By: J.P. Harris
April 10, 2020
For the last several weeks, most businesses have closed voluntarily or were closed as a result of an executive order. Although social distancing is clearly working to slow the spread of the COVID-19 virus, everyone is anxious to get back to normal operations as quickly as possible. If and when the curves depicting the number of new confirmed cases and deaths begin to decline, economic and political pressures will mount on governors to lift restrictions. That will undoubtedly happen well before the risk of transmission reduces to zero and well before a vaccine is available. The restrictions may also be lifted before testing is available on a widespread basis. On those assumptions, the grim reality is that businesses will open, the virus will still transmit from one person to another, people will get sick and some will die (albeit fewer than at current levels). Once government restrictions are lifted and companies are free to return to more typical practices, what obligation will companies have to prevent the spread of the virus to employees and customers? Will those infected bring lawsuits for damages? Will insurance cover those lawsuits? There are very few answers to these questions at this juncture, but as we look forward to a return to normalcy, we should ponder these and related questions to start preparing for a world with a new potential litigation risk.
Let’s first consider a few examples of how this might play out, because that may help identify the issues that will emerge:
- A restaurant reopens and returns to pre-quarantine service levels. A patron contracts the virus and becomes ill. Assume first that one of the servers carries the virus but is asymptomatic so neither he/she nor the restaurant owner knows the server is a carrier of the disease. Can the patron sue the restaurant?
- An online retailers’ warehouse worker who is a carrier of the disease packs boxes that are shipped to consumers across the country. The virus persists in the packing materials and infects the recipients. Can the recipients sue the retailer?
- A hair salon reopens and begins servicing customers. One of the patrons is an asymptomatic carrier of the disease, but passes the disease to other customers. Can those infected customers sue the hair salon?
- Employees of an accounting firm (or really any business, for that matter) return to work as the business reopens. One employee infects another. The infected employee in turn infects other members of his/her household. Can any of them sue the accounting firm?
- A bus company or Uber driver resumes normal operations and several passengers contract the disease after riding the bus or service. Is the bus company or Uber driver liable to the infected passengers?
These are just a few hypothetical examples, but their breadth demonstrates that essentially every business will face scenarios like these in the coming months.
While the underlying health problems are certainly paramount, this article focuses on the legal risks that might flow from the transmission of the disease during resumed business operations. For now, there are more questions than answers, as the best we can do is apply legal concepts from other similar circumstances to the present, unprecedented ones.
What Caused the Problem?
One of the elements the infected party will have to prove is that they contracted the virus at a specific location, that the owner of that location caused or failed to prevent the injury. This will be particularly problematic under most circumstances, in part because of the virus’ prolonged incubation period (of around two weeks). Take the example of a patron of a restaurant who contracts the virus. The odds are good that in the two weeks prior to eating at the restaurant, the patron will have also gone to the grocery store, interacted with co-workers, and come into contact with scores of carriers who may have been the actual source of the infection, not the restaurant. Alternatively, the patron might contract the virus at a restaurant but symptoms do no emerge until two weeks later, making it had to draw a logical connection between the restaurant and the illness. In short, it will be difficult for the plaintiff to prove that it was the restaurant and not all the other possible exposures that caused the harm. News reports suggest that it is possible from a medical perspective to trace the virus by its genes, but few plaintiffs will be able to access the resources to scientifically prove an infection’s source. If a cohort of the restaurant’s patrons all get sick, however, it will be easier for the group of patrons to prove the restaurant was the source. Individual claims might be difficult to bring, but class actions, which will be costlier to defendants, might be more viable.
Claims By Employees Against Their Employers
One of the hypothetical scenarios above involves an employee infecting a co-worker: this may be one of the few questions to which there is an answer. The workers compensation system prevents employees from suing their employers for injuries suffered in the workplace. The infected co-worker cannot sue, therefore, but is likely to receive benefits through the workers compensation system. Of course, if many employees simultaneously tap the workers compensation system for benefits, the system will come under strain. Employers pay into the workers compensation insurance program, so more frequent claims will drive up employers’ experience ratings and therefore increase premiums.
