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Ending Virus Shutdowns Too Soon Poses Legal Risk for Businesses

April 17, 2020, 1:00 PM

Whenever U.S. stores, restaurants and theaters reopen from coronavirus shutdowns, they may face an unexpected problem: lawsuits from sick patrons and workers.

Business owners hit hard by Covid-19 are eager to get back to work as the outbreak shows signs of slowing and the Trump administration pushes for a quick restart of the nation’s economy. But with no vaccine for the easily transmitted virus, companies opening too soon could be blamed if more people get sick. Walmart Inc. and Carnival Corp. are among those already defending lawsuits by employees or customers.

A wave of personal-injury cases could bankrupt businesses, according to the U.S. Chamber of Commerce, which is recommending government protections. And though it may be difficult to prove that any one company was responsible for spreading Covid-19, legal experts say a surge in such claims could strain the court system.

“The liability concern is a real issue,” said Harold Kim, president of the Chamber’s Institute for Legal Reform. “Right now they’re asking: how do we protect ourselves against risk. The worst-case scenario is that companies will not want to open their doors because the liability risk is so great.”

The scope of the pandemic is creating uncertainty about how the courts will apply standard legal principles, similar to how the system was tested by lawsuits over asbestos, saidDavid Boies, managing partner of Boies Schiller Flexner LLP in New York. Even so, the greater risk will probably come from workers, because they won’t have to prove negligence in courts, he said.

Greatest Risk

“There will likely be many workman compensation claims because of the ease of filing, there is no requirement to prove negligence, and for many people their greatest contact with others, and hence the greatest chance of contracting the virus, is at work,” said Boies, whose clients include numerous large companies.

The coronavirus has infected about 650,000 Americans and killed more than 31,000, forcing business shutdowns nationwide and leaving the economy in shambles.

State governors say they will coordinate the slow return of non-essential businesses across regions once the virus appears to be contained. Even then, many encourage common-sense measures like social distancing and face masks for the foreseeable future. On Thursday, President Donald Trump unveiled broad guidelines states can use to determine when and who can reopen.

But following the advice of public-health officials may not be enough to limit the spread of the virus or liability for companies, said Heidi Li Feldman, a professor at Georgetown University Law Center in Washington.

‘Human Lives’

“Until there’s a vaccine or cure, it’s not going to be advisable for businesses to say they’re risking human lives to restore the economy,” Feldman said.

For those that reopen before eradication, there is an increased risk that customers will claim they got sick and suffered due to the company’s negligence, said John Goldberg, a professor at Harvard Law School and an expert in tort law. Plaintiffs must show, among other things, that the business breached a duty of care owed to the customers and that its actions caused them harm, Goldberg said.

In the case of Carnival, where thousands of cruise-goers were confined on a ship for more than a week, the plaintiffs claimthe company put them at risk by disregarding outbreaks in February to start other voyages in March, resulting in passengers and crew getting sick.

Princess declined to comment on pending litigation, but said, “Our response throughout this process has focused on the well-being of our guests and crew within the parameters dictated to us by the government agencies involved and the evolving medical understanding of this new illness.”

Read More: Monthly Loss of $431 Billion Spurs Insurance Claims

For customers of millions of public shops and restaurants, where people come and go, it will be much harder to prove that a business’s actions are responsible for their sickness.

“It may be easy to claim that there was undue exposure in a particular store, but very difficult to prove that that the person with Covid-19 contracted it because of exposure in any particular place,” said Mike Steenson, who teaches at Mitchell Hamline School of Law in Saint Paul, Minnesota.

To prevail, an infected customer must show he or she didn’t have the virus before visiting the business, said Benjamin Zipursky, a law professor at Fordham University. A plaintiff also would have to prove they had no contact with anyone or any shared spaces from the time they left home to the time they reached the business, or on the way back -- a tall order.

“Most plaintiffs aren’t going to be anywhere near being able to prove all those things,” Zipursky said.

Long Incubation

Complicating matters is the long incubation period for the virus, which can last two weeks, said Nicholas Rozansky, an attorney with Brutzkus Gubner in Los Angeles, whose clients include retailers in the toy and apparel industry.

“How can you prove with a preponderance of evidence that you got it at a particular location -- it’s already difficult to do that with food poisoning, which happens a lot quicker,” Rozansky said.

While proving personal injury cases will be difficult, juries may still question whether companies went far enough to protect customers, like cleaning surfaces regularly, keeping patrons far apart and checking workers for virus symptoms. Legal experts said businesses that relax enforcement measures could find themselves on the hook even if evidence doesn’t show they had a direct link to the plaintiff getting sick, although businesses might then prevail on appeal.

Many companies are urging Congress to grant them limited immunity from litigation that arises from coronavirus-related issues, except in cases of gross negligence.

“There are things that we can and should do to provide a greater degree of certainty, and relieve the economy and business of unnecessary financial burden,” said Evan Greenberg, chief executive of insurer Chubb Ltd. “I’m not talking about giving immunity to insurance companies. I’m talking about business and corporate America and nonprofits.”

Workers’ Compensation

Unlike customers, employees who get the virus have fewer legal options, with most cases confined to workers’ compensation claims that don’t go through the court system, said Gregory Keating, a law professor at the University of Southern California.

With such claims, employees can get compensated for work-related injuries without proving an employer was negligent. It’s a lesser burden than making the case to a judge or jury, but damages are likely lower than in personal-injury lawsuits.

Still, some have taking their cases to court, including a manufacturing plant worker in Michigan who says he was fired after getting sick with coronavirus-like symptoms and the family of a Walmart employee who allegedly died after contracting Covid-19 at work.

Companies that take reasonable precautions as they resume operations should get favorable treatment from judges, their lawyers say.

“The courts should not impose a standard of liability that results in businesses not being able to operate,” Boies said. “That is as damaging to the economy as an edict that says you can’t open.”

--With assistance from Katherine Chiglinsky.

To contact the reporters on this story:
Erik Larson in New York at elarson4@bloomberg.net;
Christopher Yasiejko in Wilmington, Delaware, at cyasiejko1@bloomberg.net;
Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editors responsible for this story:
David Glovin at dglovin@bloomberg.net

Steve Stroth

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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