Litigation & Trial Practice Committee

COVID-19 Class Actions Forecast

By Anne Merminod & Nigah Awj

By Anne Merminod & Nigah Awj

Summer 2020 Newsletter

As the COVID-19 pandemic continues to ripple across the globe, greatly affecting the global economy, proposed class actions relating to the pandemic have already commenced in the United States and Canada. BLG is committed to keeping our clients informed and updated on class action developments in these uncertain times. This update summarizes recent class actions relating to COVID-19 and forecasts future potential filings. It is important to note that none of the allegations in the claims set out below have been proven in court:

Consumer Protection

Misrepresenting hand sanitizer

A consumer claims in California against Target Corporation alleges that Target misrepresented that its store brand hand sanitizer “kills 99.99% of germs”, which was not backed up by any reliable scientific studies. Mardig Taslakian v. Target Corporation, et al, March 20, 2020, CA Central District California, March 20, 2020, CA U.S. Dist. Ct., Central 2:20-CV-02667. This class action echoes recent lawsuits filed against other hand sanitizer manufacturers, such as Germ-X and Purell, which arose pursuant to a letter sent by the U.S. Food & Drug Administration (FDA) to Purell regarding its marketing representations. The FDA notes in its letter that it was not aware of “any adequate and well-controlled studies demonstrating that killing or decreasing the number of bacteria or viruses on the skin by a certain magnitude produces a corresponding clinical reduction in infection or disease caused by such bacteria or virus”. As a result, the lawsuit reads: “Target uses indirect statements to give an unfair, deceptive, untrue or misleading impression to the consumer that the Hand Sanitizer can prevent the flu and other viruses.”

Flight cancellations

Several airlines currently face class actions in the Federal Court (in British Columbia), the Superior Court of Ontario and in the Superior Court of Québec by consumers who entered a contract of carriage with these companies prior to the COVID-19 pandemic declaration and whose flights were cancelled as a result. The claimants claim a full monetary refund (as opposed to credits toward future flights) in connection with their cancelled flights.

Similarly, airline passengers in the United States claim their airline is refusing to honor ticket refund requests for cancelled flights. The plaintiffs allege that the airline is only offering a voucher that expires in a year or the opportunity to rebook on another flight. Plaintiffs seek full refunds and punitive damages. See, e.g. Sweet et al v. Frontier Airlines, May 12, 2020 CO U.S. Dist. Ct. 1:20-CV-01340C; Diaz v. Spirit Airlines Inc., May 08, 2020, FL U.S. Dist. Ct., South 0:20-CV-60933; Boucher v. Spirit Airlines, Inc., April 22, 2020, FL U.S. Dist. Ct., South 0:20-CV-60829.

Suits against airlines in both the U.S. and Canada have escalated in the past weeks.

School trip cancellation

Suits have been launched against EF Institute for Cultural Exchange, Inc. (EF) (and other class trip providers including Education First Class) in California for refusing to provide a full monetary refund for cancelled trips because of COVID-19. Grabovksy v. EF Institute for Cultural Exchange, Inc. et al, March 17, 2020 CA U.S. Dist. Ct., South 3:20-CV-00508 Class Action and Douglas v. Ef Institute For Cultural Exchange Inc., March 11, 2020CA San Diego Super.Ct.37-2020-00013374-CUMC-CTLC. EF’s contract contained a clause, which allowed it to issue travel vouchers instead of cash refunds, excluding certain fees, when tours were cancelled “for public health issues or quarantine or threats of public health issues”. The plaintiffs allege that EF instituted an unfair cancellation policy in their contract, imposing unreasonable limitation on cash refunds, which resulted in students losing some of their investment following the tour cancellations.

Event cancellation

Festival organizers have been sued for refusing to issue refunds of festival tickets, after government orders prohibiting public gatherings resulted in event cancellations, e.g. Jimenez v. Do Lab, Inc., April 14, 2020 CA U.S. Dist. Ct., Cent.2:20-CV-03462 Class Action.

As alleged, the terms and conditions of the tickets provide that “all sales are final” and that “no refunds will be granted for any reason”. The terms go on to state that in the event of a cancellation, “the holder shall not be entitled to a refund except as otherwise required by law”. The plaintiffs allege that the contract is unenforceable as illusory because the defendant retained “complete and unfettered control to modify or terminate the agreement without assuming any obligations towards Plaintiff and the Class”. Similar suits have been filed for other festival cancellations with no refund policies, such as the 2020 South by Southwest, Austin, Texas festival, and Lightning In a Bottle festivals. See, e.g., Tessa Nesis v. Do Lab, Inc. et al, April 14, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-03452

Similarly, online event ticket exchange and resale platforms such as StubHub, Vivid Seats, have been challenged in Wisconsin for failing to refund tickets for postponed events due to the COVID-19 pandemic. The plaintiffs are asking the court to prohibit StubHub from issuing coupons instead of offering full refunds. McMillan, Matthew v. Stubhub Inc. et al, April 02, 2020, WI U.S. Dist. Ct., West 3:20-CV-00319. Similar litigation has now been issued in Canada against online event ticket platforms.

