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Coronavirus Litigation: The Week In Review – Law360

Coronavirus Litigation: The Week In Review – Law360


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Email Celeste Bott

” href=”http://www.law360.com/#” id=”reporter-popover”>Celeste Bott

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Law360 (June 3, 2021, 8:00 PM EDT) —
The D.C. Circuit has left the U.S. Centers for Disease Control and Prevention‘s eviction moratorium in place, a suit accusing Airbnb of failing to repay hosts and guests for canceled bookings during the COVID-19 pandemic is heading to arbitration, and Carnival Corp. has escaped shareholder claims that it concealed coronavirus infections on its ships.

While courts across the country have altered procedures, restricted access and postponed certain cases to stem the spread of the coronavirus, the outbreak has also prompted litigation across the country.

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

Public Policy

A split Sixth Circuit panel has barred the Small Business Administration from prioritizing pandemic relief for restaurants based on race and sex, slamming the government for “racial gerrymandering” and using “unconstitutional criteria.”

The Thursday decision overturns a Tennessee federal judge’s May 19 ruling denying a white male restaurant owner’s request for a temporary restraining order. In his decision, U.S. District Judge Travis R. McDonough held that Antonio Vitolo, who owns Jake’s Bar and Grill LLC, had failed to rebut the government’s showing that it has a compelling interest in stopping the impacts of historical discrimination.

But the panel majority said that the district court should’ve issued an injunction because the government is the one that hasn’t justified its “discriminatory policy.” The SBA has injected explicit racial and ethnic preferences into the priority process by presuming certain applicants are “socially disadvantaged” based solely on those factors, U.S. Circuit Judges Alan E. Norris and Amul R. Thapar said.

The full First Circuit will reexamine a panel ruling that said the speaker of the New Hampshire House could be sued for refusing to allow virtual votes during the COVID-19 pandemic, setting a Sept. 21 hearing to consider whether revived claims by Democratic lawmakers should proceed. The Democrats, all of whom have underlying health conditions, sued the Republican speaker when he declined to allow members of the nation’s largest state legislature to vote remotely during the crisis.

That April ruling found that Speaker Sherman Packard could be sued, but also noted that the widespread availability of vaccines may render the issue moot. The lawmakers have said the issue has grown beyond reasonable accommodation for people with disabilities into a question of whether the speaker and the legislature are above the law.

And the D.C. Circuit on Wednesday denied a request from Realtors and landlords to block the U.S. Centers for Disease Control and Prevention’s eviction moratorium during an appeal, keeping the ban in place and suggesting the government may well prevail in its defense.

A three-judge panel issued a seven-page per curiam order denying the motion to lift the administrative stay that a D.C. federal judge placed on her May 5 ruling against the nationwide moratorium, which she found exceeded the CDC’s statutory authority. The panel said the judge was well within her authority to stay her own ruling, and that it would not lift that stay because the government has a good chance of winning its appeal.


A proposed class of Walgreen Co. customers suing over the retailer allegedly collecting Pennsylvania sales taxes on tax-exempt face masks asked to move the case back to state court so federal courts wouldn’t interfere in the collection of state taxes.

Counsel for proposed lead plaintiff Daniel Garcia said the federal Tax Injunction Act prohibits district courts from enjoining or restraining the collection of taxes when state courts can handle the issue, which should apply to Garcia’s suit seeking to make Walgreens pay customers back for taxes it collected on face masks sold during the COVID-19 pandemic.

An Ohio free-market research group has backed Ohio’s attempt to invalidate a federal law prohibiting states from using coronavirus aid to offset tax cuts, arguing that a proposed U.S. Department of the Treasury regulation made the statute more ambiguous.

In a Tuesday amicus brief, the Buckeye Institute said the Treasury’s interim final rule on the American Rescue Plan Act’s provision barring states from using federal aid to offset net revenue reductions failed to cure the law’s ambiguities. Under the provision, states that use the aid in that way will risk having to return the funds.

