenge to Gov. Tom Wolf's COVID-19 eviction restrictions, drawing a blistering dissent from one justice who decried the move as a "decision to abscond" that "beggars belief."

The court on July 31 dismissed the property owners' challenge as "improvidently granted" without providing further comment, months after exercising an unusual power to take up the case and receiving briefs on an expedited schedule. That elicited a sharp dissent from Justice David N. Wecht, who said the court was "abruptly wash[ing] its hands" of the dispute, despite ongoing uncertainty about the governor's decision to effectively suspend evictions during the outbreak.

A California state judge on Monday upheld San Francisco's ban on evicting tenants who can't make rent during the COVID-19 pandemic, rejecting objections from several property owner and real estate groups and deeming the ordinance "a reasonable exercise of police power to promote public welfare."

San Francisco Ordinance No. 200375, which was adopted last month, permanently prohibits evictions for nonpayment of rent during the public health crisis. The measure also limits a landlord's ability to impose late fees, penalties or similar charges for unpaid rents.

In a suit filed June 29, the industry groups — including the San Francisco Apartment Association, San Francisco Association of Realtors, Coalition for Better Housing and Small Property Owners of San Francisco — slammed the evictions ban as illegal. The ordinance conflicts with an emergency order from Gov. Gavin Newsom and state law, the groups argued in their petition. And it perpetuates unconstitutional takings of private property, they said.

And a New Jersey mall slapped Microsoft Corp. with a federal lawsuit on July 31, saying the tech giant is breaching its lease by not continuing to operate its retail store after announcing it would be closing dozens of stores around the world.

Microsoft's lease with the Westfield Garden State Plaza, which is owned by Westland Garden State Plaza Ltd. Partnership, requires it to operate its retail store in the mall for one year after it exercises its contractual right to terminate the lease early, according to the complaint in New Jersey federal court, but the tech giant is refusing to reopen and operate its store after closing due to the coronavirus pandemic.

Employment

Tyson Foods has told a federal judge in Texas it can't be held liable for the death of one of its employees in a lawsuit brought by the man's family because the relatives can't prove he contracted COVID-19 at the chicken processing plant where he worked.

In its motion to dismiss on July 30, Tyson Foods Inc. told U.S. District Judge Ron Clark that the family of Jose Angel Chavez, who worked at the company's poultry processing plant in Shelby County for more than 20 years, failed to rule out other possible causes of the infection.

Chavez's wife and three children filed suit on his behalf on May 18, alleging that despite knowing some staff were sick from the coronavirus, Tyson did nothing to warn other employees or prevent harm to them. They allege Chavez died April 17 from complications caused by COVID-19.

And the parent of Enterprise Rent-A-Car has pushed back on a former rental agent's suit claiming the company's coronavirus layoffs violated the WARN Act, insisting that the pandemic falls under the statute's carveout for "unforeseeable" situations.

Florida rental agent Elva Benson sued the Enterprise Holdings Inc. and two Sunshine State affiliates in her home federal court in May, alleging that their decision to fire her and other employees without advance notice ran afoul of the Worker Adjustment and Retraining Notification Act, a federal law that mandates certain employers warn their workforce two months before a mass layoff. 

Employers, however, are exempted from this requirement in the event of "unforeseeable business circumstances," including a "sudden, dramatic, and unexpected action or condition outside the employer's control," and the Enterprise trio argued in a dismissal bid Monday that the impact of the novel coronavirus virus falls squarely within this definition.

Native American

A D.C. federal judge has raised concerns about claims that the government owes the Shawnee Tribe more coronavirus relief funds, stating in a Monday status conference that the only funds left for allocation are a contested pot of money originally allocated for the Alaska Native corporations.

U.S. District Judge Amit P. Mehta recognized that the tribe was seeking some of the ANCs' COVID-19 relief funds because it believed the U.S. Treasury and Interior departments "used a false" population data point when calculating how much money to give to the tribe.

However, he said all the coronavirus relief funds were given out, and the ANCs' allocation — which is being challenged in the D.C. Circuit — is all that is left. If the appeals court rules that the ANCs are entitled to the entirety of the pot of funds, the judge questioned whether the Shawnee Tribe can lay claim to a portion of the money.

Insurance

Mexican airline Volaris shouldn't be allowed to toss a lawsuit from ticket buyers over its cancellation of several U.S. flights to Mexico amid the coronavirus pandemic, the customers argue, because the airline steered passengers to take short-term credit toward future flights instead of offering the required refunds.

The airline filed a dismissal motion last month arguing that the claims in the proposed class action are "undeniably moot" because the company has already been offering refunds or travel credits. In a response, named plaintiff and Chicago resident Samantha Levey told an Illinois federal court July 30 that Volaris deceived some customers into accepting flight credits that expire quickly, causing them to lose the entire value of their tickets since the COVID-19 pandemic is ongoing.