Sport leagues also face similar challenges while fans claim full refunds for cancelled games. Major League Baseball claim that it merely postponed the games and has refused to refund ticket holders.

Delivery apps high fees

Some food delivery apps were sued by restaurant owners and operators arguing that the rates being charged were unfair. The plaintiffs allege that the “No Price Competition Clauses” that force restaurants to charge uniform prices for menu items, even for food orders that are not generated through their digital platforms prevents restaurants from offering discounts to customers who would otherwise order directly or dine-in, and ultimately leads to customers being ripped off. Davitashvili et al v. Grubhub Inc. et al, April 13, 2020, NY U.S. Dist. Ct., South 1:20-CV-03000.

Cancellation of short-term vacation rentals

TurnKey customers allege they are owed refunds for deposits made for rental properties now unavailable due to COVID-19. Cahill et al v. TurnKey Vacation Rentals, Inc., April 24, 2020, TX U.S. Dist. Ct., West 1:20-CV-00441 Class Action. After stay-at-home orders took effect, TurnKey allegedly sent customers an email stating that it would no longer be offering refunds, but guests could use their deposits toward a future rental.

Overpriced toilet paper and hand sanitizer

Online purchasers in Florida are claiming that the seller charged unconscionable prices for goods such as toilet paper and hand sanitizer following the state’s COVID-19 pandemic state of emergency declaration. Sebastian Gonzalez et al v. South Beach Hardgoods Company, April 27, 2020, FL Miami-Dade 11th Judicial Cir. 2020-009139-CA-01.

Similar price gouging claims have been filed against individuals allegedly purchasing N95 masks and selling them at a very high price for a profit; and against producers, wholesalers and retailers for unfair business practices following marked up egg (or other groceries) prices during the pandemic. See, e.g., 3M Company v. Hulomil LLC, April 28, 2020, WI U.S. Dist. Ct., West 3:20-CV-00394

University closing and refunds

The Arizona Board of Regents is challenged for profiting from the COVID-19 pandemic by refusing to refund costs and fees to students ordered out of Arizona universities and transitioned to online classes. The claimants are seeking refunds for unused portions of student room, board and service costs. Rosenkrantz et al v. Arizona Board of Regents, March 27, 2020, AZ U.S. Dist. Ct. 2:20-CV-00613 Class Action.

Class actions against universities have escalated, with students requesting tuition and fee refunds for the shortened spring 2020 semester due to COVID-19 closures. See: Corinti v. Asset Plus Corp., April 07, 2020, FL U.S. Dist. Ct., North 4:20-CV00173; Dixon v. University of Miami, April 08, 2020, SC U.S. Dist. Ct. 2:20-CV01348 Class Action; Rickenbaker v. Drexel University, April 08, 2020, SC U.S. Dist. Ct. 2:20-CV-01358 Class Action; Church v. Purdue University, April 09, 2020, IN U.S. Dist. Ct., North 4:20-CV-00025 Class Action ; Student A v. Liberty University Inc., April 13, 2020, VA U.S. Dist. Ct., West 6:20-CV-00023 Class Action; Carpey v. University of Colorado Boulder ex rel. Board of Regents, April 15, 2020, CO U.S. Dist. Ct .1:20-CV-01064 Class Action; Perna v. American Campus Communities Inc., April 17, 2020, FL U.S. Dist. Ct., Mid. 3:20-CV-00391 Class Action ; Burgos v. Pennsylvania State University, April 20, 2020, NY U.S. Dist. Ct., South 1:20-CV03143 Class Action ; Patel v. University of Vermont, April 21, 2020, VT U.S. Dist. Ct .2:20-CV-00061.

Monthly membership fees

Town Sports International’s (TSI) gym users in New York are alleging that while all the gyms are currently closed and non-operational due to the COVID-19 pandemic, TSI is “outrageously continuing to charge members their monthly membership dues”, which are paid to access the gyms. The plaintiffs also allege that TSI engaged in fraudulent consumer conduct by misrepresenting to customers that it would provide gym services in exchange for membership dues, but then retained membership dues while not providing gym access; and “by misrepresenting to customers that they could cancel their memberships at any time, but then refusing to honor customer cancellation requests.” See Danforth et al v. Town Sports International, LLC et al, April 22, 2020 NY U.S. Dist. Ct., South 7:20-CV-03195 Class Action;

Delvecchio et al v. Town Sports International, LLC et al, April 05, 2020, MA U.S. Dist. Ct. 1:20-CV-10666 Class Action; Namorato v. Town Sports International, LLC et al, March 26, 2020 NY U.S. Dist. Ct., South 1:20-CV-02580 Class Action; Radford et al v. Town Sports International Holdings, Inc. et al, April 09, 2020, NY U.S. Dist. Ct., South 1:20-CV-02938 Class Action.

