COVID-19 has created chaos across every industry sector. As businesses scramble to regain control, the legal community is seeing a significant increase in virus-related litigation—and we can expect to see that number continue to rise as the dust settles in the months to follow.
Since the process of a lawsuit takes time, we have not yet seen the full force of this anticipated tidal wave of litigation. Lawsuits are normally preceded by weeks or months of out-of-court demands and efforts to settle. After a lawsuit is filed and delivered to the opposing party, the defendant has 20-30 days to answer the complaint (and can typically file for an extension). While we’re in the holding period for this enormous stockpile of litigation, the last thing you would want to do is wait until the last minute to hire counsel for your business.
Types of lawsuits to expect
According to a COVID-19 complaint tracker, as of May 20, 1181 federal and state complaints have been filed (via Hunton Andrews Kurth). These complaints are widespread across industries, from prison conditions and employment to banking and housing accommodations. Here are a few examples of notable lawsuits that are emerging:
Medical professionals suing over lack of PPE
As medical facilities become overwhelmed, frontline healthcare workers are at risk due to insufficient supplies of personal protective equipment (PPE), often being asked to reuse masks and gloves in order to be frugal. As medical professionals are especially at risk of contracting COVID-19, hospitals could be liable if they’re not properly equipping their teams.
Workers suing over workplace safety
As some businesses eagerly await the go-ahead to return to the physical workplace, employees may fear their safety has been compromised in the rush to return to business as usual, or they may also complain that they’re not equipped with the appropriate PPE. For example, if your business has not put a disciplined social distancing process in place, you can be at risk for a lawsuit.
Lawsuits related to working from home
Even if your business can operate remotely and decides to remain a hybrid workplace, this poses another set of challenges. Employees may argue about compensation for office supplies and resources such as a WiFi connection or cell phone plan, or in other cases, they may accuse employers of abusing the situation by working them overtime.
Travelers suing airlines and accommodations over refunds
Hotels, rental accommodations, and airlines are facing countless complaints from travelers who have not received a refund for travel plans that were impacted by the pandemic.
Sports, music, and entertainment industry ticket vendors
With all high attendance social events canceled for the foreseeable future, ticket vendors and venues can expect to experience similar discourse as the travel industry if they do not refund or reschedule the events.
Gyms and other memberships
If you are a gym, social club, or another membership-based service that has not been operating and you’re not providing guests and members with some type of reimbursement, you can expect to face legal issues.
Cases challenging coverage decisions from insurance carriers
The insurance industry is experiencing an uptick in business interruption claims, although there is a great deal of debate around the fine print of where a pandemic falls in specific contractual clauses.
Chapter 11 bankruptcies
We’ve said it once, and we’ll say it again—we can expect to see a lot of businesses filing for a Chapter 11 bankruptcy as they reorganize their debt repayment strategy to recover from the economic impact of the pandemic.
Preparedness = survival
It’s safe to say that attorneys will be busy in 2020. If your business is facing legal fallout from COVID-19, it’s imperative that you understand this is not something you can simply ignore until it goes away. As we’ve previously mentioned, it’s especially important to hire counsel early in order to have someone on hand to coach you through the decision-making process that might be scrutinized down the road.
Many business owners also don’t realize that a corporation or LLC cannot represent itself in court and must be represented by an attorney. As large corporations like Niemen Marcus and J. Crew prepare for filing a Chapter 11 bankruptcy, they are backed by a sophisticated counsel that will help them prepare for a smooth process ahead. It will not serve you to delay in seeking counsel and waiting until it is too late.
As we all continue to wade through the mess of COVID-19, you should be focused on your business’ financial obligations to your constituents and creditors, defending matters in good faith, and thoughtfully making the proper decisions using the tools and resources available to you.
While some of our authorities believe that we can just return to normal, there’s no doubt that the travel, hospitality, and brick and mortar retail stores will be impacted by this crisis for much longer. Even when the time is right for your business to become fully operational again, it’s critical that you put all the necessary precautions in place as outlined by the governing authorities in order to protect your business from a lawsuit down the road. Exercise extreme caution in every decision, especially if you’re thinking about selling assets, redistributing assets, or any other business considerations that you would normally not think twice about.
We can begin to face these difficult – and scary – times by arming ourselves with knowledge. Education is power and although we can’t change what’s happening around us, we can put a plan in place to lessen the impact and be prepared for what’s to come.