It’s just the beginning …
Sandra Conti
Lawyer Reporter
PROJECT COUNSEL MEDIA
24 November 2020 (Washington, DC) – On 4 November 2020, a judge for the Eastern District of New York dismissed a COVID-19 lawsuit brought by workers at a Staten Island Amazon facility against the e-commerce behemoth. The lawsuit, initially filed in June, alleges violations of New York state laws, including public nuisance protections and failure to comply with pandemic public health guidance. It’s an interesting read and may be the template for other actions. You can read it here.
Judge Brian Cogan ruled that the federal Occupational Safety & Health Agency (OSHA) is the proper venue for adjudicating the claims related to Amazon’s COVID-19 measures and policies at the Staten Island warehouse known as the JFK8 facility.
Allegations Against Amazon
In the original complaint, three JFK8 workers, along with three family members, allege that Amazon’s failure to comply with laws and public health mandates caused injury and death to workers and their families. The complaint asserts that JFK8 workers continue to contract the virus under Amazon’s “façade of compliance” with appropriate pandemic safety protocols.
The plaintiffs describe conditions where workers don’t have time to properly sanitize their workstations or frequently wash their hands to prevent the spread of COVID-19. The workers point to Amazon’s strict work-pace requirements called Time Off Task, or TOT, as the culprit. Amazon monitors workers’ every movement, giving feedback, and taking disciplinary action for too much time spent “off task.” The plaintiffs claim that TOT prevented them from taking protective measures without fear of reprisal. They want more time for off-task sanitizing and personal prevention like handwashing in the bathroom.
It is noteworthy that in July, after the June lawsuit filing, Amazon announced that it stopped giving productivity and rate feedback in its facilities. The company also stopped disciplinary actions related to Time Off Tasks that workers take to use the bathroom, sanitize their workstations, or socially distance.
In the complaint, the workers also allege that Amazon’s contact tracing methods are not consistent with CDC and/or New York state guidance. Instead of interviewing infected workers to identify the colleagues they came into contact with, Amazon uses surveillance cameras to identify “workers who come into close contact with an infected worker during the final shift that the worker was in the facility before leaving due to infection.” The plaintiffs also report that Amazon discourages COVID-19 positive workers from telling coworkers about their positive test.
Two plaintiffs allege that Amazon failed to pay them timely quarantine wages under New York labor law. They are seeking back pay for quarantine leave.
One plaintiff claims she is at greater risk of contracting the coronavirus due to her boyfriend working at JFK8. She alleges that she could have been the COVID-19 carrier that infected her father, who died of the virus. Another plaintiff says she contracted COVID-19 from working at the JFK8 facility in March. She alleges the company encouraged everyone to continue working but did not introduce appropriate safety measures. Her family contracted the virus and her cousin, whom she lived with, died in their bathroom after suffering from COVID-19 symptoms.
Referral to OSHA
Judge Cogan disagreed with the plaintiffs that their workplace safety claims can be resolved by the court. Basing his decision on the doctrine of primary jurisdiction, Cogan dismissed the public nuisance and NYLL § 200 claims without prejudice. The claims under NYLL § 191 were dismissed with prejudice. This judge maintains that “courts are not experts in public health or workplace safety matters, and lack the training, expertise, and resources to oversee compliance with evolving industry guidance. Plaintiffs’ claims and proposed injunctive relief go to the heart of OSHA’s expertise and discretion.”
Judge Cogan asserts that under New York law, a “public nuisance is actionable by a private person only if it is shown that the person suffered special injury beyond that suffered by the community at large.” The judge ruled that the plaintiffs’ concerns and risks are different in degree but not in kind from the injury suffered by the larger New York metropolitan community during the pandemic. Cogan dismissed this public nuisance claim because the alleged injuries of an increased risk of contracting COVID-19 and fear of the same “because they work in conditions, or live with someone who does, is common to the New York City community at large.”
The plaintiffs claim that Amazon breached its duty under NYLL § 200 to maintain a safe workplace in its failure to adopt and adhere to New York’s workplace guidance and COVID-19 leave law. This, allegedly, caused plaintiffs “emotional harm and in some cases pecuniary harm and physical harm associated with the COVID-19 infection.” Judge Cogan sees this claim as asking the “Court to create and enforce a scheme of workplace safety standards.” In Cogan’s view, this type of regulation sits within OSHA’s expertise. Therefore, he ruled that the agency should have the first opportunity to “evaluate the wisdom and necessity of such policies” in the unprecedented context of the COVID-19 pandemic.The plaintiffs argued that their claims for past and future harm are not preempted by New York Workers’ Compensation Law (NYWCL) because they seek injunctive relief rather than monetary damages. Judge Cogan, however, ruled that NYWCL bars the plaintiffs’ § 200 claim because it is for past injury. Judge Cogan also found that the plaintiffs’ claim for the threat of future harm under § 200 also fails, stating that “because the threat of future harm does not provide a valid basis for a tort claim,” plaintiffs cannot maintain their § 200 claim based on the threat of contracting COVID-19 at JFK8.”
Wages are not owed
Finally, plaintiffs also bring a claim for an injunction against future untimely payments. Judge Cogan agreed with Amazon that COVID-19 leave does not constitute “wages” under New York Labor Law § 191 language and dismissed this claim. Cogan determined that paid sick leave doesn’t qualify for earnings or wages under this law but is instead a benefit or wage supplement like vacation and holiday pay.
Will Courts Continue to Defer?
Given the unique and unprecedented aspects of the COVID-19 pandemic on workplaces and workers, most legal pundits think the courts are likely to continue to decline to litigate these issues. Instead, they’ll defer to OSHA, or other appropriate state or federal agencies to weigh in on the allegations first.