Other gyms and fitness centers are facing similar lawsuits – see: Brenda Labib v.24 Hour Fitness USA Inc., March 27, 2020, CA U.S. Dist. Ct., North 4:20-CV-02134; Barnett v. Fitness International LLC, March 30, 2020, FL U.S. Dist. Ct., South 0:20- CV-60658 Class Action; Jampol v. Blink Holdings Inc. April 02, 2020, NY U.S. Dist. Ct., South 1:20-CV-02760 Class Action ; Hunt v. Fitness Evolution Inc April 10, 2020, CA U.S. Dist. Ct., North 4:20-CV-02461.; Weiler v. Corepower Yoga LLC, April 15, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-03496 Class Action

ClubCorp, the operator of 200 golf clubs, which continued to charge members despite being closed, also face similar claims by its users. Cuenco v. ClubCorp USA, Inc., April 23, 2020, CA U.S. Dist. Ct., South 3:20-CV-00774 Class Action.

Season pass holders at Six Flags attraction parks also claim that they should not be charged until locations reopen. See Francis Ruiz v. Magic Mountain, LLC et al, April 13, 2020, CA U.S. Dist. Ct., Cent .2:20-CV-03436 Class Action; McConnell v. Six Flags Entertainment Corporation et al, April 21, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-03665; Shahriyar Rezai Hariri v. Magic Mountain LLC et al, April 10, 2020, CA U.S. Dist. Ct., Cent. 8:20-CV-00716 Class Action.

Events and Adventures California and Adventures Northwest’s customers pay $170 per month to attend group outings and meet other singles in their area, according to the plaintiffs. Now, with all the planned events canceled, members say they are owed a refund. Carisi v. Events and Adventures California et al, April 02, 2020, CA U.S. Dist. Ct., North 4:20-CV-02260

 

Ski resorts closing and refunds

Some ski resorts are facing class action lawsuits filed by pass holders seeking refunds after both companies shut down North American operations a month early due to the COVID-19 pandemic. See Han v. Vail Resorts, Inc, April 21, 2020, CO U.S. Dist. Ct.1:20-CV-01121; Faydenko et al v. Vail Resorts, Inc. et al, April 22, 2020, CO U.S. Dist. Ct.1:20-CV-01134;

McAuliffe v. Vail Corporation, April 27, 2020, CO U.S. Dist. Ct.1:20-CV-01176 Class Action.


News channel downplaying COVID-19

Fox News is being challenged in court for allegedly circulating inaccurate information about the COVID-19 pandemic, leading viewers to take unnecessary risks and thus spreading the virus. See “The First Lawsuit Against Fox For Misleading The Public On COVID-19 Has Been Filed In Seattle”, 2020 WLNR 10011748.

Securities

Cruise line inflated securities prices

A cruise line was sued in Florida for making false and misleading statements under the US Securities Exchange Act. The class action was brought on behalf of individuals who purchased securities at allegedly artificially inflated prices between Feb 20, 2020, and March 12, 2020, and were thereby economically damaged. The cruise line had issued a press release, claiming inter alia that (i) it had a positive forecast for the company despite COVID-19, and (ii) it had procedures in place to protect guests and crew. Emails were leaked in news channels suggesting that the cruise line had made false and misleading statements, which resulted in drops in the share price. Abraham Atachbarian v. Norwegian Cruise Lines et al, March 31, 2020, FL U.S. Dist. Ct., South 1:20-CV-21386 Class Action; Douglas v. Norwegian Cruise Lines et al, March 12, 2020, FL U.S. Dist. Ct., South 1:20-CV21107 Class Action.

Pharma company allegedly makes false claims

Similarly, Inovio Pharmaceuticals, Inc. (Inovio) faces a class action in Pennsylvania for allegedly making false and misleading statements under the US Securities Exchange Act. The Claimants allege that Inovio and its CEO capitalized on widespread COVID-19 fears when the CEO falsely claimed Inovio had developed a vaccine for COVID-19. This statement caused Inovio’s stock price to jump over 10 per cent in the ensuing trading days. Citron research exposed the fact that Inovio had not developed a vaccine by calling for a Securities Exchange Commission investigation. Stock then experienced a 71 per cent decline, resulting in losses to shareholders. McDermid v. Inovio Pharmaceutidals, Inc., March 12, 2020, PA U.S. Dist. Ct., East 2:20-CV-01402 Class Action; Beheshti v. Kim, April 20, 2020, PA U.S. Dist. Ct., East 2:20-CV-01962.

