Welcome to the inaugural COVID-19 Litigation Roundup. The spread of the novel coronavirus has led to a surge of business litigation. So far, most of the cases important to businesses fall into nine categories:
● Consumer Class Action Refund Claims
● Consumer Class Action Misrepresentation And Failure-To-Warn Suits
● Privacy Lawsuits
● Securities Class Actions
● Employment And Work-Related Suits
● Business-on-Business Cancellation Claims
● Insurance Coverage Litigation
● Government Enforcement Actions
● Actions By Businesses Against Government Agencies
These and other types of litigation will have significant effects for businesses of all sizes. They may even shape future law after the current crisis passes. And although dozens of cases have already been filed, they are likely just the tip of the iceberg. Awareness of developments in COVID-19 litigation will therefore be very important.
To help this effort, the Coronavirus Litigation Roundup will provide a weekly sampling of important new business cases, and updates for select ongoing cases. Where possible, we provide links to referenced filings. As with COVID-19 itself, only time will tell how this litigation will unfold. But one thing’s for sure: litigation counsel will be busy. That is one of the reasons why the U.S. Chamber unveiled its new Path Forward initiative on Monday, seeking a resolution of the many liability issues that impact how Americans and businesses can return to work safely, successfully, and sustainably.
1. Consumer Class Action Refund Claims (#COVIDrefunds)
Plaintiffs’ lawyers wasted no time before filing class actions seeking refunds for services rendered impossible (or commercially impracticable) by the COVID-19 pandemic. For example:
● Brenda Labib et al. v. 24 Hour Fitness USA, Inc., No. 3:20-cv-02134 (N.D. Cal.). Plaintiffs seek to represent a nationwide class of gym members who were charged a membership fee for a period during which the gyms were closed due to the pandemic. Here is the complaint, with another complaint in a similar suit.
● John Compo et al. v. United Airlines, Inc. & United Airlines Holdings, Inc., No. 1:20-cv-2166 (N.D. Ill). This is one of several putative nationwide class action complaints challenging an airline’s purported refusal to provide cash refunds to customers whose flights were cancelled, as opposed to vouchers for future flights. Similar suits have been filed in other jurisdictions.
Beyond refund claims, class action counsel are pursuing tort suits alleging misrepresentation, false advertising, or failure to warn of risks associated with products or services in the COVID-19 era, such as:
● Paul Turner v. Costa Crociere S.P.A. & Costa Cruise Lines, Inc., No. 1:20-cv-21481 (S.D. Fla.). This putative class action alleges that a cruise line wrongfully concealed information indicating that one of its passengers had coronavirus symptoms and delayed orders for passengers to remain in their cabins until two days after it learned said passenger had tested positive for COVID-19. Link to Complaint.
● McMillan et al. v. StubHub Inc. & Last Minute Transactions Inc., No. 3:20-cv-319 (W.D. Wis.). A purported class of purchasers sued for refunds on tickets to events cancelled because of COVID-19. Based on their assertion that defendants retroactively discontinued “FanProtect” guarantees to provide such refunds, plaintiffs claim that StubHub falsely advertised a guarantee at the time of purchase. Link to Complaint.
The increased use of video communications services by businesses in the wake of the COVID-19 pandemic has also led to lawsuits involving privacy concerns. A primary example is:
● Cullen et al. v. Zoom Video Communications, Inc., No. 5:20-cv-02155 (N.D. Cal.). A purported class of users sued Zoom for allegedly violating California unfair competition and privacy laws by sending personal information about users to third parties without adequate notice or authorization. Plaintiffs assert that they suffered ongoing harms despite Zoom’s release of a new version that does not transmit users’ personal information to third parties. Link to Complaint.