The hypothetical above goes on to state that the infected worker in turn infects members of his/her household and asks whether the family members can sue the employer. These family members are not prohibited by the workers compensation statute from suing the employer directly. So, an employer who fails to fulfill the requisite standard of care (whatever that is), can be liable to family members of employees who contract the virus because an employee brought it home from work. Of course, proving the root cause of the infection will remain a thorny issue for anyone trying to sue in a situation like this.
What Is the Applicable Standard of Care?
We know that companies will not be held to the standard of perfection, but where should society draw the line? How far must companies go to prevent the spread of the virus? In other contexts, the standard is what a reasonable person would do under similar circumstances, but we have not faced circumstances like this before so existing case law may prove less than helpful.
The general negligence standard is well known but difficult to apply in the real world. Generally, a plaintiff needs to show there is a duty owed and the breach of that duty caused injuries that were reasonably foreseeable. This article has been grappling with the first part – is there a duty and if so, what is the extent of that duty?
One possible articulation of the duty can be found in cases in which landowners failed to protect others from harms resulting from a condition on their properties. Landowners owe a duty of reasonable care, which changes based on the character and circumstances of the land and its use. The seminal question is whether the harm is foreseeable to the owner and if so, the owner must take reasonable precautions to prevent injury. This applies to all dangers of which the owner has actual knowledge and those that the owner should have known about in the exercise of due care. What does that mean in the context of an invisible harm, including one where carriers may be asymptomatic? Shouldn’t it matter whether the employee that is the source is asymptomatic and will we hold companies liable only if the source employee openly displays symptoms? Is there a duty on employers to make sure that their employees are not carriers of the virus?
Let’s return to the example of the restaurant owner. It is arguably foreseeable that patrons will contract this disease while in the restaurant. What are reasonable precautions under the circumstances? Must a restaurant owner remove tables to allow more distance between them so that patrons do not infect each other? [Note this will not work so well for the bus company as it cannot impose a six-foot barrier between all riders]. Must the actual mechanism of delivering food to the table change? Must the restaurant owner implement special cleaning protocols to disinfect the premises? What types of cleaning measures are reasonable and which are not?
These same questions can be used for virtually any business. Should the hair salon owner install partitions between the booths to prevent the spread of the disease among patrons? Must stylists wear masks and gloves? Must all employers check their employees for symptoms each day before the start of work? Can employers rely on a requirement that employees self-report if they feel sick and therefore stay home? If an employee disregards this requirement, works a shift and infects someone, is the employer still liable? Must the bus company take the temperature of each passenger before allowing them to ride?
An alternate body of law holds that generally speaking, one does not owe a duty to protect against the criminal acts of a third party. This might be useful to business owners to fend off claims by a customer who was infected by another customer while on the business’s premises. There are exceptions to this rule, however. If a special relationship exists, if special circumstances exist, or if the business voluntarily assumes a duty, the business may be liable for failing to prevent harm caused by a third party. Outside of the “special relationships” that might be formed under unique circumstances, if a company undertakes to disinfect its premises or otherwise makes representations to patrons about the extent to which it endeavors to prevent the spread of the virus, it might be liable for failing to follow-through on those representations. In other words, a company might “voluntarily assume” a duty to keep people safe, which will in effect set the standard of care that must be fulfilled. Companies should be mindful of the extent to which they attempt to promote their cleanliness.
The concept of negligence is likely broad enough to allow plaintiffs to assert claims in a variety of situations, provided they can demonstrate causation. The claims are more than just theoretically viable.
Plaintiffs might also analogize to holding restaurants strictly liable when patrons suffer from food poisoning. Most states require only a showing that the food served was defective and unreasonably dangerous. Plaintiffs are not required to show a lack of reasonable care (such as would be required under a negligence theory). Plaintiffs might be able to extend a similar theory to the unreasonably dangerous condition inherent in allowing carriers of COVID-19 to serve customers.
There are, therefore, several possible existing theories on which persons who contract the virus could assert claims. Absent other action, it will be up to the courts to determine what duty is owed.
Should We Require Disclosure By Companies?