Also in Illinois, groups of drivers are suing several auto insurance companies, including Progressive Universal Insurance Co., Geico Casualty Co. and Allstate Fire and Casualty Insurance Co., in state court, saying the companies have fallen far short of offering adequate relief to policyholders who have overpaid their premiums after COVID-19 emptied the state's roads.

In four complaints last month, the Illinois drivers take aim at Progressive, Geico, Allstate and American Family Insurance Co., saying they deserve more relief than those companies are offering, particularly compared to what other companies are giving their customers.

And Employers Preferred Insurance Co. has claimed in Illinois state court that it had no duty to cover a former McDonald's franchise owner's fight against a group of Chicago workers who launched a bid for better coronavirus safety protections.

Employers claimed July 30 that Lexi Management LLC, which sold its Chicago McDonald's franchise in the middle of preliminary injunction proceedings over management's allegedly subpar COVID-19 workplace safety response, incorrectly asked its insurer to cover its defense and costs in those underlying proceedings.

And a group of popular Chicago eateries, bars and museums have told an Illinois state court their all-risk commercial property insurance should cover losses they sustained in the wake of coronavirus closure orders that left them largely "nonfunctional as restaurants and cultural institutions."

Plaintiffs include the DuSable Museum of African American History, Gibsons Restaurant Group, nightclub Joy District, and other bars, restaurants and businesses who say their respective insurance companies — with more than 15 named in the suit — owe them coverage, according to the complaint filed Wednesday in Cook County Circuit Court.

Immigration

New Jersey immigration lawyers filed suit July 31 seeking a halt to in-person, nondetention hearings in the Newark Immigration Court, alleging that the U.S. Department of Justice is unnecessarily forcing them to go into court amid the coronavirus pandemic.

In their lawsuit, the Garden State chapter of the American Immigration Attorneys Association is pressing a New Jersey federal judge to bar the DOJ from forcing immigration attorneys to show up to the Newark court, a mandate the organization claims is needlessly risky with the availability of videoconferencing technology.

Consumer Protection

The U.S. Judicial Panel on Multidistrict Litigation said Wednesday that it will not combine a collection of lawsuits accusing JPMorgan Chase Bank of mishandling small businesses' applications for federal coronavirus relief loans, concluding that there's not enough to be gained by such a move.

The JPML said in an order that while there is some overlap in the small-business plaintiffs' cases against Chase, the individualized nature of the factual issues surrounding their respective loan applications will take away from the potential efficiency benefits of centralizing them in an MDL. The panel also noted that the number of cases against Chase is "limited and appears unlikely to grow," counting just seven remaining lawsuits up for centralization.

And Seton Hall University has asked a New Jersey federal court to toss a graduate's proposed class action alleging the school provided "subpar" instruction after switching to all-remote learning during the spring 2020 semester due to the COVID-19 pandemic, saying such "educational malpractice" claims are barred under Garden State law.

Plaintiff Samuel Schoening "creatively" pled claims of breach of contract, unjust enrichment and conversion, but they are each based on the quality of the education that was provided and he can't sue Seton Hall over that issue, the university told the court Monday in seeking to dismiss the suit.

In a similar lawsuit, New York University says a proposed class of students doesn't deserve refunds for the university's transition to remote learning because it continued to deliver on its educational promises despite the COVID-19 pandemic.

In a motion to dismiss filed Monday, NYU told a New York federal judge that a breach of contract suit hinges on graduate student Daniel Zagoria's personal opinion that the university's remote learning was ineffective. But that argument, it says, is neither true nor basis enough to allege a violation of Zagoria's "contract" with the university — which was, at most, an agreement that he would earn academic credits and a degree in exchange for tuition.

Food & Beverage

A winery told a California federal court July 31 that the new company managing its storage facility has jacked its rates by more than 1,000% on $7 million worth of wine, violating the state of emergency declared to prevent price-gouging during the COVID-19 pandemic.

Ruby Grapes LLC claims in its lawsuit that new owners who took over Intercoastal Wine Co. LLC quickly increased their prices after Ruby Grapes informed them they would be removing their supply in August, and that the move violates California's anti-price-gouging statute, Penal Code Section 396.

The statute prohibits raising the price of many consumer goods and services by more than 10% after an emergency has been declared. California Gov. Gavin Newsom declared a state of emergency in March due to the COVID-19 pandemic, and Ruby Grapes claims the sudden price hike is an illegal extortion attempt.

--Additional reporting by Braden Campbell, Danielle Nichole Smith, Elise Hansen, Michelle Casady, Mike Curley, Lauraann Wood, Jon Hill, Jeannie O'Sullivan, Bill Wichert, Hailey Konnath, Nathan Hale, Matthew Santoni, Rachel Scharf, Anne Cullen, Lauren Berg, Julia Arciga and Craig Clough. Editing by Orlando Lorenzo.

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

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