It has been six months since the initial wave of government mandated “stay-at-home” orders due to the COVID-19 pandemic. During this time, we have seen at least four important litigation trends emerge. Here’s a rundown of these trends and how they are affecting businesses and individuals.
COVID-19 has disrupted business operations and contracts across industries on an unprecedented scale, causing some parties to try to avoid or delay their contractual obligations while others seek to enforce them. As a result, there has been increased focus on the application of certain defenses to breaches of contractual obligations to perform — force majeure, impossibility, impracticability and frustration of purpose – arising from COVID-19.
We have been reviewing force majeure cases regularly, and counseling clients on new developments. Click here for our coverage of a high-profile refund dispute arising from the cancellation of Virgin Fest Los Angeles, and here for our analysis of one of the first force majeure cases arising out of COVID-19 to be filed in California. You may also request our firm’s presentation of specific “case studies” in which courts have addressed issues such as: what happens when a contract does not have specific force majeure language; how to determine if a specific event triggers a force majeure clause; whether the event prevented or impeded performance; and whether reasonable steps were taken to avoid or mitigate the effects of the event.
Deceptive Trade Practices
There has been a rise in complaints against companies advertising products using allegedly false and misleading claims that the products can diagnose, treat, cure, or prevent COVID-19. These complaints have been brought by customers, competitors, and federal regulators. For example, a proposed class action now pending in California alleges that Germ-X, a company that makes hand sanitizer, has falsely claimed its product can fight the coronavirus. According to the lawsuit, consumers purchased hand sanitizer based on the company’s alleged misrepresentations. See Geraldine David et al. v. Vi-Jon Inc., Case No. 3:20-cv-00424 (S.D. Cal.).
For regular updates, please see Frankfurt Kurnit’s Advertising Law Blog, which reports regularly on important advertising law developments related to COVID-19. Recently, we blogged about an FTC warning letter over deceptive mailers offering COVID-19 financial relief, FTC testimony requesting additional enforcement authority, and new Google policies about advertising that promotes COVID-19 conspiracy theories.
Forced closures resulting from COVID-19 have resulted in heavy losses for business and productions, for which they are seeking insurance coverage. Many businesses argue that “all-risk” policies should be interpreted broadly to encompass all risks, and that so-called “civil authority” coverage for losses resulting from an “order of civil or military authority,” should apply to government shutdown orders. On the other hand, insurance carriers argue that COVID-19 does not meet the policies’ physical damage requirements. In some cases, the insurance carriers can point to specific exclusions for virus-related damages. This has led to hundreds of lawsuits from businesses who say insurers refuse to provide coverage.
For more information, see our coverage of the Pandemic Risk Insurance Act of 2020, proposed legislation that would mandate that insurance companies cover business interruption losses because of pandemics, and our analysis of high-profile insurance recovery litigation here.
The COVID-19 pandemic and evolving safety guidance have spawned litigation ranging from allegations for failure to provide employees with adequate personal protective equipment, to failure to implement health-screening policies, to wrongful death claims. These claims have been brought under various theories of liability: traditional negligence claims, claims alleging violations of state or federal workplace safety laws or industry agency safety guidance, workers’ compensation claims, and even wrongful death claims.