If a business has an employee that is a carrier of the virus, should that company be required to post a notice so that customers can make an informed decision about whether to enter or conduct business with that company? Assuming the notice does not identify the employee, this probably can be handled without compromising the employee’s privacy concerns. Of course, until testing becomes more readily available, such a disclosure could extend only to those employees who exhibit symptoms or who were sick but recovered. In the absence of a statute requiring such disclosure, it is an open question whether the common-law duty of negligence requires such disclosure as part of the applicable standard of care. Those arguing against requiring disclosure might argue that the presence of the virus is (or will be) so ubiquitous that everyone should assume they are likely to come into contact with a carrier (at least an asymptomatic one), so disclosure is unnecessary. They will also argue that the negative stigma associated with a disclosure might be so harmful to the business’s reputation that society should not mandate disclosure.
Plaintiffs’ Contributory Fault
While we have so far focused on what defendants should have done, the plaintiffs themselves should probably bear some responsibility. Shouldn’t society impose on members of the public the duty to protect themselves by wearing masks when they go to the hair salon, for example? This is known as comparative or contributory fault. Just as plaintiffs will raise all of the precautions companies should have adopted, there are many that plaintiffs also could adopt to protect themselves. It is unlikely the doctrine of comparative fault will result in the dismissal of lawsuits, though, so they will have to go to verdict for a jury to decide whether and to what extent the plaintiff could have protected himself/herself. If companies make the disclosures discussed above, they will enhance the burden on plaintiffs to protect themselves against infection.
Will General Liability Insurance Cover Claims for Infections?
Uncertainty plagues the issue of whether insurance carriers will bear the ultimate brunt of the personal injury claims contemplated by this article. At first blush, the claims assert bodily injury that typically falls within the insuring language. Insurers may claim that some injuries do not result from “occurrences” because they are not accidental, in which case there will be no coverage for the claim. Several exclusions might also bar coverage such as the exclusion for communicable diseases and damages resulting from fungi, bacteria and mold. One thing is certain, though – business need to be on careful watch for a new, explicit coronavirus exclusion appearing in liability policies during the next renewal period, as there is a good chance carriers will look to avoid catastrophic exposure.
Can Businesses Obtain a Waiver for Claims?
Imagine walking into a restaurant and in addition to receiving a menu, you are asked to sign a waiver releasing the owner from claims arising from or related to COVID-19 exposure. Such a practice would not inspire a lot of confidence and could scare off patrons before they place their drink orders. Exculpatory waivers can be enforceable under certain circumstances, but there are limits to their usefulness, beyond the impracticalities. Courts will not enforce exculpatory contracts if they contravene public policy either because of a special relationship or disparity of bargaining power. Waivers must clearly state that the signer is releasing claims against the business, even for its own negligence. Companies need not use the word “negligence” but they must state clearly and specifically the intent to release the companies from liability for the harms described. In other words, a waiver in this instance would need to say words to the effect of “you release all claims in the event you contract COVID-19 as a result of entering our establishment.” It is doubtful that a release such as this could be implied without a patron or customer signing an actual document. A company probably cannot insulate itself from claims simply by putting up a sign at the entrance that patrons enter at their own risk and indicating their assent to releasing all claims by virtue of continuing to walk into the store. Companies that ship goods might try to include specific COVID-19 release language in their terms and conditions in an effort to shield themselves. The more conspicuous the notice, the better chance of enforceability.
Companies should also examine indemnification clauses in key contracts to understand how liability may flow between suppliers and business partners. Contracts with cleaning vendors, for example, might take on more importance if a company relies upon a third party to disinfect.
Is There a Legislative Solution?
No one yet knows if there will be an avalanche of suits, but it appears on first glance that every business has some level of exposure. The first several lawsuits filed in connection with COVID-19 have been against companies that continued to charge for services they could not actually provide during the quarantine period such as monthly gym memberships and colleges that continued to charge room and board while students remained at home. A search of the internet will find law firms soliciting people who have been harmed by COVID-19. Those firms are screening potential cases already. Congress stepped in early to immunize health care workers from liability for treating patients with COVID-19. Some would deem it unwise to immunize all businesses from all exposures flowing from the Coronavirus, but perhaps some other legislative action will become necessary. Legislatures adopted workers compensation systems to spread around ubiquitous risk of workplace injuries. Perhaps they will consider similar schemes for COVID-19 risks as well. Legislatures might also look to insurance carriers to ensure some level of coverage is provided.
There are more unknowns than knowns at this point. As companies start to think about ramping up to prior levels of business activity, they should also consider prudent steps to mitigate the lingering risk of claims, at least until science eradicates this disease.