Zoom misleading investors in relation to encryption capabilities

Zoom Video Communications Inc. is facing a securities challenge, alleging investors were misled about its encryption capabilities from the date of Zoom’s IPO in April 2019 to April 2020. Investors claim the COVID-19 pandemic exposed privacy issues that resulted in a series of corrective disclosures, which caused its stock to plummet. Cullen v. Zoom Video Communications, Inc., March 30, 2020, CA U.S. Dist. Ct., North 5:20- CV-02155 Class Action; Simins v. Zoom Video Communications, Inc., April 27, 2020, CA U.S. Dist. Ct., North 5:20-CV-02893C Class Action.

Stock drops

iAnthus Capital Holdings Inc. (iAnthus) is facing multiple securities class actions, alleging that it failed to disclose that it had the ability to withhold use of the interest payment escrow until the interest escrow payment was exhausted, diminished, or otherwise unavailable to satisfy the Company’s interest payment obligations. On April 6, 2020, iAnthus disclosed that it had failed to make certain interest payments, citing the “decline in the overall public equity cannabis markets, coupled with the extraordinary market conditions that began in Q1 2020 due to the novel coronavirus.” Riback v. iAnthus Capital Holdings, Inc. et al, April 15, 2020, NY U.S. Dist. Ct., South 1:20-CV-03044 Class Action; Finch v. iAnthus Capital Holdings, Inc. et al, April 20, 2020, NY U.S. Dist. Ct., South 1:20-CV-03135 Class Action; Cedeno v. iAnthus Capital Holdings, Inc. et al, May 05, 2020, NY U.S. Dist. Ct., South 1:20-CV-03513.

SCWorx Corp.’s investors claim they were tricked into investing by false statements announcing that the company had received a committed purchase order of two million COVID-19 rapid testing kits, “with provision for additional weekly orders of two million units for 23 weeks, valued at $35M per week.” When a research firm called the deal “completely bogus”, stocks dropped causing investors to suffer significant losses and damages. Yannes v. SCWorx Corp. et al, April 29, 2020, NY U.S. Dist. Ct., South 1:20-CV-03349 Class Action.

Alleged Negligent Response

COVID-19 on cruise ship

Passengers on a cruise line allege that the cruise line negligently failed to have proper screening protocols for COVID-19 prior to boarding them on its cruise ship and failed to warn them that passengers from a prior voyage had symptoms of COVID-19. 

Another suit alleges that a cruise line accepted passengers despite knowing that some exhibited symptoms of COVID-19. The plaintiffs allege that the ship was not fully sanitized and that passengers were told they would not be refunded if they cancel.

See Jacob Gleason et al v. Princess Cruise Lines, Ltd., March 11, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-02328; Steven Kurivial et al v. Princess Cruise Lines Ltd, March 12, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-02361; Evelyne Abitbol et al v. Princess Cruise Lines Ltd, March 13, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-02414; Brian Sheedy et al v. Princess Criuse Lines, Ltd., March 13, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-02430; Michael Austin et al v. Princess Cruise Lines Ltd, March 17, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-02531; Robert Jacobsen et al v. Princess Cruise Lines Ltd., March 27, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-02860; Kevin Hachinsky et al v. Princess Cruise Lines Ltd., March 30, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-02963; Stanley Dachinger et al v. Princess Cruise Lines Ltd., April 28, 2020, CA U.S. Dist. Ct., Cent. 2:20-CV-03847; Eugene Camara et al v. Princess Cruise Lines Ltd., May 11, 2020, CA U.S. Dist. Ct., Cent.2:20-CV-04250.

Chinese government alleged cover-up of COVID-19

People’s Government of the City of Wuhan, China, is being blamed by a number of small businesses in Nevada for damages caused by the COVID-19 pandemic. The claimants allege that the Chinese government acted improperly by initially covering up the COVID-19 pandemic and that the government’s lack of transparency affected the global response to the pandemic.

Bella Vista LLC et al v. The People’s Republic of China et al, March 23, 2020, NV U.S. Dist. Ct. 2:20-CV-00574

Under the same umbrella, a group of Florida residents filed a federal class action against the Chinese government and other Chinese governmental entities for damages suffered as a result of the COVID-19 pandemic. According to the claimants, “[t]he PRC and the other Defendants knew that COVID-19 was dangerous and capable of causing a pandemic, yet slowly acted, proverbially put their head in the sand, and/or covered it up for their own economic self-interest”. Alters v. People’s Republic of China et al, March 12, 2020, FL U.S. Dist. Ct., South 1:20-CV-21108 Class Action.

