The coronavirus has upended markets, disrupted supply chains and forced quarantines. It’s all fertile ground for lawsuits.
Hospitals, restaurants, day care centers, nursing homes and hotels may face claims that they didn’t take adequate steps to protect people. Shareholders can sue if companies fail to act effectively in response to the epidemic. Businesses are scrambling to see if their insurance policies cover disruptions caused by the virus. Governments are reviewing their quarantine powers.
“The impact on the global supply chain, I think, is going to be dramatic,” said Paul White, a partner with Wilson Elser Moskowitz Edelman & Dicker who represents insurers.
Some cases have already been filed: The pilots’ union at
Here’s a survey of the likely legal landscape.
‘Act of God’
The fallout from business disruptions is going to be “very significant in a way we haven’t seen before,” said Joe Balice, a litigator with Brutzkus Gubner in Los Angeles who represents clients in the textile and apparel industry, many of them hit by factory shutdowns in China.
Manufacturers may sue over missed deadlines, while suppliers could sue energy companies, which have already stopped taking some shipments as transportation demand dwindles.
“Someone can say they can’t perform under a contract because they can’t get supplies from China or their people wouldn’t come to work,” Hurst said. “The other side might say you’re being too cautious or you’re just using that as an excuse.”
Insurers are likely to find themselves in court. Balice said businesses are poring over their policies to see if they’re insured against the coronavirus fallout. “And a lot will find out that they are not,” he said.
Business disruption insurance claims typically deal with physical damage, like a factory that has burned down, not closures ordered to control a virus, Balice said. “This could be an area of insurance litigation for many years to come,” he said.
“Companies which already faced business challenges in the Chinese market could get hit hard if they have limited resources,” said Philipp Senff, head of compliance at the law firm CMS in China.
Worker Protections
Some companies have already limited business travel and encouraged employees to work from home. Several industry conferences have been scrapped to prevent large gatherings from spreading the virus.
Now some fear they may be held liable for workers’ participation in meetings or corporate events where employees are exposed. At the same time, efforts to protect staff could run afoul of privacy rules.
“What can they and can’t they ask their workforce about their potential exposure to the virus, travel activities and medical history?” said David Newman, a partner at Morrison & Foerster in Washington, who is leading the firm’s task force on advising clients about the outbreak.
“This is a fluid situation,” Camacho Moran said. “The right answer on Monday may be different by the time we get to Friday.”
Companies “may need to be more flexible in allowing employees to take sick leave and providing sick pay to motivate them to stay home,” said
Businesses that have daily contact with the public or who deal with captive populations are also at risk of getting sued, said
“The claim could be they didn’t move quickly enough to protect residents once it was clear the virus was a danger, or that they didn’t have proper contingency plans in place,” Tobias said.
Airlines have spent years in European Union courts battling and shaping rules on when they should compensate passengers. The EU’s Court of Justice might again have to weigh in on whether the companies could claim extraordinary circumstances beyond their control to avoid new payouts, EU Transport Commissioner
In Germany, the season for annual general meetings is about to start. These meetings -- which must be held within the first eight months of the year -- can be big, filling Olympic stadium halls. While it’s still early to gauge what will happen, lawyers are already exploring what can be done with virtual participation and voting.
Quarantine Power
Government efforts to fight the virus through mandatory quarantines and other such steps are another potential source of litigation, if members of the public push back.
On Tuesday, New York State Governor
The first case was a 39-year-old health care worker who traveled in Iran, which has had a serious outbreak, and who is isolated at home with what Cuomo called mild symptoms. Unlike her case, the lawyer’s presents no clear source of transmission, suggesting the possibility of a new community of person-to-person infection. New York City Mayor
Claims involving the government have already arrived. In addition to
A dozen passengers from the ship, the
“It’s a very difficult situation for the company, but they should have been familiar from handling
The cruise line said it did.
Governments must also protect captive populations from infection.
“The real danger is that the jails have terrible resources, and the coronavirus will likely spread like wildfire in the jail,” he said. “And they’ll bring it straight to the courthouse.”
Prisoners in the Harris County system, which houses the fourth-largest U.S. inmate population, are being screened, and the facility has quarantine experience from managing previous infectious disease outbreaks, said Jason Spencer, a spokesman for the system.
Everything Else
Other lawsuits popping up around the U.S. include claims indirectly related to coronavirus.
A medical staffing agency claims
A suit seeking class-action status alleges that the maker of the hand sanitizer Purell exaggerates its product’s powers to prevent illness.
And then there’s the Manhattan lawyer who asked a court to excuse a delay in suing
(Updates with case of Manhattan lawyer under Quarantine Power)
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Peter Jeffrey
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