Class Actions in a COVID-19 World: The Floodgates are Now Open
Most of the United States is nearly a month into adjusting to stay-at-home orders, business closures, event cancellations, working from home, e-learning, and social distancing, as a result of the COVID-19 pandemic. The effects of COVID-19 are likely to be felt for years to come, both inside and outside of courthouses. As to the former, class actions related to COVID-19 have exploded over the last several weeks. Unsurprisingly, much of the recent spike is due to companies changing cancellation or refund policies, or businesses that have temporarily closed and have simply refused to refund or credit customers who have paid for services. While business are attempting to adjust to mandated closures, reduced hours, and cancellations – some better than others – frustrated consumers are reacting, both with individual and class action lawsuits.
This article is meant to be an update of a March 20, 2020 article regarding COVID-19-related class litigation [see Class Actions in a COVID-19 World], and this article will focus on the types of class actions that have been filed in state and federal courts across the country.
With a couple exceptions, COVID-19-related class litigation thus far breaks down into five general categories: (1) consumer class actions; (2) exposure-related class actions; (3) securities class actions; (4) employment class actions; and (5) business class actions. Within some of those general categories (particularly the consumer category), there are already distinct subcategories.
Below is a summary of COVID-19-related class actions, broken down by those five categories. All of these cases are in the initial stages at this point in time, so there have not been many substantive rulings, and in many cases, the defendants have not yet been served.
Consumer Class Actions
Consumer class actions have predictably begun to spring up all over the country, and the consumer class actions fall within a few distinct subcategories: (1) failure to provide refunds for things like canceled flights, canceled events, or closed health clubs or other organizations that charge a membership fee; (2) false and deceptive advertising; (3) price gouging; (4) education-related; and (5) foreclosure-related.
Failure to Refund
As businesses and other institutions struggle to determine how to handle refunds, credits, and cancellations in light of the coronavirus – often changing their policies mid-stream, sometimes to the benefit of customers and sometimes to their customers' detriment – it should come as no surprise that class actions relating to refunds (or, more accurately, the failure to issue refunds) have become one of the hottest areas in COVID-19-related class litigation.
- Airlines and Cruise Lines. Several failure-to-refund class cases have been filed against airlines and cruise lines in the last two weeks, including at least three against United Airlines. The lawsuits allege that the airlines and cruise lines either changed their refund policy to be more restrictive in light of COVID-19 or have otherwise refused to provide refunds.
- Levey v. Concesionaria Vuela Compania de Aviacion, S.A.P.I. de C.V., et al., Case No. 1:20-cv-02215 (N.D. Ill.) (filed April 8, 2020)
- Mitchell v. Nursecon at Sea LLC, et al., Case No. 1:20-cv-21503-UU (S.D. Fla.) filed April 8, 2020)
- Utley, et al. v. United Airlines Holdings, Inc., et al., Case No. 1:20-cv-00756-SO (N.D. Ohio) (filed April 7, 2020)
- Compo v. United Airlines Inc., et al., Case No. 1:20-cv-02166 (N.D. Ill.) (filed April 6, 2020)
- Rudolph v. United Airlines Holdings, Inc, et al., Case No. 1:20-cv-02142 (N.D. Ill.) (filed April 6, 2020)
- Membership Fees. Several health clubs and other social clubs that have closed or stopped scheduling events due to COVID-19 are facing putative class actions as a result of their alleged failure to refund membership fees or their ongoing charging of fees to members.
- Carisi v. Events and Adventures California, et al., Case No. 3:20-cv-02260-SK (N.D. Cal.) (filed April 5, 2020) (singles social club)
- Delvecchio, et al. v. Town Sports International LLC, et al., Case No. 1:20-cv-10666-MLW (D. Mass.) (filed April 5, 2020) (health clubs)
- Jampol v. Blink Holdings, Inc., Case No. 1:20-cv-02760-KPF (S.D.N.Y.) (filed April 2, 2020) (health clubs)
- Labib v. 24 Hour Fitness USA Inc., Case No. 3:20-cv-02134-JD (N.D. Cal.) (filed March 27, 2020) (health clubs)
- Namorato, et al. v. Town Sports International, LLC, et al., Case No. 1:20-cv-02580-VSB (S.D.N.Y.) (filed March 26, 2020) (health clubs)
- Event cancellations. The cancellation of events – such as sporting events, concerts, student trips, and musical festivals – and companies' failure to offer refunds for the cancellations have prompted several putative class actions.