In the same case this week, the Treasury told the court that Ohio’s attempt to invalidate a federal law prohibiting states from using coronavirus aid to offset tax cuts is moot because the state has accepted the funds and terms and lacks standing.

And a proposed class of Pennsylvania customers didn’t know they’d been charged state sales tax on protective face masks unless they scrutinized their receipts, making retailers’ conduct deceptive under state law, their attorney told a federal judge Wednesday.

Citing unclear and changing guidance from state officials on the tax status of masks during the pandemic, retailers including Walmart and Big Lots sought to toss the customers’ claim that stores had violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. But attorney Kevin Abramowicz, representing the customers, said the law put the burden on the companies not to overcharge or collect taxes on tax-exempt goods, which customers couldn’t realize they’d done until they got to the register.


The last plaintiff standing in a proposed class of married couples of mixed immigration status who lost out on COVID-19 stimulus payments shot back at the Internal Revenue Service‘s call to dump her suit, reiterating her constitutional claims after the rest of her party dropped out.

Ohio resident Juana Rueda has declined to join more than a dozen other U.S. citizens and their immigrant spouses who voluntarily dropped their claims against the Treasury Department and the IRS in April, citing amendments to the Coronavirus Aid, Relief and Economic Security Act.

On Wednesday, Rueda pushed back against the IRS’ renewed call to toss her case, saying that her complaint centers on the “separate and unequal” frameworks that the IRS applied to determine which couples qualified for advance tax refunds before the first round of stimulus checks went out last year.

Commercial Contracts

A California federal judge has sent to arbitration a suit challenging Airbnb’s purported failure to properly repay hosts and guests for canceled bookings during the COVID-19 pandemic, pausing rather than dismissing court proceedings in case the home-sharing platform is found to have wrongly withheld funds.

U.S. District Judge Jon S. Tigar’s Tuesday order granted Airbnb Inc.’s motion to compel arbitration in lead plaintiff Anthony Farmer’s proposed class action, finding that the company didn’t violate a section of the California Code of Civil Procedure by failing to timely pay a $1,500 arbitrator compensation fee due to the American Arbitration Association.

Students at Carnegie Mellon University told a Pittsburgh federal court that more than a handful of written agreements governed the school’s alleged obligations to provide in-person instruction, as they sought to avoid dismissal of a proposed class action over a switch to online classes during the coronavirus pandemic.

The proposed class led by Abigale Pfingsten and Anokhy Desai said in a brief that prior federal court decisions tossing similar suits against Temple University, the University of Pennsylvania and the University of Pittsburgh were wrong to discount the implied promises made about the benefits of on-campus classes, which students allegedly paid for but did not get when schools moved online halfway through the spring semester of 2020 due to COVID-19.

And a New Jersey federal judge has kept alive a proposed class action over Monmouth University’s transition to all-remote instruction due to the pandemic, rejecting traditional breach of contract claims but permitting a quasi-contract claim that the school improperly kept tuition and fees after ceasing in-person classes.


Georgia staffing company Insight Global LLC is asking a court to invalidate the $735,000 cancellation fee a Florida hotel charged it after halting a January conference the company said would have been a “super-spreader” COVID-19 event.

More than 2,200 people were set up to attend the long-scheduled event from 60 cities across the U.S. and Canada, Insight Global claims in the suit, filed May 25 in the Georgia State-wide Business Court. It says that despite many attempts to cancel, reschedule or restructure the event to accommodate COVID-19 safety protocols, Orlando World Center Marriott refused to call it off or work with the company to improve safety for attendees.

The hotel insisted it could stage the conference and subsequently charged Insight Global a $735,000 cancellation fee, according to the lawsuit.

And Florida Gov. Ron DeSantis on Wednesday slammed the federal government’s request to file additional briefs in their legal fight playing out in federal court over pandemic-related cruise industry restrictions, saying in a statement that requiring cruise-goers to be vaccinated discriminates against families with children.

In a response brief, Florida argued that allowing the CDC to file additional briefs will delay a ruling on the state’s pending preliminary injunction bid, thereby harming Florida’s economy.