Another class action against China alleges China has been hoarding personal protective equipment (PPE) and refusing to send COVID-19 supplies to the U.S. Aharon et al v. Chinese Communist Party et al, April 07, 2020, FL U.S. Dist. Ct., South 9:20-CV-80604

Forced closing of business.

Pennsylvania business owners are claiming against the Governor of Pennsylvania that “non-life sustaining” businesses and their employees have been unlawfully forced to bear the cost of the state’s response to COVID-19. The claimants allege that executive orders by the Governor amount to unlawful seizure of property without due compensation, a practice prohibited by the Fifth Amendment. It also claims that businesses were provided with no notice before being forced to close their doors for an indefinite period of time. Paradise Concepts, Inc. T/KA Kenwood Pools v. Thomas W. Wolf, Governor of the Commonweath of Pennsylvania et al, May 05, 2020, PA U.S. Dist. Ct., East 2:20-CV-02161 Class Action.

California small businesses are also suing government authorities to expand the essential business classifications. The plaintiffs allege that more businesses should be allowed to open and that the measures are overboard. Professional Beauty Federation of California, et al v. Gavin Newsom, et al, May 12, 2020, CA U.S. Dist. Ct., Cent .2:20-CV-04275.


Temporarily stopping foreclosure sales

Plaintiffs in a claim against a U.S.-based bank are seeking to stop foreclosures in West Virginia during the national emergency caused by the spread of the COVID-19 virus. The plaintiffs claim that they were victimized by a predatory lending scheme perpetrated in concert by a manufactured housing retail dealer and Countrywide Home Loans, Inc., whereby the dealer and lender arranged for fraudulent home loans far exceeding the actual value of the properties. The plaintiffs allege that Countrywide’s successor, the U.S.-based bank, increased indebtedness to more than double the value of the property and seeks to enforce a fraudulently originated lien. The bank also allegedly rejected and refused the plaintiffs’ payments and seeks to foreclose on homes in violation of the contract and law. Shuff et al v. Bank of America, N.A. et al, March 16, 2020, WV U.S. Dist. Ct., South 5:20-CV-00184

Illegal short-term rentals

Fairbnb Canada has published an unissued claim alleging that condominium corporations exposed residents to COVID-19 by allowing illegal short-term rentals in their buildings. However, in response, the condominiums released a notice to owners prohibiting such short-term rentals until the end of the pandemic state of emergency period. Thus, this class action will not proceed. Note: Docket could not be located. 

Austrian ski resort alleged a virus hotspot

5,000 people who tested positive after returning home from the Austrian resort of Ischgl have registered for a class-action lawsuit that claims Ischgl and the Tyrol region prioritized private gain over public health. The plaintiffs allege that the defendants made a “commercial decision” not to end the season early, opening the door to three charges: creating a public danger; spreading a reportable illness; and abuse of authority through lack of action. See “Coronavirus infected apres-ski in the Austrian Alps; criminal probe and litigation now follow thousands of tourists from the U.S. and Europe fell ill after late-winter ski trips,“ Washington Post, May 17, 2020, 2020 WLNR 13885110.

Bank loans

A series of class action lawsuits allege banks prioritized larger loans instead of handling applications on a first come, first serve basis as required. The small businesses that did not receive the loans allege that this “dishonest and deplorable behavior” left small businesses with nothing. Many small businesses that would qualify for Paycheck Protection Program (PPP) loan under the Coronavirus Aid, Relief, and Economic Security (CARES) Act also claims that some banks prioritize current customers when it comes to offering loans. Hyde-Edwards Salon & Spa v. JPMorgan Chase & Co. et al, April 22, 2020, CA U.S. Dist. Ct., South 3:20-CV00762 Class Action; Physical Therapy Specialists, P.C. v. Wells Fargo Bank, N.A., April 29, 2020, CO U.S. Dist. Ct. 1:20-CV-01190; Sha-Poppin Gourmet Popcorn LLC v. JPMorgan Chase Bank, N.A et al, April 24, 2020, IL U.S. Dist. Ct., North 1:20-CV-02523.

Furthermore, some strip clubs claim they are being discriminated against by banks despite being fully qualified to receive government assistance. DV Diamond Club of Flint, LLC v. Small Business Administration, an agency of the United States et al, April 08, 2020, MI U.S. Dist. Ct., East 4:20-CV-10899C.

Voting

A class action lawsuit claims that requiring Georgia voters to pay for mailing in their ballots during the COVID-19 pandemic is essentially charging a “poll tax” and those who cannot afford it may not be able to vote. Black Voters Matter Fund et al v. Raffensperger et al, April 08, 2020, GA U.S. Dist. Ct., North 1:20-CV-01489.

The League of Women Voters of Ohio and several Ohio residents claim that the new state law that prohibits in-person voting due to the COVID-19 pandemic is unfair and may stop a lot of citizens from casting their ballots. League of Women Voters of Ohio et al v. LaRose, March 30, 2020, OH U.S. Dist. Ct., South 2:20- CV-01638.

