It was bound to happen. Someone was bound to file a lawsuit over someone else’s response to the coronavirus or COVID-19. The American Airlines pilots’ union sued the carrier in order to get it to stop serving China during the outbreak. Meanwhile, the city of Costa Mesa, California, sued the federal government because it wanted to offload quarantined cruise ship passengers to a facility there.
A lot of businesses will probably be sued if they fail to take reasonable steps to help prevent the virus from spreading. This could include hospitals, nursing homes, hotels and even day care centers. Shareholders might sue their companies after an inadequate response. Or, governments might be sued for going too far in their response and quarantining people against their will.
Meanwhile, there has already been substantial business disruption from the virus, and it’s unclear whether insurance policies are going to cover that disruption. Conferences and large gatherings have been canceled. Airlines are likely to face disputes over when and whether they have to compensate passengers for canceled flights.
What is ‘force majeure’?
If you work directly with the public, you could be at risk for a lawsuit. This is especially true if you provide health care services.
Even if you don’t, however, you could be facing a contract nightmare. People you have contracts with may simply not be able to fulfill them if they need supplies from China or too many of their workers are sick.
Will your insurance cover any lawsuits? Will you be able to enforce your contracts? It depends in large part on whether your policy or contract has a “force majeure” or “act of god” clause. These clauses release parties from contract obligations whenever an “act of god” occurs. Whether the coronavirus and COVID-19 count as an act of god is an open question, but it seems likely.
The virus could have many unforeseen consequences
It’s hard to predict what legal maneuvers might come about due to the coronavirus. For example, according to Bloomberg, a medical staffing agency has sued the U.S. Citizenship and Immigration Services for delaying H-1B visa applications for immigrants with medical expertise who are needed to address the outbreak.
In another case, a class of plaintiffs is attempting to sue Purell, the manufacturer of hand sanitizer, for allegedly exaggerating the product’s ability to prevent people from getting sick.
Now is the time to sit down and plan your business’s response to the coronavirus and COVID-19. Make sure you are fully meeting any responsibilities you have, to the extent possible. Make contingency plans. Consider whether you will meet your contractual obligations and what will happen if you don’t. For assistance, contact an experienced business law attorney.