Class Actions in a COVID-19 World:  The Floodgates are Now Open

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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.

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.

Price Gouging

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).

Education

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.

Foreclosure Prevention

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.

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.

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.

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.

Looking Forward

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.

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.

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