WHO

The World Health Organization (WHO) faces class action claims for allegedly not acting quickly enough to warn countries about the COVID-19 pandemic. Plaintiffs claim the WHO knew about the virus since November 2019 but waited until March 11, 2020, to announce it was a global pandemic. Kling et al v. The World Health Organization, April 20, 2020, NY U.S. Dist. Ct., South 7:20-CV03124 Class Action.

Privacy & Data Sharing

Privacy concerns around Zoom data sharing

Zoom Video Communications, Inc. (Zoom) users in California are claiming Zoom shares their data with Facebook and other third parties without adequate notice. Its use by consumers and businesses has exploded in the face of the current COVID-19 virus pandemic. The plaintiffs allege that upon installing the Zoom App, Zoom collects the personal information of its users and discloses, without adequate notice or authorization, this personal information to third parties, including Facebook, allegedly invading the privacy of millions of users. The plaintiffs seek damages and equitable relief to remedy the violations. Cullen v. Zoom Video Communications, Inc., March 30, 2020, CA U.S. Dist. Ct., North 5:20-CV-02155 Class Action.

A similar action has been filed against the group video chat app Houseparty alleging that it discloses users’ personal information without their permission to third parties, including Facebook. Sweeney v. Life on Air, Inc. et al, April 17, 2020, CA U.S. Dist. Ct., South 3:20-CV-00742 Class Action. 

Insurance And Coverage

Denied insurance coverage for business losses

Insurance companies are being sued in Québec and Saskatchewan by insureds, who were parties to a contract of insurance that included “business interruption” or “operating loss” coverage. The plaintiffs claim that the insurers engaged in breached of contract and in anti-competitive behaviour by denying claims occasioned by COVID-19. The plaintiffs allege that insurance companies cannot claim that these events were unforeseen under the force majeure clause, in light of the prior the SARS pandemic. They seek compensatory damages for being denied coverage after being forced to close their businesses. Note: Docket could not be located.

Similarly, Oceana Grill and the Choctaw Nation of Oklahoma and Chickasaw Nation Department of Commerce have commenced actions in the United States against their insurance provider claiming that their “all risk” commercial general liability policies should cover losses incurred because of business closures resulting from the COVID-19 pandemic. Station 6, LLC v. Certain Underwriters at Lloyd’s London, May 04, 2020, LA U.S. Dist. Ct., East 2:20-CV-01371 Class Action; In re: The Application of: Chickasaw Nation Dept of Commerce, Civil Miscellaneous, March 24, 2020, OK ontotoc Dist. Ct. CV-2020-00035; In re: The Application of Choctaw Nation of Oklahoma, Civil Miscellaneous, March 24, 2020, OK Bryan Dist. Ct. CV2020-00042.

Claims against insurers have escalated in the past month.

Labour & Employment

Rideshare drivers as independent contractors

Rideshare drivers in California allege that the company misclassified them as independent contractors and thus owed the workers paid sick leave, which is particularly harmful given the COVID-19 pandemic. The plaintiffs allege that the company’s failure to comply with California’s labour law puts the lives of the drivers and the general public in danger, because drivers feel forced to keep working to maintain their income. Capriole v. Uber Technologies, Inc. et al, April 01, 2020, CA U.S. Dist. Ct., North 3:20-CV-02211 Class Action. 

Drivers of another rideshare company are also claiming sick leave. Furthermore, a federal judge ruled that the company could not force its drivers in Massachusetts to arbitrate claims as they are being misclassified as independent contractors rather than employees, and workers are exempt from the Federal Arbitration Act. Cunningham v. Lyft, Inc., No. 1:19-CV-11974-IT, 2020 WL 1503220 (D. Mass. Mar. 27, 2020).

Unions allege failure to protect workers

The Alaska State Employees Association has filed a class action against the State of Alaska seeking injunctive relief based on the state’s failure to protect union members from the health and safety risks posed by COVID-19. The lawsuit alleges that nonessential workers were denied the right to telework and that their work environment was not well adapted for social distancing. The plaintiffs have asked the court to require the state to enforce safety policies and health mandates and provide a safe work environment. Alaska State Employees Association , Local 52 v. State of Alaska, March 24, 2020, AK Third Judicial District, Anchorage 3AN20-05652CI.

Similarly, federal employees, assisted by the American Federation of Government Employees labour union claim against the United States of America that federal workers have risked exposure to COVID-19 without receiving proper hazard pay. Braswell et al v. USA, March 27, 2020, U.S. Ct. Of Federal Claims 1:20-CV00359.