Product Liability

A cleaning supplies wholesaler that paid $2.5 million for hand sanitizer at the peak of the COVID-19 crisis claims in a new lawsuit that its order was breached with late, inferior product, with bottles missing a specified pump-top and with a third of the order made in Mexico, not Colorado as promised.

Atlanta-based S.P. Richards Co. said Solv-All Alliance Group broke its contract with the shipment of 316,800 16-ounce bottles of sanitizer when the product was delayed three times, then didn’t meet the specifications of the order.

S.P. Richards is seeking the reimbursement of nearly $2.5 million it paid for the order and punitive damages from Solv-All and its CEO Scott Marincek, for alleged negligent misrepresentation, breach of implied and express warranty, fraud and breach of contract.


Amazon‘s claim that the New York attorney general sued it over COVID-19 worker protections in bad faith drew skepticism Tuesday from a Brooklyn federal judge, who suggested the case may be moot as the pandemic fades.

During remote arguments, U.S. District Judge Brian M. Cogan told counsel for Amazon he faced an “uphill battle” to convince him that Attorney General Letitia James had brought her action in bad faith. At the same time, the judge questioned whether both sides were “caught up in the past” and asked them to resolve their dispute, as the worst of the COVID-19 emergency had passed.

In its filings, Amazon has claimed “significant evidence that the [Office of the Attorney General] launched its investigation and brought its case in a ‘bad faith’ effort to harass Amazon” — specifically claiming the office prejudged its own investigation — ignored contradictory facts, applied a double standard, disregarded “clear legal limits on its authority” and “engaged in a pattern of conduct designed to damage Amazon.”

And the former general counsel for a New York plastic surgery practice filed a discrimination suit Wednesday alleging the practice wrongly furloughed him while he was hospitalized for COVID-19, and then refused to rehire him due to his long-term virus symptoms.

Scott Edelman sued Aristocrat Plastic Surgery PC, which operates two plastic surgery practices in midtown Manhattan and Long Island, and its owner and lead surgeon Kayvon Tehrani in New York federal court. He alleges that their decision to terminate him when he suffered from “long-haul” coronavirus last spring violated New York state and city human rights laws and the Rehabilitation Act.

Edelman, who had been APS’ vice president of business affairs and general counsel since 2013, says he told Tehrani in March 2020 that he’d been hospitalized and put on supplemental oxygen. Just a few days later, Edelman claims, he was informed that he was among a group of APS employees being furloughed, even though many workers directly below him kept their jobs.

Real Estate

Victoria’s Secret owes $32.4 million for abandoning its store at the Westfield World Trade Center shopping center, the mall’s operator alleged in the latest New York state court spat to break out between the retailer and landlord.

Westfield alleges that its former tenant has wrongly used temporary COVID-19 closures as reason to pack up and leave the mall with $4.3 million in past-due rent, as well as $28.1 million in future payments left on the lease that runs through 2029.

Victoria’s Secret Stores LLC informed Westfield in January that it was invoking a “co-tenancy failure” clause to terminate the lease that it inked with the underground mall, managed by Unibail-Rodamco-Westfield SE, in February 2015. The clause stated that Victoria’s Secret could cancel the contract early if Westfield failed to keep 75% of the mall’s stores open and operating for 12 consecutive months, according to the lawsuit.

But Westfield says it has clear evidence that its stores’ operations did not dip beneath this 75% threshold for an entire year. And even though it provided this data to Victoria’s Secret, it claims, the company completely vacated the premises at the end of April.


A New Jersey federal judge has sent to the Western District of New York a proposed class action over Eastman Kodak Co.’s award of stock options to executives ahead of a $765 million COVID-19 drug loan announcement, concluding that that forum is the most appropriate venue even though none of the parties asked for it.

In approving the transfer, Chief U.S. District Judge Freda L. Wolfson pointed out that Kodak is based in Rochester, New York, and the Western District is where the alleged misconduct occurred with respect to the potential loan from the U.S. International Development Finance Corp. and the stock options to CEO James Continenza and Chief Financial Officer David Bullwinkle.

