COVID-19 Resource Center

Class Action Lawsuits: The New Legal Landscape in the Wake of COVID-19

June 1, 2020Article

The COVID-19 pandemic has presented a series of chilling issues including federally-mandated shelter-in-place orders, significant death, and extreme financial hardships. In this time of ever-evolving factual circumstances, businesses should prepare for future class-action lawsuits stemming from the pandemic. Hundreds of lawsuits have already been filed against hospitals, nursing homes, gyms, restaurants, and event vendors like Ticketmaster. These class-actions contain a wide range of causes of action including allegations of personal injury stemming from a business’s purported failure to provide sufficient personal protective equipment (PPE) amid the pandemic as well as breach of contract actions for failure to refund customers’ money for sporting events, concerts, and the like. Unfortunately, businesses must use valuable resources to defend against all lawsuits filed against them, even if the claims are shown to lack merit. The current legal landscape is unclear as the federal government continues to contend with the establishment of a requisite baseline for protection required by businesses. Therefore, the defense of these lawsuits will be on a case-by-case basis with a unique dependence and involvement of both judges and the legislature in various states and nationally. 

As an example, on May 5, 2020, five McDonald’s employees from the greater Chicago area filed a class action lawsuit in the Law Division of the Circuit Court of Cook County, Illinois. The employees, represented by the Chicago-based personal injury law firm of Seidman Marguils & Fairman LLC, claim that the fast food giant has “failed to take adequate steps in response to the pandemic.” The employees claim that McDonald’s has failed to provide adequate PPE, including hand sanitizer, gloves and masks, in the wake of the COVID-19 pandemic which, according to the employees, has “broader public health consequences for the Chicago community.” In addition to allegedly failing to provide PPE, the lawsuit alleges that McDonald’s failed to provide proper notification to employees when co-workers tested positive for COVID-19. The lawsuit seeks an injunction to compel McDonald’s to stop requiring employees to re-use masks, require all customers to wear face coverings, and require McDonald’s to notify employees when an employee tests positive for the virus.

Similarly, three McDonald’s employees have filed administrative actions with the California Division of Occupational Safety and Health alleging unsafe conditions during the coronavirus pandemic.

According to the Chicago Tribune, McDonald’s denies all of the allegations and noted that the allegations are “inaccurate characterizations … which do not represent the actual realities in our 14,000 restaurants around the country”[1] and that the chain has rolled out nearly 50 new safety measures during the pandemic to ensure the safety of its employees.

With class action filings related to the COVID-19 pandemic on the rise, defending class action lawsuits is more precarious than ever. Congress has acknowledged the anticipated onslaught of lawsuits and has not yet proffered legislation to provide guidance for businesses to manage the pandemic as the re-opening of States commence. Senator Mitch McConnell noted during his announcement of the return of Congressional session earlier this month, “Our nation is facing the worst pandemic in over a century and potentially the worst economic shock since the Great Depression. Our response must not be slowed, weakened, or exploited to set up the biggest trial lawyer bonanza in history.”[2]

In order to navigate this new legal landscape and avoid a possible bonanza, companies and businesses should consider several elements in their defense of lawsuits filed in the wake of the COVID-19 pandemic:

Standing

A plaintiff seeking to sue must have standing. Because the COVID-19 circumstances are extremely fluid with shelter-in-place orders and shutdowns still in place in New York City, potential standing arguments exist. In federal court, Article III of the United States Constitution provides that standing exists if a plaintiff has suffered an injury in fact which (1) is causally connected to the defendant’s conduct and (2) can be redressed by a favorable court decision.[3] In contrast to the federal approach which rests on constitutional and prudential grounds, New York courts have treated standing as a common law concept. “‘Standing requires an inquiry into whether a litigant has “an interest … in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.’’” Matter of Montano v. County Legislature of County of Suffolk, 70 A.D.3d 203, 215 (2d Dept. 2009). “A party ‘has standing to maintain an action upon alleging an injury in fact that falls within his or her zone of interest.’” Id. Therefore, if a class action like that against McDonald’s is brought in New York, a factual analysis must be completed to determine whether adequate service has been provided by the business – it may be determined that no injury has ultimately occurred which can call a plaintiff’s standing into question. Standing for a case like that against McDonald’s may be achieved because all plaintiffs in the lawsuit presumably lived and worked in the State of Illinois. However, if not all plaintiffs have tested positive for COVID-19, a court may not recognize a common injury.

Forum

If a class attempts to certify in federal court, it may be possible for corporate defendants to defeat class certification at the outset of the litigation. Federal court often does not favor class certification. If the class is ultimately certified, presiding courts must determine which law applies to non-contract claims. Notwithstanding the fact that contracts typically contain a choice-of-law provision, it is unclear whether that choice will apply to non-contractual claims. As outlined in Phillips Petroleum Co v. Shutts, 472 U.S. 797 (1985), the law of the jurisdiction where a class action proceeds does not presumptively apply to every plaintiff. As the class action lawsuits are trending for causes of action arising in tort, rather than contract, the determination of the law applied in federal court is not certain. While federal court is typically a much more expedient route to resolution, the pandemic has caused a logjam of pre-existing cases in federal court, which may cause a delay in the resolution of cases. New York State Courts, by contrast, do not move nearly as quickly. Given the pandemic, state court cases will likely progress even slower as courts work to alleviate the backup of pending state court cases.

Defenses

The most promising defense for corporate defendants is that of causation and, in this case, injury. The fact-driven elements of causation and injury can provide corporate defendants occasion to build solid defenses. Particularly now, the causation of COVID-19 is still unclear. Recently, it was determined that COVID-19 is not spread on surfaces as previously thought. Medical professionals disagree as to effective social distance policies and procedures. It is the plaintiffs who have the burden to establish a nexus between the alleged conduct and injury. However, the government-mandated shelter-in-place orders, together with the recent national protests with non-masked participants, could be viewed as an intervening cause or contributing factor to alleged injuries.

In the McDonald’s matter, causation and injury will both be significant factors for analysis by a judge. Given the fact that there is no single method for contraction of COVID-19 and that there is no concrete way to prove that employees are properly socially distancing at work, it will be difficult for plaintiffs to establish the necessary causal link to prove their claim. A clear causal link between McDonald’s environment and COVID-19 must be established for the plaintiffs’ argument to have teeth.


Authors: Deena M. Crimaldi (Of Counsel, New York), Jenny DeFrancisco (Associate, New York) Editor: S. Christopher Collier (Senior Partner, Atlanta)

Hawkins Parnell & Young's national litigation team is helping businesses across the United States navigate unprecedented legal challenges arising from the COVID-19 pandemic. Visit our COVID-19 Resource Center for the latest insights and guidance.