Unlawful terminations

Velodyne Lidar Inc.’s employees allege that they were unlawfully terminated with one day’s written notice and that the company’s representation that layoffs were due to COVID-19 was inconsistent with the defendant’s recent business activities. Siers v. Velodyne Lidar, Inc., April 03, 2020, CA U.S. Dist. Ct., North 5:20-CV-02290 Class Action.

Hooters III Inc. also face similar allegations for allegedly terminating employees upon closing offices and restaurants because of the COVID-19 pandemic, without providing required advance written notice. Scott et al v. Hooters III, Inc., April 16, 2020, FL U.S. Dist. Ct., Mid. 8:20-CV-00882 Class Action.

Hair salon employees claim that the owners refused to pay them earned wages for the pay period leading up to the salons’ COVID-19 closures, see Miller et al v. Creative Hairdressers, Inc. et al, April 20, 2020, FL U.S. Dist. Ct., Mid. 8:20-CV00912 Class Action; and Olsen v. Ratner Companies L.C. et al, April 07, 2020, NJ U.S. Dist. Ct. 1:20-CV-03760 Class Action.

Protecting the Vulnerable Against COVID-19

Protecting the elderly in residential and long-term care facilities

Elderly residents, long-term care facilities and related corporations are being sued by residents exposed to the COVID-19 or the estates of those who passed away due the corporations’ negligent and careless responses. The plaintiffs in Québec allege that their facility had been completely deserted; the vast majority of staff members had abandoned the residence due to a lack of resources and that residents were found in completely inhumane conditions. Plaintiffs’ seek moral and punitive damages.

In Ontario, plaintiffs are claiming $50 million in damages and $10 million in punitive damages against the long-term care provider, Revera. The plaintiffs allege that the facilities lacked proper sanitation protocols, adequate testing and that measures to keep residents safe were not properly disseminated to residents and their families.

The Department of Health in Pennsylvania is also facing similar lawsuits for not regularly inspecting the long-term care facilities and allegedly not stopping the facilities from using an experimental treatment on residents without their consent. Gill v. Pennsylvania Department of HealthApril 28, 2020, PA U.S. Dist. Ct., East 2:20-CV-02038 Class Action.

Protecting prison population

The Governor of Illinois and the director of the Illinois Department of Corrections might face an order directing state officials “to drastically reduce Illinois’s prison population” as inmates are vulnerable to catching COVID-19. The lawsuit seeks to represent older prisoners and those with health problems because the poor protective measures in prisons make the COVID-19 effects deadly for them. Money et al v. Pritzker et al, April 02, 2020, IL U.S. Dist. Ct., North 1:20- CV-02093 Class Action.

Similarly, the prison wardens and the Federal Bureau of Prisons are being sued in Colorado and Louisiana for allegedly failing to protect prisoners and corrections staff from COVID-19. The plaintiffs allege that the prisons “are knowingly risking the lives of every prisoner”. See Nellson v. Barnhart et al, March 18, 2020, CO U.S. Dist. Ct.1:20-CV-00756;.

Furthermore, the American Civil Liberties Union (ACLU) asked the California Supreme Court to order the release of immigrant detainees from two California border facilities amid the COVID-19 pandemic. See California Attorneys for Criminal Justice v. Newsom (Becerra), April 24, 2020, CA Supreme Court S261829.

The Transgender Law Center also filed a similar suit against the Secretary of the U.S. Department of Homeland Security and the Attorney General of the United States to protect transgender people in civil immigration detention. C.G.B. et al v. Wolf et al, April 23, 2020, DC U.S. Dist. Ct. 1:20-CV-01072.

Class actions against prisons have escalated in the last month, See also: Thompson v. Columbia County et al, March 24, 2020, OR U.S. Dist. Ct. 3:20-CV-00490; Savino et al v. Hodgson et al, March 27, 2020, MA U.S. Dist. Ct. 1:20-CV-10617; Valentine et al v. Collier et al, March 30, 2020, TX U.S. Dist. Ct., South 4:20-CV-01115; Money et al v. Pritzker et al, April 02, 2020, IL U.S. Dist. Ct., North 1:20-CV-02093; Mays et al v. Thomas, April 03, 2020, IL U.S. Dist. Ct., North 1:20-CV-02134C; Evenstad et al v. Schnell et al, April 06, 2020, MN U.S. Dist. Ct. 0:20-CV-00885; Barnes v. Jeffreys, April 05, 2020, IL U.S. Dist. Ct., North 1:20-CV-02137; Graham et al v. Allegheny County et al, , April 08, 2020, PA U.S. Dist. Ct., West 2:20-CV-00496; Carranza et al v. Reams, April 07, 2020, CO U.S. Dist. Ct. 1:20-CV-00977; Wilson et al v. Williams et al, April 13, 2020, OH U.S. Dist. Ct., North 4:20-CV-00794; Cameron et al v. Bouchard et al, April 17, 2020, MI U.S. Dist. Ct., East 2:20-CV-10949; Zepeda Rivas et al v. Jennings et al, April 20, 2020, CA U.S. Dist. Ct., North 3:20-CV02731C; McPherson et al v. Lamont et al, April 20, 2020, CT U.S. Dist. Ct. 3:20- CV-00534.