Securities suits are underway, including suits outside of the typical public-disclosure context. For example:
● Douglas et al. v. Norwegian Cruise Lines et al., No. 20-cv-21107 (S.D. Fla.). An investor filed a purported class action against Norwegian Cruise Lines and two of its officers, alleging that Norwegian made misleading statements about its positive outlook in late February 2020. Notably, the Complaint does not claim that the allegedly false statements were made in SEC disclosures. Link to Complaint. Here’s another complaint in a similar suit.
● McDermid et al. v. Inovio Pharmaceuticals, Inc., No. 20-cv-01402 (E.D. Pa.). An investor filed a purported securities fraud class action alleging that a company’s stock price more than quadrupled after its CEO met with President Trump and claimed it had developed a COVID-19 vaccine. Plaintiff alleges that the company had not actually developed a vaccine. Link to Complaint.
A handful of employment suits have been filed, such as:
● Evans v. Walmart Inc., J2M-Evergreen LLC, No. 2020-L-3938 (Il. Cir. Ct.). A decedent’s estate filed this negligence and wrongful death action claiming exposure to COVID-19 from working at a retail store. Link to Complaint.
While some businesses are being sued, others are filing suits, including for refunds in light of cancellations related to COVID-19. For example:
● Stonebrick Group LLC v. HSL Cottonwood Hotel RC LLC a/k/a Ritz-Carton Dove Mountain, No. 4:20-cv-144 (D. Ariz.). Plaintiff sued for the return of a $500,000 payment for a conference to be held at defendant’s hotel, which the hotel cancelled due to state closure orders and social distancing guidelines without providing a refund. The contract allegedly contained “act of God” and “government order” clauses. Link to Complaint.
Already underway is a surge of insurance coverage disputes for various types of business interruption claims, such as:
● Sandy Point Dental PC v. Cincinnati Insurance Co. et al., No. 1:20-cv-02160 (N.D. Ill.). A dental practice asserts that the defendant denied claims for business interruption losses caused by a state-ordered COVID-19 scaling back of operations, on the ground that this was not “direct physical damage” covered by the policy. Link to Complaint.
● Scratch Restaurants LLC d/b/a Phillip Douglas LLC et al. v. Farmers Group Inc. & Truck Insurance Exch., No. 20STCP01233 (Los Angeles Super. Ct.). The plaintiff seeks declaratory relief that the California governor’s COVID-19 orders to shelter in place constitute a prohibition of access to plaintiffs’ premises, thereby triggering insurance coverage under the “Civil Authority” provision of plaintiff’s policy. Link to Complaint. Here is a similar Complaint.
Not all of this is private litigation. Governments have already brought enforcement actions challenging, for example, alleged price gouging and false advertising:
● State of Alaska v. Juan Lyle Aune, No. 3AN-20-05758CI (Anchorage Trial Ct.). Alaska instituted this prosecution against an individual who allegedly purchased masks and ventilators and “flipped” them at unfair prices during the COVID-19 pandemic, making up to a $50 profit per pack of masks, assertedly in violation of the Unfair Trade Practices Act. Link to Complaint.
● State of California v. Yikon Genomics, Inc. d/b/a Yikon Global, No. 20-ST-CV-13169 (Los Angeles Cty. Ct.). California sued a Chinese genetic testing company for violation of Business & Profession Code § 17500. California alleged false advertising in connection with a purported COVID-19 home testing kit that the defendant had allegedly misrepresented as being FDA approved. Within just a few days, a settlement was reached whereby the defendant agreed to stop selling the kits and to provide full refunds to customers.
Some businesses have also sued governments. While some suits have challenged shut-down orders on various bases, this one seeks more prompt government action:
● Abet Life Inc. v. Alex M. Azar II, Secretary, U.S. Dept. of Health and Human Servs., No. 4:20-cv-1169 (S.D. Tex.). This due process complaint seeks injunctive relief to preclude Medicare auditors from requiring complete documentation of claims during the COVID-19 pandemic. Plaintiffs claim that if Medicare auditors do not pay claims timely, such firms will have to shut down, increasing the burden on hospitals. Link to Complaint.
