Should businesses reopen? Stay closed? Either way, ‘Someone will sue’

By Daniel Fisher

As states like Georgia, Tennessee and Texas start to reopen their economies, business leaders are left with some tough decisions. Open up and risk being sued by customers and employees who contract COVID-19, or stay closed and get sued for failing to fulfill contracts with other companies? Allow infected workers back on the job, or risk a lawsuit by making them stay home?

“In many ways, no matter what decision a business makes there’s litigation risk attached to it,” said Brian P. Downey, a partner with Pepper Hamilton who represents companies embroiled in employee and business disputes. “Someone will be unhappy, someone will be aggrieved and someone will sue.”

Companies in Georgia, for example, can no longer blame their state government for failing to restart operations and meet their business obligations. That could get them in trouble with customers who have contracted for supplies and services they require to keep their own businesses running. That might spur them to make the business decision of opening back up.

As employers, however, those companies operate under a different set of rules. Their local health department might still mandate strict social distancing. The Centers for Disease Control, the Occupational Safety and Health Administration and other agencies might have different rules and recommendations. Which to follow? All of them.

“It’s incumbent on businesses to have a deep understanding of the full measure of laws and regulations that are going to govern ramp-up and return-to-work activity,” said Matthew Caligur, a partner with Baker Hostetler. “There are at least three substantive bodies of law to be familiar with.”

State common law generally applies to stores and other businesses that might be vulnerable to lawsuits by “invitees,” which basically means anybody who sets foot on their premises. Lawyers will be actively seeking clients who claim they came down with COVID-19 by going into a store that had inadequate protections, and they’ll also be looking for employees who claim they got sick because the boss didn’t give them the proper personal protective equipment.

Walmart has already been hit with a wrongful-death lawsuit by the estate of a man who worked at a Chicago-area store.

State common law is notoriously accommodating to plaintiff claims, so companies can only partially protect themselves by following CDC guidelines as well as whatever their state and local governments recommend or require. They can gain more comfort from the legal requirement that plaintiffs prove causation – that their injury was caused by the business they are suing. With the latest data suggesting millions of people in New York City have been infected with COVID-19, that may be a tough hill for plaintiffs to climb.

Companies can easily argue customers caught the disease somewhere else. Workers on an assembly line, however, will probably have a much easier time pursuing claims they caught the disease at work. One major meat packer has already been sued.

Even if causation provides a solid defense, restaurants and other businesses open to the public still face difficult decisions, Downey said. How much do they restructure the physical operations to minimize the risk of spreading disease? How much PPE should employees wear? Should they test customers coming in the door? With what? Infrared thermometers? Operated by who, and with what training? Hello, privacy lawsuits without a plan to deal with the digital information being stored. In Illinois, with its strict biometric privacy law, the whole idea of testing anybody might be a non-starter.

The novel coronavirus raises novel questions under the Americans with Disabilities Act, which requires employers to make reasonable accommodations for employees who suffer a disability. Will COVID-19 apply, and if so, how much of an accommodation must an employer make for an employee whose mere presence could kill another worker? The most Downey will say is companies should follow CDC and OSHA guidelines, be transparent about the presence of the coronavirus in the workplace without sharing names, and make reasonable accommodations for infected workers but discipline others if they refuse to show up out of fear of the disease.

Disputes over business interruption insurance have already blossomed into nationwide litigation and some states are considering laws requiring insurers to pay claims. But contract litigation is also going to erupt as companies in Georgia, say, try to restart operations but cannot obtain materials from suppliers in states that are still under lockdown.

“There’s an argument that if we’re shut down by government order, we can’t perform” under the contract terms, Downey said. “Once that’s gone, is the continued existence of the virus sufficient?”

Federal law and some state statutes protect certain industries against lawsuits based on COVID-19. The Public Readiness and Emergency Preparedness Act and the CARES Act offer broad immunity from state and federal lawsuits to companies involved in manufacturing, delivering or dispensing “covered countermeasures.” That includes PPE, medical devices and most hospital procedures. But it goes further than that: A vacant hotel requisitioned as a staging area for COVID-19 patients could well be protected against slip-and-falls and the lawyers may have to take a pass on vehicle accidents in the parking lot of a warehouse supplying N95 masks to the local hospital.

If you’re designing, testing, donating, selling or distributing an approved medical device, “you’ve got fairly broad liability protection throughout the supply chain,” said Caligur.