A similar action commenced in Québec against the Attorney General of Canada for Correctional Service Canada’s failure to assure the safety and security of the detainees. The claim alleges that inadequate measures were implemented to stop the spread of COVID-19 within the Joliette Institution and seeks additional damages for class members that tested positive for COVID-19.

Discrimination by Trump

A class action was filed against President Trump and other high-ranking government officials over a provision of the coronavirus relief package that could deny funds to U.S. citizens married to immigrants without Social Security numbers. The plaintiffs claim they were discriminated against based solely on whom they chose to marry. Does v. Trump et al, May 08, 2020, WI U.S. Dist. Ct., East 2:20-CV-00704

Potential Future Class Actions

As the impact of COVID-19 spreads, class action lawsuits are likely to rise. Given the similarities between the legal systems in Canada and the U.S., class actions commenced in one country are often filed across the border. Following recent trends, below is a list of potential future class actions that might be expected:

Consumer protection claims are very popular with consumers seeking compensation for their financial or personal loss. Claims are likely to arise mainly in three categories: refund policies (including memberships and subscriptions), misleading advertising or price gouging. 

Securities claims may issued against public companies for failing to abide by securities disclosure obligations. Public companies should consider whether there are company-specific implications of the crisis that constitute material non-public information, whether that information requires immediate disclosure, and whether the company should restrict trading by insiders.

Tort claims are expected for allegedly negligent responses to COVID-19. These claims may allege a failure to protect from or a failure to warn of the potential exposure to COVID-19. These types of claims have already been commenced against cruise lines and governments. A claim in negligence could be brought in respect of companies in the hospitality industry and elsewhere: e.g. sporting event spectators in large arenas, attendees of conferences, patrons of hotels, religious congregations, and government bodies, all of whom may have been exposed to the virus.

Breach of contract claims may be filed for breach of warranty, issues with the supply chain or delays. As companies scramble to keep supplying products, in some cases, those companies are using alternative suppliers or back-up manufacturing lines to maintain operations. Companies are already challenging the right to exercise force majeure clauses. There are also disputes surrounding termination in cases where buyers exercise a contractual right to terminate a contract if the force majeure event extends for too long a period. Once manufacturing ramps up again, there could also be disputes regarding which party is responsible for expedited freight related to shipping delays caused by COVID-19.

Privacy and data security claims for failure to adequately protect confidential information or dissemination of confidential information are likely to rise. There are increased opportunities for malicious actors to gain access to an organization’s electronic information systems, whether through phishing or other social engineering, or through a hack at a time when the organization is digitally overstretched. These risks are likely to be exacerbated by the increased number of employees working from home and outside of normal supervisory regimes.

Insurance claims are on the rise against insurance companies for declining coverage under their policies for company losses occurred in relation to COVID-19. Insurance companies assert the benefit of the force majeure clause to deny coverage, stating that the closure events were unforeseen. Insureds are challenging this interpretation in the courts. 

Banking and debt collection claims against financial institutions from their commercial clients raising concerns in relation to foreclosures, debt collection suspensions and the administration of loans and the banks’ role in providing access to government relief programs during the COVID-19 pandemic. 

Employment claims are increasing against employers for failing to take steps to safeguard the health and safety of employees or to follow employment standards legislation. Concerns have already arisen from unionized meat inspectors at a meat processing plant in Alberta, where one individual had tested positive for COVID-19. 

Corporate governance claims might arise as many companies face financial challenges and even bankruptcy. Companies and their directors and officers may face class actions for breach of fiduciary and other duties to creditors and other stakeholders upon filing for insolvency. 

Government entities also face increasing challenges for allegedly “causing harm” or “increasing the risk of harm” from COVID-19. Other claims might arise for failure to safeguard the health and safety of citizens whether in relation to elderly residents, prisons or homeless shelters among others. There have also been actions by companies forced to close for inadequate responses or notices from the government leading them to hardship. 

COVID-19 exposes companies to class actions. The above examples show that it is crucial for companies to carefully inform their investors, customers and the public about the impacts of COVID-19 on their business. 

Anne Merminod

Partner - BLG

Anne Merminod, BLG Anne Merminod is a partner at BLG in Montreal, Canada. Anne is an experienced and skilled litigator who devotes her practice to defending...

Nigah Awj

Associate - BLG

Nigah Awj, BLG Nigah Awj, a Montreal-based associate at BLG, specializes in the field of Maritime law as well as non-marine insurance regulation 

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