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COVID-19 Litigation Report – Week of July 27, 2020

Using timely research, Blank Rome’s COVID-19 litigation team provides a weekly report highlighting the latest cases and updates in key litigation areas, such as workplace claims, class actions, breach of contract claims, and more. The team also looks at emerging trends surrounding the pandemic and offers practical considerations for your business.  

TRENDS THAT WE ARE SEEING:

  • Claims against property owners that prohibit occupant from installing equipment to assist with reducing COVID-19 risk.
  • Claims relating to the cancellation of events because of the pandemic and the failure to return deposits for those events.
  • Discrimination and unlawful termination claims as a result of employers’ alleged actions in failing to properly consider an employee’s situation during the pandemic.
  • Insurance claims seeking coverage for losses due to closures because of governmental orders and pandemic issues.
  • Class actions to protect tenants for non-payment of rent

PRACTICAL CONSIDERATIONS:

  1. Consider all contract claims for cancelled events and failed deliverables due to COVID.
  2. Follow CDC guidelines, and any state or local orders, for your workplace, and make periodic updates to your business reopening guidelines.
  3. Consider the impact of state and local orders on policies for paid time-off and other forms of leave.
  4. Consider all potential COVID-related arguments that will made by employees when contemplating any termination decision; carefully consider requests for employee accommodations, and properly document.
  5. Seek counsel (by insurance counsel) if unable to obtain coverage from an insurer that is denying coverage during the pandemic.
Subject Matter Case Details

Property/Building Issues
  • Breach of fiduciary duty (New York): leasing company allegedly wrongfully refused to allow the owner to install a commercial grade air conditioning compressor at an office space that she owns in co-op building, which was needed to provide the office space with sufficient cooling and ventilation for the safety of the company’s at-risk clients, including seniors, during the COVID-19 pandemic.

Workplace Claims
  • Retaliation claims:
    • employee demoted and then fired after repeatedly raising concerns about employer’s response to the COVID-19 pandemic and violation of executive order requiring those would could work from home to do so (Minnesota)
    • employee of healthcare facility fired for reporting patient abuse and neglect during the CoOVID-19 pandemic to the San Antonio Police Department and Texas Health and Human Services (Texas)
  • FMLA
    • employee fired worker for taking leave to care for her child during the COVID-19 pandemic (Florida)
    • worker suffered from COVID-19 and was told she would be paid while recovering from the illness, but was later told that she had exhausted all of her PTO (Texas)
  • Discrimination (California): minority worker was denied promotions and advancement, then fired after asking for accommodations to care for disabled child during COVID-19 pandemic.
  • Age discrimination (California): Worker was terminated after complaining about not being paid his earned commission in the middle of the pandemic.

Legal Malpractice
  • New York: client sues law office after being unable to collect on a defaulted loan due to lawyers’ failure to properly draft documents during the Covid-19 pandemic.

Class Actions
  • Tuition and fees for higher education (Florida, New York & Texas): students bring class action against universities for refusing to refund tuition, fees, and on-campus living expense fees to students even though classes and on-campus facilities were suspended.
  • Airlines (British Columbia): airline ticket purchasers who were issued travel vouchers instead of refunds for flights cancelled due to the COVID-19 pandemic bring class action against airlines.
  • Collections (North Dakota): creditor attempted to collect debts during the COVID-19 outbreak by letter but failed to mention relief options in the letter under the Coronavirus, Aid, Relief, and Economic Security Act.
  • Consumer Protection (West Virginia): tenant class of those unable to pay rent during the COVID-19 pandemic brought a class action against leasing company for sending threatening eviction letters and charging late fees.
  • Contract:
    • banking institutions failed to pay financial advisors their fees for their work to obtain Paycheck Protection Program loans on behalf of borrowers during the COVID-19 pandemic (Florida).
    • contractor took advantage of this economic situation caused by COVID-19 pandemic by stopping supplies of iodine despite timely payments made by buyer (Texas).
  • Business insurance (New York): manufacturer brings class action against insurer for failure to insure business income losses and other covered expenses incurred due to COVID-19 pandemic closures.
  • ADA (New York): Blind website users sues owner of website for being unable to fully access and shop on website, which is not user friendly for the visually impaired, especially during the COVID-19 pandemic.

Breach of Contract Claims

 
  • California: maker of body armor claimed to have one million boxes of powder free nitrile gloves for the purchase price of $10 million. Telemedicine service provider paid $1 million deposit but found out there were no gloves when they arrived at defendant’s warehouse. The defendant refused to return the deposit.
  • Georgia: Movie theater refused to pay rent, claiming that it is excused from paying rent because of government action resulting from the COVID-19 pandemic.
  • Pennsylvania: employer violated Collective Bargaining Agreement governing the correctional officers' union operations by changing the officers’ work schedules to a different shift and failing to grant hardship requests submitted by officers who could not work the newly-assigned shifts due to family obligations.
  •  Vermont: state violated contract by rejecting medical device company’s order of 50 medical ventilator units for the COVID-19 pandemic without reason.

Weddings and Other Event Cancellations
  • Trade practices: Defendants refused to confirm that they rescheduled plaintiffs' wedding reception or refund plaintiffs' overpayment of venue and bar deposits after their wedding plans changed due to the COVID-19 pandemic (North Carolina).

Contract:

  • Cancelled weddings due to COVID, and facilities are refusing to return deposits (Arkansas, Minnesota & Texas).
  • Travel insurers sold travel protection policy and refused to reimburse buyers after vacations were cancelled due to the pandemic and quarantine orders (California & Illinois).
  • Catering service did not return plaintiff's deposits for services for an event cancelled due to the COVID-19 pandemic (New York).

Insurance Coverage

Several suits alleging business interruption and revenue/profit losses by warehouse facilities, department stores, banquet halls, restaurants, wedding venues, salons, hotels, and bars (Alabama, Florida, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania, Tennessee & Texas). Other notable cases:

  • Missouri: owners of commercial buildings brought class action against insurance providers alleging that they had overpaid and were due reimbursement for premiums related to their general commercial liability.