- McMillan v. StubHub Inc., et al., Case No. 3:20-cv-00319 (W.D. Wis.) (filed April 2, 2020) (failure to provide ticket refunds for canceled sporting events and concerts)
- Rutledge v. Do Lab Inc., Case No. unknown, (Cal. Super. Ct., Los Angeles County) (filed March 24, 2020) (failure to provide refunds relating to canceled Lightning in a Bottle music festival)
- Grabovsky v. EF Institute for Cultural Exchange, Inc., et al., Case no. 3:20-cv-00508-GPC-BLM (S.D. Cal.) (filed March 17, 2020) (failure to provide refunds for canceled educational trips)
- Douglas v. EF Institute for Cultural Exchange, Inc., et al., Case no. 37-2020-00013374-CU-MC-CTL (Cal. Super. Ct., San Diego County) (filed March 11, 2020) (failure to provide refunds for canceled educational trips)
False or Deceptive Advertising
Thus far, at least two putative class actions have been filed that allege false or deceptive advertising claims based on statements made regarding the effectiveness of hand sanitizer at killing germs and viruses, including COVID-19.
- Taslkian v. Target Corporation, et al., Case No. 2:20-cv-02667-ODW-JPR (C.D. Cal.) (filed March 20, 2020)
- David, et al. v. Vi-Jon, Inc. d/b/d Germ-X, Case No. 3:20-cv-00424-CAB-AGS (S.D. Cal.) (filed March 5, 2020; voluntarily dismissed without prejudice April 9, 2020)
Thus far, at least one price-gouging putative class action has been filed against Amazon as a result of allegedly excessive prices the plaintiff paid for toilet paper and hand sanitizer in light of COVID-19. Armas v. Amazon.com Inc., Case No. 104631782 (Fla. Cir. Ct., 11th Cir., Miami-Dade County) (filed March 10, 2020).
At least two putative class actions have been filed relating to the closure of colleges and universities. In both, the putative class seeks partial refunds of room and board or housing fees, where dormitories and campus housing have been closed for the remainder of the semester as a result of COVID-19.
- Corinti v. Asset Plus Corporation, Case No. 4:20-cv-00173-MW-MAF (N.D. Fla.) (filed April 7, 2020) (seeking refund of housing fees from college dormitory property management company)
- Rosenkrantz, et al. v. Arizona Board of Regents, Case No. 2:20-cv-00613-JZB (D. Ariz.) (filed March 27, 2020) (seeking refunds of room and board fees paid by or on behalf of students at Arizona State University, Northern Arizona University, and the University of Arizona)
In West Virginia, homeowners have filed a putative class action against Bank of America, seeking to enjoin foreclosure proceedings as a result of the COVID-19 pandemic and claiming that they were the victims of predatory lending. James L. Shuff, et al. v. Bank of America, et al., Case No. 5:20-cv-00184 (S.D. W.Va.) (filed March 16, 2020).
Mass Tort/Exposure to COVID-19 Related Class Actions
As more people become infected with COVID-19, we can expect to see more putative class actions – both against business and governmental entities – relating to exposure to COVID-19 and the alleged failure to take precautions to prevent the spread of the virus.
- Cruise Line Exposure. At least two exposure-related putative class actions have been filed against cruise lines relating to COVID-19 outbreaks on cruise ships, alleging failure to properly sanitize cruise ships, refusal to provide any refund if passengers canceled, and blocking TV news channels to prevent passengers from hearing about COVID-19.
- Archer et al. v. Carnival Corporation & PLC, et al., Case No. 3:20-cv-02381-JSC (N.D. Cal.) (filed April 8, 2020)
- Turner v. Costa Crociere SPA, et al., Case No. 1:20-cv-21481-KMM (S.D. Fla.) (filed April 7, 2020)
- Prison and Detention Center Exposure. At least two putative class actions have been filed relating to conditions in prisons and/or detention centers – and the particular vulnerability of inmates and detainees to contracting COVID-19.
