Mitigating Litigation Risk For Businesses Reopening In The Near-Term

The economy needs to restart, and businesses will need to reopen, long before the novel coronavirus has burned out. As of this writing, only a very small percentage of the U.S. population has been tested; overall testing capacity is inadequate; there is no identified treatment for the virus; and an approved vaccine available at scale is more than a year away. In other words, at the same time businesses will be reopening, the virus will be spreading: some unknown percentage of those infected will become seriously ill or die. Absent statutory immunity, businesses which reopen in the near-term will be subject to claims arising from the spread of the virus to employees, contractors, visitors and/or customers, most likely grounded in negligence. As questionable as such claims may prove to be on the merits, there are powerful economic factors which will lead plaintiffs’ counsel to recruit and pursue these claims—preferably, in bulk. In fact, some firms are already advertising for such clients.

Businesses that do reopen are well-advised to take proactive steps to better insulate themselves against such claims. By so doing, such businesses will make themselves both less likely and less inviting targets. Essential steps will include:

• Being fully briefed on the most current government guidance and other authoritative best practices;

• Having detailed, written procedures in place for staying current on such guidance;

• Incorporating and tailoring guidance and best practice into policies and procedures implemented in the work place, with due consideration given to public health (as well as business) factors; and,

• Investing the time, money and human resources necessary to best ensure these policies and procedures are enforced and adhered to (and exceptions, quickly addressed and corrected).

Most importantly, businesses should carefully document each step that they take (and why), each step they consider and reject (and why), and all steps taken to implement their reopening health and safety plans. Businesses, as potential defendants, need a well-documented “pandemic reopening” narrative that is comprehensive and cohesive. Businesses that can present a clear and consistent narrative at trial about what their plans were and how they put those plans into action are far less likely to be serial defendants in the litigation to come.

Where We Are Now—and Where We Will Be Shortly

As of this writing, most states and many cities have “shelter in place” orders, shuttering “non-essential” businesses. Many Governors are now actively considering plans for when and how to lift restrictions, to permit businesses to start operating again. Florida, Georgia, South Carolina and Texas have already begun relaxing restrictions. The coalition of Northeastern States, including New York, and of Western States, including California, are actively evaluating such plans.

While there has been some success to date “flattening the curve” to mitigate impacts on hospital capacity in some areas, the novel coronavirus is still spreading. The CDC is reporting between 2,000 to 4,000 new cases daily. CDC guidance still emphasizes testing only for those who are symptomatic (and health care workers who come into contact with them). There is no reliable antibody testing available yet at scale; there is no demonstrated treatment developed specific to the virus; and there is no effective vaccine yet on the horizon.

Just as shelter-in-place orders and social distancing have slowed the spread of the virus, epidemiologists and public health officials warn us that loosening these restrictions will— inevitably—cause the virus to spread. Almost every previously restricted activity that is permitted will increase the risk of infection. In short, although it is essential that businesses do get back to work, doing so will create risk. People will get sick.

Potential Claims—Not Hard to Assert

Although the COVID-19 pandemic and its social and economic disruptions have and will generate significant litigation, the focus here is on claims that are likely to be filed against businesses for reopening. The fact pattern is likely to be simple but recurring. An individual—employee, contractor, visitor or customer—is diagnosed with COVID-19.  Unfortunately, in most cases filed, the individual’s outcome is likely to be catastrophic—disability or death. The individual (or his/her heirs) will assert that interaction at the business was the source of infection: for instance, that the individual became infected while meeting in the business’ offices. Plaintiff will assert that the business defendant was negligent[1] in maintaining and conducting its business, in light of the existing reasonable standard of care, and that this negligence was the cause of the plaintiff/decedent’s infection and injuries.

In almost every U.S. jurisdiction, simple negligence claims have the same four essential elements: 1) the defendant owed a duty of care to the plaintiff; 2) the defendant breached that duty of care; 3) the defendant’s breach of duty actually and proximately caused the plaintiff injury; and 4) plaintiff suffered damage as a result of the injury. Plaintiffs that recover on negligence claims are typically entitled to economic damages (e.g., medical expenses, lost wages), as well as damages for “pain and suffering.” “Duty of care” is typically defined in terms of what an “objective, reasonable person” would do, given all of the circumstances of which a reasonable person would be apprised. Such circumstances include, in almost every state, whether the risk of harm to the plaintiff from the defendant’s conduct was reasonably foreseeable.

Plainly, any plaintiff’s claim for coronavirus-related injury—whether made by an employee[2], contractor, visitor or customer—will face significant problems of proof. Most obviously, the plaintiff, to prevail at trial, will need to prove that it is more likely true than not that she became infected as a result of the defendant’s conduct. Being able to pinpoint the location of infection to a specific defendant and to exclude all other potential exposures will be extremely difficult for most.