The judge handed down that decision in addressing a motion from one of the three proposed lead plaintiffs — Les Investissements Kiz. Inc. and UAT Trading Service Inc., collectively referred to as the Kiz Group — to ship the case to the Southern District of New York, where a similar proposed class action is pending.

And a Florida federal judge found that investors hadn’t shown any “severe recklessness” on the part of Carnival Corp. in connection with the cruise line’s public statements about the risks posed by COVID-19 as the pandemic was breaking out.

U.S. District Judge K. Michael Moore dismissed the putative class action filed roughly a year ago accusing the world’s largest cruise provider of concealing COVID-19 infections on its ships and spreading the virus “at various ports throughout the world.” The judge said he could not find any statements from the company — pertaining to its “commitment” to health and safety or about complying with regulatory requirements — that rose to the level of being false or misleading.


UnitedHealth units were hit with a lawsuit Wednesday by a New Jersey medical testing laboratory alleging the insurer shirked its duty to cover tens of thousands of claims for COVID-19 tests, despite earning billions of dollars in profits last year as the pandemic swept the nation.

Genesis Laboratory Management LLC says the insurance giant has failed to reimburse it for 51,000 legitimate claims for coronavirus diagnostic tests that it “provided and continues to provide” to United’s insureds, in violation of state and federal laws. Additionally, the insurer subjected the lab to burdensome medical records requests and in some cases denied claims for immaterial reasons, Genesis alleged.

A New York personal injury law firm sued its insurer in New York federal court over pandemic losses it says it’s owed, alleging Hartford Insurance Co. is skirting its duties under a policy it issued shortly before the first major virus outbreak in the United States.

Daniel P. Buttafuoco & Associates said its all-risk policy with Hartford protected it against catastrophic events like the coronavirus pandemic, and included civil authority coverage for the suspension of business operations required under government stay-at-home orders. Employees at the firm’s Long Island office contracted COVID-19, the firm said in its complaint, making the space unsuitable for work.

Twenty-five owners of popular Chicago-area restaurants including Buffalo Wild Wings and Jack Gibbons Gardens have sued Society Insurance, alleging the carrier must cover their revenue losses caused by COVID-19 and government shutdown orders. The bar and restaurant franchisees told an Illinois federal judge Wednesday that Society has wrongfully denied coverage of their pandemic-related losses and failed to properly investigate their insurance claims.

Also on Wednesday, a Minnesota federal judge ruled that IMT Insurance Co. must face a hair salon’s COVID-19 business interruption coverage suit, saying extending the policy’s virus exclusion to include government closure orders would go “too far.” U.S. District Judge John R. Tunheim said the salon owner had sufficiently alleged a direct physical loss, a precondition for coverage, by showing his hair salon and barbershop lost function and value after being forced to close by government orders last year.

Strathmore Insurance Co. argued to the First Circuit on Wednesday that a lower court got it right as a seafood chain’s losses from closing during the pandemic weren’t from the presence of the coronavirus causing a physical loss or damage at its properties.

In New Jersey, a federal judge has tossed a tanning salon’s proposed class action for coverage of pandemic losses, saying a virus exclusion in the salon’s policy with Nationwide Mutual Insurance Co. precludes any coverage.

And in a major loss for hundreds of businesses in western Washington state, a federal judge has found that pandemic losses they sustained are not covered by their policies because they didn’t show the virus caused physical loss or damage. U.S. District Judge Barbara J. Rothstein said provisions covering physical loss in the businesses’ all-risk policies did not apply to the loss of access to a property. 

The same judge on Wednesday threw out a cryotherapy clinic’s putative class action for coverage of pandemic losses, saying the clinic, like other businesses before it, had failed to show direct physical loss or damage required for coverage.

–Additional reporting by Eli Flesch, Daphne Zhang, Shawn Rice, Bill Wichert, Matthew Santoni, Hailey Konnath, Dean Seal, Asha Glover, Chris Villani, Joyce Hanson, Rachel Sc

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