Meanwhile ….
In response to denied business interruption insurance claims, thousands of small business owners have turned to legal action against their insurers—with mixed results. But one case, filed by a Louisiana restaurant group, has recently survived a summary judgment motion filed by Lloyd’s of London. The ruling indicates that the case, Cajun Conti LLC et al. v. Certain Underwriters at Lloyd’s, London et al., No. 2020-02558 (La. Dist. Ct., Orleans Parish Mar. 16, 2020), will go to trial, making it the first business interruption insurance claim case to be tried in the United States in connection to the COVID-19 pandemic.
The Rise of Business Interruption Insurance Litigation
The economic consequences of the COVID-19 pandemic on small businesses have been dire. As early as March, mass layoffs and closures due to decreases in revenue and state-mandated shutdowns had adversely impacted thousands of businesses. Almost immediately, businesses across the country filed claims with their insurance carriers seeking protection and reimbursement from COVID-19-related losses. These business interruption claims—typically, claims that result from physical damage done to the business property—presented an unprecedented question as to whether global pandemics fall under such coverage. Some insurers, like The Hartford Insurance and Travelers released statements explicitly denying coverage for losses stemming from pandemics and viruses. As a result, a number of businesses filed lawsuits against their carriers, with over 1,250 filings as of October 2020. The viability of these lawsuits has been varied, with some being dismissed on motion by the defendant carriers. Conti v. Certain Underwriters, however, is the first to make it to trial.
Conti Case Background
The plaintiffs in Cajun Conti own a 500-seat New Orleans restaurant, Oceana Grill, centrally located in the city’s French Quarter. Back in March, Louisiana governor, John B. Edwards issued an order banning gatherings of 250 people or more, and New Orleans mayor, LaToya Cantrell ordered restaurants to operate at 50% capacity and cease service by 9 pm. Just days later, Oceana Grill’s owners filed a suit seeking a declaratory judgment that its insurer should cover losses related to their business’s interruptions. The complaint also sued the state of Louisiana and its governor for a ruling as to whether the ban on gathering of over 250 people applied to restaurants.
According to the complaint, the plaintiffs carried an all risk commercial general liability policy with Lloyd’s of London, meaning that the policy shall cover losses from all risks unless “clearly and specifically excluded.” The complaint significantly alleges that this policy “does not provide any exclusion due to losses, business or property, from a virus or global pandemic.” However, based on information or belief, the plaintiffs alleged that Lloyd’s had accepted their “policy premiums with no intention of providing coverage due to direct physical loss and/or from a civil authority shutdown due to a global pandemic virus. Plaintiffs argued that the virus’s physical infection and spread onto surfaces would constitute a “direct physical loss.”
Although they had not yet been denied a claim, the plaintiffs sought a declaratory judgment that their commercial policy cover economic losses from sales and the cost of cleaning and any loss of income resulting from future civil authority shutdowns.
Summary Judgment Denied
In a ruling denying Lloyd’s motion for summary judgment, Judge Paulette R. Irons found that the question of whether COVID-19 constitutes direct physical loss or damage is a case of first impression and that there is a genuine issue of material fact as to whether policy interests necessitate a more liberal reading of prior case law. If so, there is a question of how COVID-19 impacts the environment and whether the plaintiffs’ suspension of their restaurant’s operations was caused by physical loss or damage from the virus. Although the Lloyd’s argued that any physical harm from COVID-19 could “be abated with simple household cleaning supplies,” the court was not swayed in light of contrary studies presented by the plaintiffs.
As to the Civil Authority Endorsements, the court also found that whether COVID-19 damages to property at another location within one mile of the restaurant is a Covered Cause of Loss is a genuine issue of material fact, as the plaintiffs allege damages at locations surrounding its premises, including a hospital. The court further held that whether the Orders prohibited access to the plaintiffs’ premises is a genuine issue of material fact, since the restaurant had to “drastically change its operations to exclude sit-down patrons, which was previously the heart of its business, because the Order restricted their presence in the building.”
Since the summary judgment motion was denied and a trial date set, the Lloyd’s underwriters have claimed in a motion to the court that the owner of Oceana Grill had previously contacted the New Orleans mayor prior to the shutdown order to ensure that the order included language that the virus causes physical damage to property. The motion was denied and stricken from the record after plaintiffs presented evidence that the restaurant owner was not trying to influence the mayor’s order, but rather, was alerting the government to insurers’ plans to escape obligations.
Future of COVID-19 Business Interruption Claims
Although the Cajun Conti case seems promising for businesses, not all are as successful. Whether an insurance policy includes a virus exclusion seems to be the strongest indicator of lawsuit viability. In cases where the businesses purchased policies that did not specify a virus exclusion clause, the plaintiffs have typically prevailed against insurer motions to dismiss more than half of the time. Contrarily, insurers with policies that contain exclusions for virus-related losses are oftentimes winning motions to dismiss (state and federal courts have granted 31 out of 38 motions to dismiss in these cases). Though over half of the over 1,250 business interruption suits have been in cases with no explicit (or not coded) virus exclusion policy, almost 500 policies at issue contain a clause that explicitly excludes viruses from coverage, with an additional 121 cases containing “hidden” exclusion clauses (i.e., exclusions for pollution and contamination damages). In the latter cases, courts have been clear that no coverage should be expected when the virus exclusion policy is “clear and unambiguous.” However, like all legal matters surrounding COVID-19, the overall outcome and legal precedent are still yet to be seen.