While difficult, that causation showing may become more feasible, especially as strong contact tracing regimes are instituted. As scientific study better defines how the virus spreads, various methods for pinpointing causative exposures may develop. For instance, scientists at the Gaungzhou Center for Disease Control and Prevention recently published a study in which they concluded that a number of individuals were infected while eating lunch at a specific restaurant at the same time as Patient A, who was asymptomatic, and that it appears the restaurant’s air conditioner played a role in distributing the virus. Lu, et al., “COVID-19 outbreak Associate with Air Conditioning in Restaurant, Guangzhou, China, 2020,” 26 Emerging Infectious Diseases No. 7 (July 2020).

Moreover, as a practical matter, tort plaintiff firms will be economically motivated to recruit and pursue such claims. COVID-19 cases will be appealing, as the virus will be very much on the minds of judges and juries: allegations of misconduct contributing to the spread of the disease will have particular emotional resonance. If you doubt this, consider your emotional response today to a stranger violating social distancing norms near you.

Finally, plaintiff firms know that they ordinarily do not need to try their claims to verdict to monetize them. In fact, plaintiff firms count on the reality that the majority of defendants will choose to settle, to avoid the airing of unfortunate facts or to avoid perceived verdict risk in the face of a particularly sympathetic plaintiff. Defendants may need to settle—especially if the number of claims has grown such that defense costs, alone, create a material burden on the business.

Mitigating the Litigation Risk: Document the Reopening Narrative

Many business leaders are lobbying Congress to provide broad immunity from claims arising from reopening and the inevitable transmission of COVID-19. The U.S. Chamber of Commerce asserts that the failure to address these liability risks could cripple any recovery, as businesses refuse to reopen in light of that risk. At a minimum, the Chamber and others (like the Business Roundtable) have called for the establishment of clear, national guidelines for businesses to follow and the establishment of a liability safe-harbor for those that adhere to those guidelines.

Every business thinking about reopening should fully inform itself of all potentially applicable public health guidance – from the federal government (e.g., CDC, OSHA), state government (e.g., Department of Public Health), and local regulatory entities (e.g., county and municipal health departments). Similarly, many trade associations and other professional organizations (e.g., the American Industrial Hygiene Association), have published guidance and best practices that may apply to your particular business. Because each business’ issues and risks will be unique, there is no one-size-fits-all and no specific “right” answer to what steps to take. However, the following steps will likely be essential to defending reopening negligence claims:

• Evaluation by senior management as to whether and to what extent to reopen, including serious consideration of the concomitant public and individual health risks to employees, contractors, visitors and customers;

• Evaluation by senior management and company specialists (e.g., industrial hygienists), of all the steps recommended by government officials, authoritative best practices, and by applicable peer-reviewed scientific literature;

• Development of a reopening plan that is as protective as possible given the demands and nature of the business at issue, balanced against the detriment to operational efficiency and cost, the overall profitability of the business, and consideration of other factors, such as employee financial stability and maintenance or adjustment of employee benefits (including health insurance).

• Implementation, monitoring, enforcement, and record-keeping of all steps practical to lower the transmission of the virus in accordance with the detailed reopening plan;

• Regular re-evaluation of updated government guidance, best practices and literature, and regular re-assessment and appropriate updating of existing policies and procedures, to keep them current.

As importantly, it is critical to document every evaluation thoroughly, every policy and procedure decision thoroughly, and all implementation steps, thoroughly. It, likewise, will be important to have one designated senior manager or employee collect, review and maintain all of the documentation—to ensure that the collection is comprehensive, accurate, and cohesive. To the extent internal memos or emails set forth an incomplete picture, it is important to fill the gaps contemporaneously. To the extent there are inconsistency or inaccuracies reported, it is important to resolve those in real time.

All of the bulleted steps above are largely common sense for any business, with or without the litigation risk. But documenting the entire process and all of the factors considered— including public and individual health issues—are an added step that will prove critical in defending a subsequent suit.

By its very nature, tort litigation is an exercise in second-guessing the defendant’s conduct. Judges and juries are frequently willing to give defendants—who can prove they did a thorough and reasonable job based upon the best available information—the benefit of the doubt. Plaintiffs firms quickly conclude that such defendants are not good targets. On the other hand, the defendant who cannot prove what it did, cannot prove why it did it or cannot get its story straight, will have a difficult time with even the friendliest judge or jury. That defendant will be a ripe target for not just the first lawsuit, but for any additional plausible claim.

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[1] Plaintiffs might also assert strict liability claims, contending that operating a business in the current environment is, by definition, an “ultrahazardous activity.” It seems unlikely that such a claim – given the practical needs of having businesses open – will obtain much traction.  If it does, more claims in the aggregate will likely be filed.  Nonetheless, the possibility of such claims do not change how prudent businesses should mitigate risk proactively.

[2] In most jurisdictions, absent gross negligence, reckless disregard, or affirmative misconduct, employee claims will likely be limited to worker compensation claims.