- Valentine, et al. v. Collier, et al., Case No. 4:20-cv-01115 (S.D. Tex.) (filed March 30, 2020) (inmates at Texas prison alleging lack of access to soap and hand sanitizer increases chances of contracting COVID-19)
- Savino, et al. v. Hodgson, et al., Case No. 1:20-cv-10617-WGY (D. Mass.) (filed March 27, 2020) (putative class action on behalf of ICE detainees alleging lack of toilet paper and soap in ICE detention facilities, and seeking to be temporarily released with ankle monitors until COVID-19 pandemic subsides)
- Lawsuits Against China. At least three putative class actions have been filed against the People's Republic of China relating to China's alleged failure to report or contain COVID-19.
- Bourque CPAs and Advisors, et al. v. The People's Republic of China, et al., Case No. 8:20-cv-00597-RGK-DFM (C.D. Cal.) (filed March 26, 2020)
- Bella Vista LLC, et al. v. The People’s Republic of China, et al., Case No. 2:20-cv-00574-JCM-NJK (D. Nev.) (filed March 23, 2020)
- Alters, et al. v. People's Republic of China, et al., Case No. 1:20-cv-21108-UU (S.D. Fla.) (filed March 12, 2020)
Securities-Related Class Actions
At least two COVID-19-related stock drop securities class actions have been filed as a result of statements made by publicly traded companies.
- Douglas v. Norwegian Cruise Lines, et al., Case No. 1:20-cv-21107-RNS (S.D. Fla.) (filed March 12, 2020) (alleging Norwegian made false or misleading statements in filings with the SEC that downplayed the current and potential impact of COVID-19 on Norwegian's operations and concealed information regarding Norwegian's response to the virus)
- McDermid v. Inovio Pharmaceuticals, Inc., et al., Case No. 2:20-cv-01402-GJP (E.D. Pa.) (filed March 12, 2020) (alleging Inovio made several false and misleading public statements about its development of a COVID-19 vaccine, causing share prices to increase significantly, before declining by over 70% after more information became public showing that Inovio had not developed a vaccine)
Employment Class Actions
While there are only a few employment-related putative class actions that have been filed as of yet, it is reasonable to expect the number to increase. Claims so far include those: (1) seeking increased pay for employees who work in fields that increase their chances of contracting COVID-19; (2) seeking unemployment benefits; (3) seeking to enforce social distancing guidelines; and (4) failure to pay employees after COVID-19-related shutdowns.
- Olsen v. Ratner Companies, et al., Case No. 1:20-cv-03760-RBK-JS (D.N.J.) (filed April 7, 2020) (alleging FLSA violation for alleged failure to pay employees after COVID-19-related shutdown)
- Brenda Braswell, et al. v. The United States of America, Case No. 1:20-cv-00359-VJW (Fed. Ct. Claims) (filed March 27, 2020) (putative class action filed by federal employee union seeking hazard pay for those working in jobs exposing them to COVID-19, sometimes without proper protective gear)
- Alaska State Employees Association, Local 52 v State of Alaska, Case No. 3AN-20-5652-CI (Alaska Super. Ct., 3d Judicial Dist., Anchorage) (filed March 24, 2020) (putative class action by public employees' union relating to State of Alaska's alleged failure to allow telecommuting, not permitting employees to follow social distancing guidelines, and failing to provide proper protective equipment for employees that interact with the public)
- Verhines v. Uber Technologies, Inc., Case No. 3:20-cv-01886-EMC (N.D. Cal.) (filed March 12, 2020; removed to federal court March 17, 2020) (seeking unemployment benefits and paid sick leave on behalf of rideshare drivers)
- Rogers, et al. v. Lyft Inc., Case No. CGC-20-583685 (Cal. Super. Ct., San Francisco County), Case No. 3:20-cv-01938-VC (N.D. Cal.) (filed March 12, 2020; removed to federal court March 19, 2020; motion to compel arbitration granted April 7, 2020; partially remanded April 7, 2020) (seeking unemployment benefits and paid sick leave on behalf of rideshare drivers)
Business Class Actions
Individuals are not the only putative class plaintiffs bringing COVID-19-related cases. Businesses have also begun to bring class action lawsuits relating to small business loans, business interruption, and insurance claim denial.
- Small Business Loans. Several small businesses in Maryland filed a putative class action against Bank of America, alleging that the bank blocked the businesses' applications for a loan under the Paycheck Protection Program associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act because the businesses do not currently have a loan from Bank of America. Profiles Inc., et al. v. Bank of America Corporation, et al., Case No. 1:20-cv-00894-SAG (D. Md.) (filed April 3, 2020).
