Product Liability Claims We Expect to See as a Result of COVID-19

Plaintiffs’ Goal: Many Solvent Defendants with Deep Pockets

Manufacturers, product distributors, parts or component suppliers, sales representatives, and others should not be surprised to see their names in a product liability lawsuit. Depending on the jurisdiction, claims may be brought against parties in the chain of commerce.

Plaintiffs’ attorneys are filing and advertising for product claims related to

• failing to warn about the presence of COVID-19 in manufacturing or distribution facilities;
• sanitizers, protective gear, and disinfectants misrepresenting the protection against viruses, germs, and bacteria;
• products claiming to protect against COVID-19;
• dietary supplements and other foods allegedly curing, treating, or mitigating COVID-19 and its symptoms;
• drugs and vaccines claiming to treat COVID-19 or lessen its impact;
• tests claiming to detect COVID-19 or related antibodies;
• products claiming to boost immune systems;
• exposure to COVID-19 from contaminated devices or packaging; and
• failing to warn about potential side effects or impacts caused by drugs or devices.

These claims could be brought by individuals, by companies, or in a mass tort suit or class action  by groups such as healthcare workers, employees, and consumers.

Governmental actions are also on the table. The U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) have issued warning letters to companies for selling fraudulent COVID-19 products. The FDA and FTC indicate that “warning letters are just the first step.” A list of FTC warning letters and actions are available on the Coronavirus Response: Enforcement Actions page of its website.

The Next Step: What Types of Claims Will Plaintiffs Bring?

Lawyers certainly do not have a crystal ball and they recognize that novel tort claims will likely emerge from the pandemic. We can, however, lean on our experience to understand the types of claims most likely to be brought. Product liability claims generally focus on whether a product is “defective.”

Lawsuits related to COVID-19 may include allegations that a defendant

• defectively designed a product;
• defectively manufactured or assembled a product;
• sold or marketed a product with insufficient labeling, improper instructions, or inadequate warnings;
• acted with negligence;
• fraudulently misrepresented a product’s characteristics or abilities;
• breached an express warranty;
• breached an implied warranty, such as the implied warranty of merchantability or implied warranty of fitness for a particular purpose; and
• is strictly liable for a defect that made a product unreasonably dangerous.

Plaintiffs’ “shotgun” tactics quickly increase costs and emphasize the need to proactively protect against litigation. Their goal is to accumulate a sufficient volume of claims—regardless of merit—to become an economic threat and attempt to force settlements.

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Staying Up-to-Date on Tort Immunity

Just as important as understanding what claims companies may be exposed to is understanding what claims plaintiffs cannot pursue. Through the PREP Act and the CARES Act, the government sought to expedite the design, development, testing, manufacture, and administration of drugs and devices designed to diagnose, treat, prevent, mitigate, or cure COVID-19. Each act sought to limit the liability of companies helping to fight the COVID-19 crisis.

At a high level, the PREP Act authorizes the secretary of the Department of Health and Human Services to issue a “PREP Act declaration.” On March 30, 2020, the secretary issued such a declaration: the Declaration Under PREP Act for Medical Countermeasures Against COVID-19. It provides immunity from liability to “Covered Persons” involved in “Recommended Activities” concerning “Covered Countermeasures,” which are authorized by an “Authority Having Jurisdiction.” Companies should understand whether immunity has been, or will be, conferred for their activities based on the declaration and its amendments. For instance, companies should know that “Covered Persons” include, among others, manufacturers (including suppliers of services related to medical devices and component part manufacturers) and device distributors.

The PREP Act declaration was followed by the CARES Act, which incentivized businesses to produce and distribute personal and respiratory protective equipment—such as masks and respirators—by granting additional liability protection to private entities. While the PREP Act declaration was amended several times, the most recent amendment—the fourth amendment—took place in December 2020 and was substantial. The goal of the fourth amendment was to create a more consistent pathway for manufacturing, distributing, and using COVID-19 countermeasures. This amendment further extends private sector immunities for entities involved in manufacturing, testing, developing, distributing, administering, or using COVID-19 countermeasures under the FDA or National Institute for Occupational Safety and Health—including devices and distribution channels where there is no federal agreement or authorization. It also clarifies that there are situations where not taking action falls within the PREP Act and can result in immunity. Notably, an exclusive federal cause of action for death or serious injury caused by willful misconduct is the only exception to immunity from a lawsuit and liability under the PREP Act.

As the legal landscape surrounding COVID-19 evolves, companies must monitor the changes in tort immunity and maintain an ongoing understanding of how they affect their operations.

Proactively Take Steps to Limit Exposure

The steps companies should take are unique to their industry, products, operations, and other individualized factors. There are, however, many generally applicable preventive measures. As mentioned, it is vitally important for companies to understand how the PREP Act and CARES Act may provide immunity. Further, companies should research their state’s Good Samaritan laws to understand whether additional protections exist. Businesses should also check whether there is an “innocent seller” statute that may provide immunity.

Companies should thoroughly review guidance by the Centers for Disease Control and Prevention, FDA, Occupational Safety and Health Administration, and state and local governments. Marketing materials, labels, instructions, warnings, and other representations should be thoroughly reviewed for accuracy and to determine whether additional warnings are needed if COVID-19 has affected a product or changed its risks. Federal preemption defenses may also exist if a warning or instruction is federally mandated.

Entities should review their insurance policies and other contracts to understand what types of claims and issues are covered. Express and implied warranties should be clearly disclaimed when appropriate. Businesses should consider excluding third-party beneficiaries from contracts, unless they are component or part suppliers, in which event businesses should seek vendors’ endorsements.

Research should be done to analyze preventive measures to protect employees and consumers from contact-based transmission. In addition to lawsuits involving potential product contamination, lawsuits have been filed by employees against their employers for alleged responsibility in the employees’ contracting of COVID-19. Businesses throughout the distribution chain should take measures to disinfect products, shipping materials, and the individuals handling them. Additional product testing may be necessary to limit potential defects. Due diligence may include contacting suppliers, vendors, and other business partners to understand what steps they are taking.

It is important to remind employees to follow company policies and legal requirements. Employees should be promptly and clearly notified of changes. Strict record keeping and sound guidelines are important, and new employee training may be necessary to address changing protocols.

Expect the Expected, and Be Ready for Incoming Litigation

Plaintiffs’ law firms are already preparing. Companies must take proactive steps to understand what claims enterprising plaintiffs might bring, understand how new laws protect their businesses, and take steps to limit their exposure to costly litigation.

Bryan D. Pasciak and Blake A. Angelino are associates of Faegre Drinker Biddle & Reath LLP in the Chicago, Illinois, office.

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