How COVID-19 is Changing the Class Action Landscape
Robert Hyte, Director Of Operations at Settlement Services, Inc.
Class actions are on the rise, and many class action practitioners predict that it will continue to grow because of the COVID-19 pandemic.
In fact, as of this past December, over 1,400 class actions related to losses tied to the pandemic were filed and the number will only continue to increase. Filed cases span the country with the most cases currently being filed in California, Illinois, New York, and Florida.
Several people who prepaid for travel, education, events, and other goods or services are now at a loss after being forced into cancellations. This is just a small illustration of how the pandemic has monetarily harmed large classes of people across nearly every industry. Affected groups like these and others may turn to class actions as an outlet to remedy their damages.
What Type of COVID-19 Class Actions Have Popped Up Recently?
It is not surprising that ‘failure to refund’ types of class actions have already taken form. Naturally, consumers asked for refunds if they could no longer do the things they paid for due to pandemic-related restrictions. Considering all the uncertainty related to the pandemic, consumers were shocked when businesses denied their refund requests. The biggest instance of this type of consumer upset was with the travel industry. When the US went on lockdown, people who had paid for flights, which were promptly cancelled, were still ineligible to receive a refund for those flights. Last year, there were over 40 class actions filed against several domestic airline companies for failure to return funds paid for cancelled flights, due to the COVID-19 pandemic.
There are also many Covid-Related MDLs related to ski pass insurance, travel insurance, and business interruption insurance that have been centralized in the past five months including:
· MDL 2955 – Arch Insurance Company Ski Pass Insurance Litigation in the Western District of Missouri
· MDL 2975 – In re United Specialty Insurance Company Ski Pass Insurance Litigation in the Northern District of California
· MDL 2964 – Society Insurance Company COVID-19 Business Interruption Protection Insurance Litigation in the Northern District of Illinois
· MDL 2968 – Generali COVID-19 Travel Insurance Litigation in the Southern District of New York
There is also a push to consolidate all airline cases into multidistrict litigation. The common theme in all these suits are arguments that claim that while the airlines allow for refunds in their contracts, they denied refund requests for flights grounded due to the pandemic. Instead of refunds, many airlines presented consumers with vouchers for future travel, which is not what consumers wanted. Regardless, if multidistrict litigation comes to fruition, the courts may likely certify a good number of these class actions, which could be extremely costly to struggling airline companies, who will no doubt consider the benefits of a global settlement.
Other ‘failure to refund’ cases are being filed against educational institutions, event ticketing agencies, hotels, fitness clubs, and more. These cases can be tricky because these organizations stopped providing access to their students, members, or the public because government-issued restrictions required them to cease operations. Should these types of organizations have to issue refunds for travel expenses consumers expended but were never able to enjoy? Or for monthly fees related to facility usage that members were unable to take advantage of due to these restrictions? Or to students who were forced to finish their college semester remotely and live off-campus? Besides ‘failure to refund’ cases, there have also been some class actions against cruise lines for continuing normal operations, despite knowing that coronavirus risks were increasing. By maintaining standard operations, cruise lines may have put staff and passengers at harm.
Plaintiffs should expect to see these businesses and institutions challenge class certification, invoke force majeure clauses, and assert other defenses to attempt dismissal. This is unchartered territory, and the courts are going to need to make tough decisions when it comes to proceeding with class actions stemming from the pandemic.
Predictions for the Future
The amount of class actions that may result from the pandemic are almost endless. It is certain that courts will see an increase in the ‘failure to refund’ cases discussed above, since this issue affected several different groups of consumers. However, other classes that could pop up in the courts over the next year or so will likely include:
Individuals affected by personal protection equipment, like masks and gloves, which failed to sufficiently protect a person.
Employees and/or consumers who became sick because businesses failed to implement safe work practices after reopening.
Smaller businesses that did not receive appropriate aid from banks because those banks, instead, prioritized their larger clients and institutions.
Consumers affected by businesses that price gouged certain necessities after the government declared a state of emergency.
Companies or employees that are experiencing privacy violations under new laws like the CCPA and the increased use of videoconferencing software (like Zoom).
With employees in many locations exclusively working from home, labor and employment collective actions present another area of risk as clocking in and out can present a challenge. Overtime practices, reductions in force, and the like may present enhanced risk, because of COVID-19.
These are just a few examples of other instances where large classes of people could have meritorious class action claims related to the pandemic. Many other scenarios are plausible. In addition, individual lawsuits relating to the above and other pandemic related harm will definitely continue rise.
Conclusion
As with most aspects of life, the pandemic’s impacts are changing the class action landscape. The growing number of class actions in the U.S. will steadily continue to rise and evolve, as new issues come to light. Plaintiff’s Counsel should be mindful of these sorts of opportunities as they try to rebound from what was a tough 2020. Employees will be turning to Counsel for advice on these and likely many more novel issues in 2021 and beyond and it makes sense to be prepared for the opportunities that present themselves.