- Closure of Businesses. A small business in Pennsylvania and two of its former employees filed a putative class action against the Governor of Pennsylvania and the Secretary of the Pennsylvania Department of Health alleging that the Governor's order to close non-essential businesses constitutes an improper taking without compensation in violation of the Fifth Amendment of the U.S. Constitution. Schulmerich Bells LLC, et al. v. Wolf, et al., Case No. 2:20-cv-01637 (E.D. Pa.) (filed March 26, 2020).
- Denial of Business Interruption Insurance Claims. At least two putative class actions have been filed against insurers by restaurants and/or bars whose claims for business interruption coverage have been denied.
- El Novillo Restaurant v. Certain Underwriters at Lloyd's London, et al., Case No. 1:20-cv-21525-UU (S.D. Fla.) (filed April 9, 2020)
- Billy Goat Tavern I Inc., et al. v. Society Insurance, Case No. 1:20-cv-2068 (N.D. Ill.) (filed March 31, 2020)
Class litigation relating to COVID-19 is just starting to heat up, and it will likely be here for years to come. In addition to the types of class actions identified above, below are some industries and types of business and entities that may end up as defendants in COVID-19-related putative class actions, and the types of potential class claims they might face.
- Health Care. Even though hospitals, health care providers, and nursing homes appear to have avoided putative class litigation thus far, it's reasonable to expect defending against COVID-19-related class claims in the future for failure to contain the virus, failure to properly diagnose the virus, failure or refusal to treat persons with the virus, or, in the case of nursing homes, wrongful death or other medical-related claims relating to COVID-19.
- Travel, Hospitality, and Service. The travel and hospitality industries are beginning to face COVID-19-related class actions for failing to provide refunds, changing refund or credit policies, failing to contain the virus (i.e., on cruise ships), and event cancellations, and one can expect that there will be more putative class actions in those areas. In addition, certainly now that the spring break season is coming to an end – and many would-be travelers had to cancel their plans, due to stay-at-home orders and the spread of the virus in general – hotels and vacation rental companies may face putative class actions for charging non-refundable deposits or refusing to fully refund customers who had to cancel travel plans. Also, restaurants and bars – even those open only for carry-out or delivery during local or state-wide restaurant and bar closure orders – could face putative class actions for failing to take proper precautions to prevent the spread of the virus, should any customer become infected, either while picking up a carry-out order or eating food prepared by the restaurant.
- In addition to business interruption insurance claim denials, insurance companies may face putative class actions relating to COVID-19, filed by both individuals and businesses, for denial of claims related to the virus, including travel insurance claims and medical claims.
- Employers and Businesses in General. Finally, in addition to the types of class actions that have already been filed and the more industry-specific types of claims identified above, employers and businesses in general could face putative class actions relating to COVID-19 for a variety of reasons, including the following: (1) any business where the virus was spread or was not contained could face potential class litigation, either by employees or customers; (2) any business requiring employees to work, failing to reasonably accommodate telecommuting or working from home, or failing to provide proper precautions or equipment could face potential class litigation from employees; (3) employers may face potential wage and hour claims, such as failure to pay overtime, failure to reimburse employees for expenses required to work remotely, or failure to allow proper break time, especially when employees are working remotely and may be expected or "encouraged" to remain accessible even during what would normally be off hours; (4) claims relating to delays in performance or delivery of goods or services; (5) employee privacy issues, including improper disclosure of medical conditions or diagnoses; or (6) potential discrimination or disparate impact claims relating treatment of employees or customers differently based on actual or perceived illness, disability, age, race, or national origin.
An earlier update regarding COVID-19-related class litigation [see Class Actions in a COVID-19 World] outlined some basic steps that businesses and employers could take to help avoid potential class actions related to COVID-19: (1) don't lie; (2) implement clear and concise written policies and procedures – and follow those policies and procedures; (3) follow federal- and state-issued mandates and guidelines regarding COVID-19; (4) treat current customers and consumers as though you would like them to continue to be customers and consumers after the COVID-19 virus has been contained; and (5) incorporate class action waivers and arbitration clauses into customer agreements, to the extent feasible. As the recent spate of COVID-19-related putative class actions shows, businesses and other institutions that fail to take those basic steps risk facing the burden and expense of class litigation.
The attorneys at Burke, Warren, MacKay & Serritella, P.C. have experience representing companies in hundreds of class action lawsuits locally and nationwide, in a wide range of subject matters.